494 B.R. 494
Bankr. C.D. Cal.2013Background
- Kevin Wessell filed a Chapter 15 petition for relief and a petition for recognition on June 10, 2013.
- Liquidator alleges the debtor is a British Virgin Islands corporation, formerly IncWay Corporation in Wyoming, now in wind-down since 2010.
- Debtor has been named in lawsuits, including two pending in the Central District of California, while operating in wind-down mode.
- Liquidator seeks provisional stay under 11 U.S.C. § 1519(a) pending recognition to protect assets and interests of creditors.
- Opposition from Thomas Alexander and Neil Vacchiano argues the motion is a ploy and should be denied pending the district court trial.
- Court denies the motion after applying the four-factor test, finding no sufficient urgent need, no irreparable harm, and unfavorable balance of equities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a provisional stay under 1519(a) should be granted. | Liquidator: urgent need to protect assets. | Alexander/Vacchiano: no urgent need; motion is movants' tactic. | Denied |
| What standard governs provisional relief under 1519 in this context. | Liquidator: injunctive-relief standards apply under 1519(e). | Opposition disputes applicability of broad injunctive standards. | Winter injunctive standards apply; burdens shown on movant |
| Did Liquidator prove likelihood of success on the merits. | Petition for recognition will be granted; merits favored by stay. | No sufficient showing of likelihood of success on merits. | Not met |
| Did Liquidator show irreparable harm if relief is not granted. | Costs of ongoing litigation threaten the estate and fairness among creditors. | No evidence of ongoing costs or assets at risk; harms not irreparable. | Not shown |
| Do public-interest concerns weigh in favor of provisional relief. | Provisional relief would aid recognition goals and cross-border coordination. | No demonstrated public-interest benefit; relief would be limited and neutral at best. | Neutral |
Key Cases Cited
- In re Pro-Fit Holdings Ltd., 391 B.R. 850 (Bankr.C.D. Cal. 2008) (discusses provisional relief under §1519 and noninjunctive relief)
- Winter v. NRDC, 555 U.S. 7 (U.S. 2008) (preliminary injunction factors)
- In re Vitro, S.A.B. de C.V., 455 B.R. 571 (Bankr.N.D. Tex. 2011) (applies preliminary injunction standards to §1519 relief)
- U.S. v. Ron Pair Enterprises, Inc., 489 U.S. 235 (Supreme Court 1989) (plain-language statutory interpretation guidance)