701 F.3d 449
5th Cir.2012Background
- Debtors MPF Corp. Ltd., MPF-01 Ltd., and MPF Holding US LLC filed Chapter 11 in Sept. 2008 for the MPF unit project.
- Cosco Dalian Shipyard contracted to build the MPF hull; after two years no buyer for MPF, Cosco agreed to take over construction.
- Novation agreements substituted Cosco for Debtors in Vendor Contracts; Cosco paid a lump sum into the plan, with secured and DIP loan balances.
- Plan reserved Avoidance Actions for the Litigation Trustee, including actions against Exhibits 3(b) and (c) vendors; unsecured creditors to receive through a litigation trust.
- Litigation Trustee commenced avoidance actions against several Cosco-related vendors; some vendors moved to enforce confirmation order arguing plan released them or that Vendor Contracts were pre-confirmation assigned.
- Bankruptcy court held reservation of avoidance actions insufficient under United Operating; dismissed all trustee actions; Court certified appeal to Fifth Circuit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the plan's reservation of avoidance actions conferred standing | Litigation Trustee argues plan reserved actions and naming/exhibits satisfy United Operating requirements. | Debtors contend plan reserved only may exist claims and was not specific and unequivocal. | Reservation deemed sufficiently specific and unequivocal; standing limited to non-released claims; remand for further standing analysis. |
Key Cases Cited
- Dynasty Oil & Gas, LLC v. Citizens Bank (In re United Operating, LLC), 540 F.3d 351 (5th Cir. 2008) (specific and unequivocal reservation required for post-confirmation standing)
- Spicer v. Laguna Madre Oil & Gas II, L.L.C. (In re Tex. Wyo. Drilling, Inc.), 647 F.3d 547 (5th Cir. 2011) (disclosure may identify prospective defendants; plan need not name them)
- Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377 (5th Cir. 2009) (standing to enforce plan-reserved claims)
- Tex. Gen. Petroleum Corp., 52 F.3d 1335 (5th Cir. 1995) (ambiguity in reservation can still support standing when adequately described)
- National Benevolent Association of the Christian Church (Disciples of Christ) v. Weil, Gotshal & Mangers, LLP (In re National Benevolent Association of the Christian Church (Disciples of Christ)), 333 F. App’x 822 (5th Cir. 2009) (unpublished; ambiguity reading not dispositive of reservation validity)