Case Information
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE IN RE: BYJU’S ALPHA, INC., ) Chapter 11
)
Debtor. ) Case No. 24-10140 (JTD) _____________________________________ )
BYJU’s ALPHA, INC., ) Adv. No. 24-50013 (JTD)
)
Plaintiff/Appellee, )
v. )
)
CAMSHAFT CAPITAL FUND, LP, )
CAMSHAFT CAPITAL ADVISORS, LLC, )
CAMSHAFT CAPITAL MANAGEMENT, ) C.A. No. 24-358 (MN) LLC, RIJU RAVINDRAN AND ) C.A. No. 24-492 (MN) INSPILEARN LLC, ) (Consolidated)
)
Defendants/Appellants. )
)
)
) MEMORANDUM OPINION
William C. Morton, pro se appellant.
Susheel Kirpalani, Benjamin Finestone, William B. Adams, Daniel Holzman, Jianjian Ye, Q UINN E MANUEL U RQUHART & S ULLIVAN LLP, New York, NY; Robert S. Brady, Kenneth J. Enos, Jared W. Kochenash, Timothy R. Powell, Y OUNG C ONAWAY S TARGATT & T AYLOR , LLP, Wilmington, DE– Attorneys for appellee BYJU’s Alpha, Inc.
George W. Hicks, Jr., K IRKLAND & E LLIS LLP, Washington, DC; Seth M. Cohen, K IRKLAND & E LLIS LLP, San Fracisco, CA; Patrick J. Nash, Jr., K IRKLAND & E LLIS LLP, Chicago, IL; Brian Schartz, K IRKLAND & E LLIS LLP, New York, NY; Laura Davis Jones, Peter J. Keane, P ACHULSKI S TANG Z IEHL & J ONES LLP, Wilmington, DE—Attorneys for appellee GLAS Trust Company LLC.
March 28, 2025
Wilmington, Delaware
NOREIKA, U.S. DISTRICT JUDGE:
Pending before the Court are the above-captioned consolidated appeals filed by Camshaft
Capital Fund, LP, Camshaft Capital Advisors, LLC, Camshaft Capital Management, LLC
(collectively, “Camshaft”) and William C. Morton (“Mr. Morton,” and, together with the
Camshaft, “the Appellants”) with respect to the Bankruptcy Court’s (i) March 14, 2024 Order on
Finding of Contempt (Adv. D.I. 80)
[1]
(“the Contempt Order”), and (ii) March 18, 2024 Order
Granting Debtor’s Motion for a Preliminary Injunction (Adv. D.I. 84) (“the PI Order”). (Civ. No.
24-358-MN, D.I. 1). Appellants separately appealed the Bankruptcy Court’s April 3, 2024
Memorandum Opinion (A4746-69),
In re BYJU’s Alpha, Inc
.,
For the reasons set forth herein, Camshaft lacks the right to immediately appeal the Contempt Order. Even assuming that Camshaft had such a right, Camshaft and Mr. Morton, who has chosen to proceed pro se , have together failed to show any abuse of discretion. Accordingly, the Contempt Order will be affirmed. Appellants have waived their appeal of the PI Order. Having ruled on the merits, the Motion to Dismiss for failure to obtain counsel is moot.
I. BACKGROUND
A. The Debtor and the Alpha Funds
The following facts appear undisputed. BYJU’s Alpha, Inc. (“the Debtor”) is a special
purpose vehicle formed by an indirect subsidiary of Think and Learn Private Limited (“T&L”), an
Indian corporation.
See In re BYJU’s Alpha, Inc
.,
Appellants are effectively just Mr. Morton, as the founder, CEO, and seemingly only employee of Camshaft. [4] Certain facts brought Camshaft’s legitimacy into serious question. [5] In November 2021, the Debtor—with T&L and its affiliates serving as guarantors— borrowed $1.2 billion from certain lenders (“the Lenders”) with GLAS serving as the Lenders’ agent. . There are three alleged transfers at the center of this dispute.
First, in late April 2022, the Debtor alleges that Mr. Ravindran and T&L caused the Debtor to transfer over $533 million of cash (“Alpha Funds”) to Camshaft, ostensibly in exchange for a limited partnership interest in Camshaft Capital Fund, LP (“Camshaft LP Interest”). The Debtor asserts it has received no return from the purported investment in Camshaft.
Second, in March 2023, the Debtor alleges that Appellants facilitated Mr. Ravindran’s and T&L’s transfer of the Debtor’s Camshaft LP Interest to another T&L subsidiary controlled by Mr. Ravindran—Inspilearn LLC (“Inspilearn”). (D.I. 13-2, Ex. 1 at 5). The Camshaft LP Interest—valued then by Appellants at almost $540 million ( id. )—was the Debtor’s property but the Debtor alleges that it received nothing in the Inspilearn transfer. (D.I. 13-2, Ex. 2 (“3/14/24 Tr.”) at 24:21-25:6, 56:10-15).
By October 2023, following four defaults on the covenants under the credit agreement between the Debtor, its affiliates, and the Lenders, GLAS accelerated the loans and replaced Mr. Ravindran with Timothy Pohl to serve as the Debtor’s sole director and officer. [6] On February 1, 2024, the Debtor filed for chapter 11 protection. The very same day, Inspilearn transferred the Camshaft LP Interest to an offshore trust, presumably to move the funds away from U.S. jurisdiction. (D.I. 13-2, Ex. 1 at 4). This is the third alleged fraudulent transfer.
On February 2, 2024, the Debtor initiated the adversary proceeding asserting fraudulent transfer claims against Camshaft and seeking to recover the Alpha Funds—almost certainly the single largest asset of the Debtor’s estate. ( See Adv. D.I. 40 (“Amended Compl.”) ¶¶ 45-53). There appears to be no dispute that the funds were transferred from the Debtor to Camshaft. Camshaft’s CEO and sole employee Mr. Morton refused to identify the offshore trust to which the Camshaft LP Interest was transferred, despite the various Bankruptcy Court orders outlined below.
B. The Prior Orders
On February 5, 2024, the Bankruptcy Court held a hearing to consider certain first day motions during which the court directed Camshaft to confer with the Debtor to locate the Alpha Funds. (D.I. 13-2, Ex. 3 (“2/5/24 Tr.”) at 51:10-12). Camshaft refused to confer.
On February 16, 2024, the Bankruptcy Court issued an order granting the Debtor’s motion for expedited discovery, which required Camshaft to respond to the Debtor’s interrogatories and provide discovery regarding the Alpha Funds. (Adv. D.I. 22 at 2). Camshaft issued a response, but with an “attorneys’ eyes only” designation. Camshaft eventually agreed to remove the “attorneys’ eyes only” designations from its responses. Although Camshaft disclosed, for the first time, that it facilitated transferring the Alpha Funds overseas to a “non-US Trust” on the Petition Date, Camshaft refused to identify the “non-US Trust.” (D.I. 13-2, Ex. 1 at 4).
On February 27, 2024, the Bankruptcy Court held a conference to address Camshaft’s deficient discovery responses and instructed Camshaft to make “full disclosure by Friday [March 1].” ( See D.I. 13-2, Ex. 4 (“2/27/24 Tr.”) at 11:5-7). Camshaft refused and moved for a protective order, seeking a ruling that it was not required to respond to the outstanding discovery on relevance grounds. (Adv. D.I. 28).
At a hearing on March 1, 2024, the Bankruptcy Court denied the motion for protective order and ordered Camshaft to provide the requested discovery by the end of that day (“the March 1 Order”). (D.I. 13-2, Ex. 5 (“3/1/24 Tr.”) at 25:2-10). To ensure Camshaft’s compliance, the Bankruptcy Court set a status conference for Monday, March 4, 2024. ( .). The Bankruptcy Court warned that, “[a]s part of that status conference,” it “will consider whether or not [it is] going to issue a notice to show cause” if Camshaft failed to provide discovery. ( Id. at 25:7-10). It also requested Mr. Morton’s in-person appearance for the conference:
COURT: I would request that [Mr. Morton] be in the courtroom for that hearing . . . I think it will be very important for him to be here.
I think he needs to hear it from me directly.
COUNSEL: Understood, Your Honor. Thank you.
( Id . at 25:11-21). Camshaft failed to comply with the March 1 Order.
An hour before the March 4, 2024 status conference, Camshaft’s counsel emailed the Bankruptcy Court advising that Mr. Morton “is in transit to Dubai” and therefore would not attend the conference in person despite the Bankruptcy Court’s request. (D.I. 5, Ex. B at 1). At the status conference, counsel to Camshaft explained, “As to the question of the documents, as officers of the Court, we advised Mr. Morton that he should produce the documents, he should produce the information, he declined. That is where we are today.” (D.I. 13-2, Ex. 6 (“3/4/24 Tr.”) at 4:15- 18). Counsel continued, “[M]y client is not here today. I understood Your Honor’s [request] that he appear. He is overseas and was not able to make it. He was actually on his way by the time Your Honor’s order came out.” ( . at 3).
C. The Show Cause Order
Consequently, the Bankruptcy Court determined to hold a hearing for Appellants to show cause why they should not be held in contempt for violating the March 1 Order and issued the Show Cause Order (Adv. D.I. 56) to be heard in conjunction with the Debtor’s previously filed motion for injunctive relief, which sought an order prohibiting the transfer or use of the Alpha Funds. (Adv. D.I. 41). The Bankruptcy Cout advised:
I want to make it absolutely clear to Mr. Morton that one of the possible remedies[ ] I am going to impose for the contempt is civil confinement if he doesn’t comply with the order[, a]nd I want to give him every opportunity to be heard on that before I impose that penalty.
(3/4/24 Tr. at 13). Camshaft’s counsel requested that the show cause hearing be scheduled after March 6, 2024, in order to comply with due process. ( Id. at 11:20-24). The Bankruptcy Court agreed and ordered Mr. Morton to “appear in person” for a show cause hearing on March 14, 2024. (Adv. D.I. 56). The Bankruptcy Court reiterated that it would “consider all possible sanctions against Camshaft and Mr. Morton, including placing Mr. Morton in civil confinement until he purges himself of such contempt.” ( .).
D. The Contempt Order
At 3:54 p.m. on the eve of the show cause hearing, Judge Dorsey’s chambers received an email from Camshaft’s counsel indicating that Mr. Morton “cannot attend in person” because he had “recently been hospitalized and thus remains overseas,” but that he wished to appear at the show cause hearing remotely via Zoom. Consistent with the Federal Rules of Civil Procedure, and Judge Dorsey’s chambers’ procedures which allow witnesses to testify remotely upon showing of good cause, [7] the Bankruptcy Court responded to the email and informed Camshaft’s counsel that in order to evaluate Mr. Morton’s request, it would need (1) some proof that he had actually been hospitalized, (2) clarification as to whether he intended to have his own counsel appear at the show cause hearing, and (3) clarification as to whether he intended to comply with the order to produce the requested discovery. Thirty minutes before the start of the show cause hearing, the Bankruptcy Court received a response from Camshaft’s counsel, informing the Court that (1) Mr. Morton had been discharged without providing any proof of his hospitalization, (2) Mr. Morton’s separate counsel would not appear at the show cause hearing, and (3) Mr. Morton did not intend to comply. (3/14/24 Tr. at 5:4-6 (“Camshaft’s counsel advised me that Mr. Morton was allegedly now released from the hospital, but . . . provided no proof”)).
At the March 14, 2024 hearing, Appellants did not present any evidence or argument to
justify their refusal to comply with the prior orders or to show that they would be unable to pay
fines. Appellants simply identified Camshaft’s interrogatory response: Mr. Morton said he did not
have the Alpha Funds
.
( . at 7:18-22). The Bankruptcy Court declined to credit Mr. Morton’s
statement given his “absolute contempt for the court.” (
Id.
at 7:23-8:2). The Bankruptcy Court
further found that “Camshaft’s brazen insistence on concealing the location and control of [the
Alpha Funds] strongly indicates that it retains some ownership and control over it”— controverting
Mr. Morton’s unsubstantiated statement that he lacked access to the Alpha Funds.
In re BJYU’s
Alpha, Inc.,
Having concluded that Appellants’ conduct satisfied the standard for contempt, id . at *4, the Bankruptcy Court issued a bench ruling holding both Camshaft and Mr. Morton in contempt. The Contempt Order imposed a daily fine of $10,000 on each of Camshaft and Mr. Morton until “Camshaft produces the information it was ordered to produce at the hearing on March 1, 2024,” and ordered Mr. Morton’s confinement. Id. at *4, n.38 (explaining Contempt Order). Because Mr. Morton remained at large, the Bankruptcy Court held “a chambers conference with the U.S. Marshals, debtor’s counsel, the U.S. Trustee’s counsel” to discuss “Mr. Morton and whatever information the debtor[] had about Mr. Morton and how to locate him.” (3/14/24 Tr. at 7:7-11).
The court also addressed Camshaft’s only due process objection—that the Contempt Order was entered without Mr. Morton’s presence—explaining that Mr. Morton had received more than sufficient process given his failure to appear or “provide an adequate excuse for why he could not be here.” ( Id . at 8:6-12). Camshaft’s counsel made no further objection. ( Id. at 8:13).
E. The PI Order
Following the issuance of the contempt documents, the Bankruptcy Court reconvened the hearing and heard argument and evidence on the Debtor’s motion for injunctive relief. Camshaft did not present any witnesses or evidence, nor did Camshaft examine any witnesses offered by the Debtor and Mr. Ravindran. Mr. Ravindran testified at the hearing remotely after he explained his overseas presence to the Bankruptcy Court, and the Bankruptcy Court found good cause. ( Id. at 14:1-15:11). Camshaft chose to only “make two quick points” ( id. 153:25-154:1), to which both the Debtor and GLAS responded. ( Id. at 164:8-168:4). Having found that the Debtor was likely to succeed on its claims and that it would suffer irreparable harm absent preliminary injunctive relief, the court granted that motion and issued “a freeze injunction preventing the transfer of the funds or the use of the funds, wherever they might be located . . . .” ( . at 171:8-14; 180-81).
The Bankruptcy Court subsequently entered the PI Order (Adv. D.I. 82, 84) memorializing its ruling, and later issued its Memorandum Opinion further explaining its ruling. In re BYJU’s Alpha, Inc., 2024 WL 1455586, at *5-*11. On March 19, 2024, Camshaft alone appealed the Contempt Order and the PI Order. An Amended Notice of Appeal, adding Mr. Morton as an appellant, was filed on March 28, 2024. (D.I. 3). On April 17, 2024, all Appellants appealed the Memorandum Opinion.
F. The Orders Denying Appellants’ Stay Motion
On March 27, 2024, Appellants moved in the Bankruptcy Court for a stay of the Contempt Order and PI Order pending the appeal. On April 9, 2024, the Bankruptcy Court denied Appellants’ stay motion, ruling that Appellants had failed to demonstrate any likelihood of success on appeal or irreparable harm absent the stay. (D.I. 13-2, Ex. 7 (“4/9/24 Tr.”) at 49:2-9).
On April 15, 2024, Appellants filed a motion for stay pending appeal in this Court. (D.I. 5). That motion was denied on July 18, 2024. (D.I. 26, 27). On July 22, 2024, the Court approved the parties’ stipulated briefing schedule on the merits. (D.I. 33). The appeals are fully briefed. (D.I. 35, 46, 50).
G. The June 11 Order
Following certain document production, in June 2024, Appellants filed a motion requesting that the Bankruptcy Court vacate the Contempt Order and remit any contempt fines that had accrued. (A7462-76). On June 11, 2024, the Bankruptcy Court held a hearing on the Appellants’ motion to vacate and remit as well as a motion for sanctions (in the form of a default judgment) filed by Appellees based on Camshaft’s noncompliance with discovery. The Bankruptcy Court denied the motion for sanctions, lifted the warrant for Mr. Morton’s arrest so he could return to the U.S. for a deposition, and paused the accrual of contempt fines pending Appellants’ turnover of certain native files. (A7978-79). The Bankruptcy Court denied, however, Appellants’ request to remit the contempt fines that had accrued as of June 11, 2024, rejecting Appellants’ argument that retaining the fines post-compliance would transform the Contempt Order into a criminal contempt order. ( See Adv. D.I. 258 (“6/11/24 Tr.”) at 72:20-73:9). The Bankruptcy Court further stated:
Again, given that Mr. Morton fled the country and refused to return, return to sit for his deposition, refused to produce the documents until the date of his choosing, I am not going to use any equitable power that I might have to remit those fines. The fines stand.
( . at 73:11-16).
II. JURISDICTION
A. The Contempt Order
The parties dispute whether the Contempt Order is a final, appealable order such that this
Court has jurisdiction over the appeal pursuant to 28 U.S.C. § 158(a). There is no dispute that
non-party Mr. Morton has the right to immediately appeal the Contempt Order. (D.I. 26 at 10). A
party to an action, on the other hand, lacks the right to appeal a civil contempt order “except in
connection with an appeal from a final judgment or decree.”
Fox v. Capital Co.
,
The purpose of this rule is to prevent “perpetual relitigation” and ensure “the finality of
judgments of both appellate and trial courts.”
Id.
at 637. It applies even if a non-party may have
an immediate right to appeal the same civil contempt order to which a party is also subject.
See
DeMasi v. Weiss
,
Camshaft is a party to the adversary proceeding in which the Contempt Order was entered
and therefore has “no immediate right to appeal” from the Bankruptcy Court’s order of civil
contempt.
DeMasi
,
As Camshaft lacks an immediate right to appeal from the Contempt Order, and leave to
appeal is unwarranted here, Camshaft’s appeal of the Contempt Order should be dismissed.
Additionally, Camshaft failed to obtain counsel and cannot proceed
pro se
with respect to the
consolidated appeal.
[8]
Finally, as set forth below, even assuming that Camshaft may appeal the
Contempt Order, Camshaft and Mr. Morton have together failed to demonstrate any abuse of
discretion, which Appellants concede is the applicable standard of review. (D.I. 5 at 11; D.I. 35
at 5).
See Victory v. Berks Cnty.
,
B. The PI Order
The Court has previously determined that it has jurisdiction over the appeal of the PI Order. (D.I. 26 at 10-12). For the reasons set forth below, Appellants waived their appeal of the PI Order.
III. ANALYSIS
A. Appellants Have Failed to Show that the Bankruptcy Court Abused Its Discretion in Issuing the Contempt Order
Section 105 of the Bankruptcy Code allows a bankruptcy court to “issue any order, process,
or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C.
§ 105(a). This equitable authority gives a bankruptcy court the discretion to hold individuals and
entities in civil contempt if they knew about and disobeyed “a valid order of [the] court.”
Roe v.
Operation Rescue
,
“consider the character and magnitude of the harm threatened by continued contumacy, and the probable effectiveness of any suggested sanction in bringing about the result desired.” . at 304.
To establish that a party is liable for civil contempt, it must be shown: (1) that a valid order
of the court existed; (2) that the defendant had knowledge of the order; and (3) that the defendant
disobeyed the order.
Marshak v. Treadwell,
1. Appellants Received Due Process Appellants argue that the Bankruptcy Court denied them due process when it would not allow Mr. Morton (the only witness for Camshaft) to appear by videoconference at the March 14 hearing:
The basis for the Bankruptcy Court’s rejection of Mr. Morton’s request to appear remotely was that Mr. Morton did not provide written proof of his recent hospitalization. The Bankruptcy Court, however, allowed Mr. Ravindran to appear remotely at the same hearing without requiring written proof establishing his unavailability under Rule 43(a) . . . There is no reason why Mr. Morton did not have the same opportunity, especially given that he faced the serious consequence of civil confinement.
(D.I. 35 at 15-16). At the March 1, 2024 hearing, the Bankruptcy Court instructed Camshaft and
Mr. Morton to “produce the information that has been requested . . . by the end of the day today.”
(A8609). The Bankruptcy Court warned that if the parties did not comply with the ordered
production, it would hold a hearing to determine why they should not be held in contempt. (A8609,
A8617). Three days later, at the promised hearing, Mr. Morton again refused to appear or to
explain his continued refusal to comply with the March 1 discovery order. (A8631). The
Bankruptcy Court repeated its warning that Camshaft and Mr. Morton would be held in contempt
if they refused to comply. (A8631). The Bankruptcy Court issued a show cause order explicitly
directing Mr. Morton to appear in person at yet another hearing on March 14 to show cause why
he should not be held in contempt, and it specifically identified fines and civil confinement as
potential contempt sanctions. (A2480-81, A8631). Appellants complain that these explicit
warnings of civil confinement reflect the Bankruptcy Court’s “improper[]” intention “all along to
subject to Mr. Morton to civil confinement.” (D.I. 35 at 25-26). To the contrary, they confirm
that the Bankruptcy Court provided the requisite “fair warning” before imposing civil contempt.
Roe
,
Despite his knowledge of the Bankruptcy Court’s valid order requiring him to produce documents, three warnings that he would be held in civil contempt if he did not produce the documents, and two different opportunities to appear before the Bankruptcy Court to explain his non-compliance, Mr. Morton nevertheless “refused” to appear on March 14 or comply with the discovery order. This Court agrees with Appellees that, given Mr. Morton’s refusal to comply with the Bankruptcy Court’s valid discovery order, and Camshaft’s refusal to direct its sole officer to comply, the Bankruptcy Court was well within its discretion to do exactly what it warned it would do: hold Camshaft and Mr. Morton in civil contempt.
Appellants do not challenge the Bankruptcy Court’s March 1 discovery order as invalid or
claim they did not have knowledge of the order. Rather, they argue they were deprived of due
process because the Bankruptcy Court “entered the Contempt Order without Mr. Morton’s
participation.” (D.I. 35 at 18). The Bankruptcy Court held three separate hearings on the required
production—on March 1, 4, and 14—before holding them in contempt. Camshaft attended all
three of those hearings and was heard, and Mr. Morton does not dispute that he had the ability to
attend at least two of those hearings. Those opportunities alone satisfy due process.
See Hayes v.
Cape Henlopen Sch. Dist.
,
Ignoring Camshaft’s appearance at all three hearings and Mr. Morton’s undisputed ability
to attend at least two of the hearings, Appellants hang their due process hat on the Bankruptcy
Court refusal to permit Mr. Morton to attend the March 14 hearing remotely. (
See
D.I. 35 at 19).
Appellants cite no authority, however, for their proposition that a court abuses its discretion or
deprives a party of due process by enforcing its own rule prohibiting remote appearances absent a
showing of good cause. Rather, “live testimony in open court is a deeply entrenched default that
will only be excused when three factors are met—good cause, compelling circumstances, and
appropriate safeguards.”
J.D. v. Price
,
Appellants note that other courts have allowed parties to “establish unavailability through
statements by counsel.” (D.I. 35 at 19-20). But Appellants have not shown that the circumstances
in those cases were similar to those here (including Mr. Morton’s repeated refusal to comply with
court orders). Appellants’ cited cases demonstrate that the decision “to accept or reject counsel’s
representations” always falls “within the discretion of the trial court.”
Castilleja v. Southern Pac.
Co.
,
Appellants further suggest that the Bankruptcy Court failed to give Mr. Morton an “opportunity” to excuse his in-person appearance for good cause. (D.I. 35 at 20). After first learning of Mr. Morton’s intended absence at 3:54 p.m. the day before the March 14 hearing, the Bankruptcy Court requested (1) proof that Mr. Morton had been “hospitalized,” (2) clarification as to whether he intended to have his own counsel appear at the hearing, and (3) clarification as to whether he intended to comply with the underlying discovery order. (A4751-52; 3/14/24 Tr at 4). Neither Camshaft nor Mr. Morton provided any of the requested information until thirty minutes before the hearing was scheduled to start. (A4752; 3/14/24 Tr. at 4-5). Moreover, the limited answers provided were not reassuring: Mr. Morton’s counsel stated that he would not appear at the hearing and that Mr. Morton did not intend to comply with the court’s discovery order. (A4752; 3/14/24 Tr. at 5).
In their opening brief, Appellants assert, without citation to the record, that, long after the hearing, they “provided documentation to the Debtor and GLAS showing that Mr. Morton was in fact hospitalized just before the March 14 Hearing.” (D.I. 35 at 12). In their reply, Appellants explain that the evidence of the hospitalization was provided in response to discovery requests. ( See D.I. 50 at 8 (citing Adv. D.I. 302, Ex. BB at 6-7, and Ex. CC at 19). Appellants’ cite is to a sealed declaration on the docket of the adversary proceeding that was neither designated as part of the record ( see D.I. 4) nor made available to the Court anywhere in the appendix ( see D.I. 36-41). Regardless of whether the Bankruptcy Court might have deemed such “documentation” sufficient to justify remote testimony, this information was not provided at the time the Bankruptcy Court requested it. The Bankruptcy Court did not abuse its discretion in declining to permit remote testimony when it was provided with no evidence warranting a departure from its own practice, the federal rules, and established case law.
This Court further rejects Appellants’ argument that the “disparate” treatment of Mr. Ravindran and Mr. Morton violates due process. The show-cause hearing was specifically directed at Mr. Morton, not Mr. Ravindran, who, unlike Mr. Morton, had not been ordered to attend the hearing in person and was not facing civil contempt for repeated defiance of a court order. Moreover, unlike Mr. Morton, Mr. Ravindran established a factual basis justifying his request to appear remotely—he lived in Dubai and was currently caring for his parents in Dubai, who were undergoing cancer treatment and suffered from dementia. (3/14/24 Tr. at 14). The Bankruptcy Court was well within its discretion in determining that Mr. Morton and Mr. Ravindran were differently situated warranting differed rulings as to their appearance at the March 14 hearing.
2. The Contempt Order Is Supported by the Record
Appellants further challenge the Contempt Order on the bases that “the Bankruptcy Court
did not hold any sort of evidentiary hearing” and “did not make the requisite factual findings at
the Contempt Hearing, including the critical determination as to whether the Camshaft Parties had
the ability to pay the contempt fines imposed.” (D.I. 35 at 22). The show cause hearing
was
the
evidentiary hearing—Mr. Morton simply chose not to appear despite being ordered to do so, and
Appellants chose not to present any evidence to carry their burden “to show that [they had] made
‘in good faith all reasonable efforts to comply’” with the Bankruptcy Court’s order.
Harris
,
Moreover, it was Appellants’ burden to “produc[e] evidence of [their financial] inability to
comply with the sanctions order.”
Egnotovich v. Greenfield Twp. Sewer Auth.
,
3. The Sanctions Imposed Were Appropriate
The Bankruptcy Court’s Memorandum Opinion explained that “both monetary sanctions
and civil confinement are the least coercive sanctions available” given “Mr. Morton’s refusal to
appear at the show-cause hearing, his failure to provide any proof of his hospitalization, and his
outright refusal to provide the information he was ordered to produce.”
In re BYJU’s Alpha, Inc.,
The Bankruptcy Court had “wide discretion” in imposing sanctions for civil contempt,
Robin Woods Inc. v. Woods
,
Indeed, as Appellees correctly point out, the smaller fines that were imposed in the cases
cited by Appellants arose in smaller matters with substantially fewer assets at stake.
See Ninaltowski v. Moore
,
This Court agrees that a fine that is “twenty times higher” than the fines imposed in those cases is appropriate considering that the amount in controversy in this case (over $533 million) is well over twenty times higher than the amounts at issue in those cases, and Appellant repeatedly refused to comply with a critical discovery order intended to reveal the location of the missing $533 million. Moreover, although Appellants shrug (D.I. 35 at 16) at the “allegedly time-sensitive nature” of the requested discovery, they ignore the Bankruptcy Court’s stated concerns about the location of the Alpha Funds. (A8574). As the Bankruptcy Court explained when it chose to “expedite the discovery in this case,” Appellants “apparently transferred $533 million to a hedge fund operating out of an IHOP in [Florida], and then that money all of a sudden disappears and nobody wants to tell me where it is.” (A8540-A8580 (“2/16/24 Tr.”) at 35). The Bankruptcy Court properly exercised its discretion in determining that a $20,000 daily fine was necessary to ensure compliance with its lawful order to disclose the location of the missing funds.
B. Appellants Have Waived Their Appeal of the PI Order Mr. Ravindran separately appealed the Contempt Order and PI Order. ( See Civ. No. 24- 389-MN, D.I. 1; Civ. No. 24-492-MN, D.I. 1). Despite several extensions, Mr. Ravindran did not comply with the deadline to file his opening brief. Accordingly, his appeals were dismissed on December 5, 2024. ( See D.I. 57). Appellants indicated in their briefs that they are “no longer raising any separate issues relating to the March 14, 2024 [PI Order] and instead will join in any arguments made by Mr. Ravindran in his appeal with respect to the PI Order.” (D.I. 35 at 4-5). According to Appellants, they have “not abandoned” their appeal of the PI Order; rather the “filing of an appeal would allow Camshaft to be the beneficiary of a reversal of the PI Order based on arguments made by Mr. Ravindran.” (D.I. 50 at 18). As Mr. Ravindran failed to file an opening brief, and thus made no arguments with respect to the PI Order, Appellants have waived their appeal of the PI Order.
C. This Court Lacks Jurisdiction Over Any Challenge to the June 11 Order Appellants challenge the Bankruptcy Court’s refusal in the June 11 Order to remit the contempt fines after they began to comply with the discovery order. The June 11 Order is not properly before this Court, however, because neither Camshaft nor Mr. Morton appealed that order. Camshaft filed a notice of appeal of the Contempt Order and the Preliminary Injunction on March 20, 2024. Camshaft filed an amended notice of appeal on March 28, 2024, that included Mr. Morton. Neither party filed a notice of appeal following the Bankruptcy Court’s June 11 Order, and the time to do so has long since passed. See Fed. R. Bankr. P. 8002(a); Fed. R. App. P. 4(a)(1)(A). This Court therefore lacks jurisdiction to review the June 11 Order.
Notwithstanding, Appellants argue that this Court may still consider their arguments as to
the June 11 Order. Appellants assert (D.I. 35 at 3) that this Court has jurisdiction over the June 11
Order because their March 19 notice of appeal “states that it is from ‘any and all orders, judgments,
decrees, decisions, rulings, and opinions that may subsequently be entered regarding the Contempt
Order.” (D.I. 1). This Court lacks jurisdiction over “premature” appeals, just as it lacks
jurisdiction over appeals that are untimely.
Marshall v. Comm’r Pa. Dep’t of Corrs.
,
A notice of appeal is “premature” if, at the time it is filed, the court has “not yet issued or
announced its decision” on the motion in question.
Marshall,
Appellants further contend that the June 11 Order is appealable because it is “inextricably linked to the Contempt Order” that is the subject of their appeal. (D.I. 35 at 3). Appellants cite no authority for such a rule. Although appellate review of an injunction generally “extends to all matters inextricably bound up with th[at] decision,” Wright & Miller, 16 F ED . P RAC . & P ROC . J URIS . § 3921.1 (3d ed.), the same is not true of a contempt order, which is the only order the Appellants have chosen to address in this appeal.
IV. CONCLUSION
As Camshaft lacks an immediate right to appeal from the Contempt Order, and leave to appeal is unwarranted, Camshaft’s appeal of the Contempt Order must be dismissed. Even assuming that Camshaft, like Mr. Morton, had an immediate right to appeal the Contempt Order, Appellants have together failed to demonstrate any abuse of discretion, so the Contempt Order will be affirmed. Appellants have further waived their appeal of the PI Order. Having ruled on the merits, the Motion to Dismiss the consolidated appeal for failure to obtain counsel is moot and will therefore be denied. An appropriate order follows.
Notes
[1] The docket of the Chapter 11 case, captioned In re BJYU’s Alpha, Inc ., Case No. 24-10140 (JTD) (Bankr. D. Del.) is cited herein as “Bankr. D.I. __,” and the docket of the adversary proceeding, captioned BYJU’s Alpha, Inc. v. Camshaft Capital Fund, LP, et al., Adv. No. 24-50013 (JTD), is cited herein as “Adv. D.I. __.” The appendix filed in support of Appellants’ opening brief (D.I. 36-41) is cited herein as “A__.”
[2] Appellants’ opening brief raises no argument as to whether (or how) the Memorandum Opinion “alters or supplants, rather than supplements or clarifies” the Contempt Order.
[3] Unless otherwise indicated, the docket of the consolidated appeal, Civ. No. 24-358-MN, is cited as “D.I. __.”
[4]
See In re BYJU’s Alpha, Inc
.,
[5] For example, the address for Camshaft’s principal place of business, supplied by Camshaft
to the SEC, is actually the address of an IHOP located in Miami, Florida. Camshaft
eventually provided an additional address, which points to a sparsely furnished room that
shows no sign of regular activity.
In re BYJU’s Alpha, Inc
.,
[6] Subsequent litigation in the Delaware Court of Chancery affirmed Pohl’s appointment. See Final Order and Judgment, Glas Trust Co. LLC v. Ravindran , C.A. No. 2023-0488 (Del. Ch. 2023).
[7] See Chambers Procedures for Judge John T. Dorsey (revised Jan. 11, 2024), https://www.deb.uscourts.gov/judge-john-t-dorsey (“The remote attendance of live witnesses is permitted only upon a showing of good cause and in compelling circumstances. See Fed. R. Civ. P. 43(a).”); Fed. R. Civ. P. 43(a) (“For good cause in compelling circumstances and with appropriate safeguards, the court may permit testimony in open court by contemporaneous transmission from a different location.”).
[8] On July 19, 2024, the Camshaft’s then-attorneys, Pieter Van Tol, Christopher R. Bryant,
and Elizabeth Carter of Hogan Lovells US LLP moved to withdraw from this matter based
on an irreparable “breakdown in the[ir] relationship,” and noting that continued
representation would impose a financial burden on the firm. (D.I. 30 at 4-5). Camshaft
“indicated that [it] d[id] not consent to the termination of the representation.” (
Id.
at 4).
Nevertheless, Camshaft never filed an opposition to Hogan Lovells’ withdrawal motion.
On October 10, 2024, this Court granted counsel’s motion to withdraw. (D.I. 52).
As this Court has recognized, “[i]t has been the law for the better part of two
centuries . . . that a corporation may appear in the federal courts only through licensed
counsel,” and “that rule applies equally to all artificial entities.”
Van de Berg v. Comm’r
,