Search Market Direct, Inc. v. Jubber (In Re Paige)
685 F.3d 1160
10th Cir.2012Background
- Paige filed for Chapter 7 in 2005; the Domain Name freecreditscore.com was initially Paige’s asset and later became part of the bankruptcy estate.
- SMDI and ConsumerInfo competed to control the Domain Name, with SMDI purchasing it from a third party after Paige’s bankruptcy filing.
- The Trustee pursued an Adversary Proceeding to recover the Domain Name and funds to pay creditors.
- The Bankruptcy Court approved an Asset Purchase Agreement under which ConsumerInfo would fund the estate and, if recovery occurred, receive the Domain Name.
- A Joint Chapter 11 Plan was confirmed; it continued the Adversary Proceeding in a Liquidating Trust and ultimately transferred the Domain Name to ConsumerInfo.
- After 2009 the Domain Name was turned over to ConsumerInfo and the Joint Plan was substantially consummated, with the Trustee and law firm compensated; SMDI challenged these outcomes, including the Trustee’s disinterestedness and the fees, and raised standing and mootness arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Joint Plan proposed in good faith under § 1129(a)(3)? | SMDI contends the Trustee’s conflict and ConsumerInfo’s conduct showed bad faith. | ConsumerInfo argues good faith under Pikes Peak standard; plan feasible and in line with Code. | Yes; Joint Plan was proposed in good faith. |
| Was the Joint Plan fair and equitable under § 1129(b)? | SMDI says plan discriminated unfairly and did not satisfy absolute priority. | Plan treated like creditors alike and satisfied absolute priority. | Yes; Joint Plan fair and equitable. |
| Is SMDI’s plan feasible, justifying non-confirmation of its plan? | SMDI’s plan feasible and should have been confirmed if Joint Plan failed. | SMDI plan not feasible given APA constraints and potential breach claims. | SMDI Plan not feasible; Joint Plan remains confirmed. |
| Did the Liquidating Trustee and ConsumerInfo have standing to pursue turnover and § 362/§ 542 claims? | SMDI argues lack of standing to press estate’s turnover/automatic stay claims. | Liquidating Trustee and ConsumerInfo properly appointed; turnover appropriate. | Trustee had standing; turnover order upheld. |
| Is the Adversary Appeal moot under § 363(m) after the sale to ConsumerInfo? | Mootness should not bar review because defenses persisted and relief possible. | Sale to ConsumerInfo protected by § 363(m) and not subject to reversal. | Not moot for merits; mootness reversed on Adversary Appeal. |
Key Cases Cited
- Travelers Ins. Co. v. Pikes Peak Water Co., 779 F.2d 1456 (10th Cir. 1985) (good-faith standard under § 1129(a)(3))
- In re 203 N. LaSalle St. P’ship, 526 U.S. 434 (U.S. 1999) (feasibility and plan confirmation standards)
- Sweetwater v. Citicorp Acceptance Co. (In re Sweetwater), 884 F.2d 1323 (10th Cir. 1989) (standing and representation in § 1123(b)(3)(B))
- In re Mako, 985 F.2d 1052 (10th Cir. 1993) (Sweetwater framework for post-confirmation claims and representation)