748 F.3d 110
2d Cir.2014Background
- Adelphia Recovery Trust appeals a grant of summary judgment against it in a fraudulent conveyance suit under 11 U.S.C. §548(a)(1)(A) and 550(a) against Goldman, Sachs & Co., the ruling relying on judicial estoppel.
- ACC filed for Chapter 11 bankruptcy on June 25, 2002; plan of reorganization was proposed in 2006 and confirmed January 5, 2007, with substantial consummation by March 2007.
- The Trust alleges Goldman was paid $63 million on margin calls from a 1999 loan to Highland Holdings II; payments were made by Adelphia Cablevision LLC, an ACC subsidiary, not ACC itself.
- The Concentration Account, used for the debtor’s cash management, was listed as an asset of ACC subsidiaries (not ACC) in bankruptcy schedules, following the Bank of Adelphia Paradigm.
- The district court held the Trust lacked standing to sue the subsidiary and that judicial estoppel barred the assertion of ACC ownership; the bankruptcy plan’s finality and asset-schedule treatment support estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amended complaint states a valid fraudulent conveyance claim. | Adelphia Recovery Trust (Trust) contends ACC owned the concentration funds. | Goldman argues payments came from Adelphia Cablevision LLC, not ACC; Trust lacks standing to sue the subsidiary. | Yes, the claim is barred by judicial estoppel. |
| Whether judicial estoppel bars the Trust’s claim given bankruptcy proceedings. | Trust's position aligns with prior bankruptcy positions; inconsistency should be allowed. | Policy interest in finality of bankruptcy requires estoppel. | Yes, judicial estoppel applies to bar the complaint. |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (factors vary by context for use of judicial estoppel)
- Sure-Snap Corp. v. State St. Bank & Trust Co., 948 F.2d 869 (2d Cir. 1991) (bankruptcy asset schedules; broad definition of estate assets)
- Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116 (2d Cir. 2008) (importance of asset allocation to bankruptcy process; finality concerns)
- Wight v. BankAmerica Corp., 219 F.3d 79 (2d Cir. 2000) (integrity of judicial process; estoppel concerns)
- In re Adelphia Recovery Trust, 634 F.3d 696 (2d Cir. 2011) (bankruptcy context; integrity of proceedings)
- In re Adelphia Communications Corp., ? (?) (bankruptcy plan finality and asset treatment context (cited in opinion))