2012 U.S. Dist. LEXIS 40463
E.D.N.Y.2012Background
- Petitioners seek leave to appeal a Bankruptcy Court order denying their motion to dismiss a trustee's adversary proceeding.
- Debtor Futter Lumber Corp., in Chapter 11, was confirmed by plan on June 9, 2010, with releases for insiders and specific insiders.
- The Plan and post-confirmation Disclosure Statement defined and preserved the Debtor's Causes of Action for the Liquidation Trust.
- The adversary proceeding, filed May 9, 2011, alleges preferential transfers and fraudulent conveyances by insiders.
- Bankruptcy Court on November 8, 2011 denied the Motion to Dismiss, finding reserved causes of action and consistency with the Disclosure Statement.
- Petitioners filed for leave to appeal on December 9, 2011; the district court denied the motion, ruling no interlocutory appeal warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Plan/Disclosure Statement reserved post‑confirmation claims to defeat res judicata. | Petitioners argue DS expressly reserved action rights. | Respondent contends reservation is established by Plan/DS and notice. | Denied; no controlling question of law or substantial difference of opinion. |
| Whether the denial presents a controlling legal question with substantial grounds for difference of opinion. | Petitioners contend substantial disagreement exists on reservation standard. | Respondent asserts the standard was correctly applied to the facts. | Denied; issues are fact-specific and not pure questions of law. |
Key Cases Cited
- In re Kassover, 343 F.3d 91 (2d Cir. 2003) (discretionary appellate jurisdiction standard under § 158(a)(3))
- Traversa v. Educ. Credit Mgmt. Corp., 386 B.R. 386 (Bankr. D. Conn. 2008) (applies §1292(b)-style framework to bankruptcy interlocutory appeals)
- N. Fork Bank v. Abelson, 207 B.R. 382 (Bankr. E.D.N.Y. 1997) (reiterates framing of controlling issue and material advance test)
- In re I. Appel Corp., 300 B.R. 564 (S.D.N.Y. 2003) (reservation of post‑confirmation rights; impact of disclosure statement)
- In re WorldCom, 2003 WL 21498904 (S.D.N.Y. 2003) (disclosure statement adequacy is fact-specific; not always a controlling legal question)
- Sure-Snap Corp. v. State St. Bank & Trust Co., 948 F.2d 869 (2d Cir. 1991) (preclusion by plan confirmation; potential implicit standard for reservations)