607 B.R. 143
Bankr. S.D.N.Y.2019Background
- Debtors Waypoint owned grouped helicopter assets (WACs). Macquarie was the stalking-horse bidder for most assets and had a $19.5M breakup fee plus up to $3M in expense reimbursement under its APA.
- Lombard, a secured lender for WAC 9, submitted a 100% credit bid for the WAC 9 assets. LCI (helicopter lessor) had signed an NDA with the Debtors and allegedly discussed a post-credit-bid purchase with Lombard.
- At the expedited Feb. 12 sale hearing Macquarie objected, cross-examined witnesses, requested discovery (denied), and the court approved Lombard’s credit bid, finding Lombard acted in good faith and there was no collusion that affected the sale.
- Macquarie sued LCI (as assignee of Debtors and in its own right) alleging: (Count I) breach of the NDA; (Count II) tortious interference with Macquarie’s business expectancy; and (Count III) a § 363(n) claim for collusive bidding.
- LCI moved to dismiss. The court considered the sale hearing record and sale orders and dismissed all three counts with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of NDA (Count I): did plaintiff allege recoverable damages? | LCI’s contacts with Lombard caused collusive bidding and deprived the Debtors of competing cash bids, injuring the estate (assigned to Macquarie). | No cognizable damages: Lombard credit-bid the full secured claim; Debtors would not be better off and third‑party cash bids sufficient to overcome the credit bid were implausible. | Dismissed with prejudice for failure to plead damages. |
| Tortious interference (Count II): did LCI use wrongful means to interfere? | LCI secretly colluded with Lombard to prevent Macquarie’s purchase and to eliminate its breakup fee. | LCI was a competitor pursuing its own economic interest; persuasion/negotiation without independent tort or fraud is not wrongful means. | Dismissed with prejudice: plaintiff failed to allege wrongful means or other required elements. |
| § 363(n) collusion claim (Count III): standing and merits | Macquarie (as assignee and disappointed bidder) can challenge intrinsic fairness and allege an agreement controlling the sale price. | Macquarie lacks assignee standing to assert § 363(n); in any event the sale order already rejected collusion and is final—claim precluded by collateral estoppel. | Dismissed with prejudice: no standing as assignee; merits barred by collateral estoppel and prior findings of good faith. |
| Request for discovery / opportunity to litigate | Macquarie contends it lacked time/discovery at the sale hearing to develop evidence. | Macquarie had Ms. McDermott’s declaration, cross-examined witnesses, and did not seek expedited discovery or a continuance before the hearing. | Court found Macquarie had a full and fair opportunity; discovery request denied. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard — plausibility requirement)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard — factual plausibility)
- RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (credit-bid purpose and effect)
- Lone Star Indus. v. Compania Naviera Perez Companc (In re New York Trap Rock Corp.), 42 F.3d 747 (2d Cir.) (definition of “control” under § 363(n))
- Kabro Assocs. v. Colony Hill Assocs. (In re Colony Hill Assocs.), 111 F.3d 269 (2d Cir.) (unsuccessful bidder standing and intrinsic-fairness doctrine)
- Carvel Corp. v. Noonan, 818 N.E.2d 1100 (N.Y.) (tortious interference: wrongful means and competitor context)
- GAF Holdings, LLC v. Rinaldi (In re Farmland Indus., Inc.), 408 B.R. 497 (B.A.P. 8th Cir.) (collateral estoppel bars post-sale tort suits raising same collusion issues)