Homestead Holdings, Inc. v. Wellington (In Re PTI Holding Corp.)Homestead Holdings, Inc. v. Wellington (In Re PTI Holding Corp.)
Amended Opinion on Motion for Preliminary Injunction
I. Introduction
In 2004, brothers Steven and David Greenstein acquired control of Homestead Holdings, Inc., the debtor and debtor in possession in this case. As part of that acquisition, Homestead bought assets from the defendant, Broome & Wellington. The Greensteins guaranteed the deferred portion of the price paid for the assets.
Soon after Homestead filed its chapter 11 case in March 2006, Broome and Wellington filed a proof of claim in an amount just slightly in excess of $7 million in Homestead’s ease. Shortly after that, it sent a letter to the Greensteins indicating that it would fairly immediately file suit on all guaranties and would, as the acquisition documents provide, file that lawsuit in England. 1
Homestead then filed this adversary proceeding objecting to the proof of claim, and asserting various counterclaims. In addition, Homestead sought a preliminary injunction against Broome & Wellington’s prosecution of any action on the guaranties. This request was based on two grounds: first, that the full attention of Steven and David Greenstein, as Homestead’s chief operations officer and chief executive officer, respectively, is necessary to Homestead’s reorganization; and, second, that prior determination of the guaranty claim in England would have adverse consequence on the determination of the proof of claim in this court. The requested injunction covers not only Steven and David Greenstein, but a company liable on the debt to Broome & Wellington, Greenco Enterprises Co., Inc., in which the Green-steins have significant ownership interests. The Greenstein brothers and Greenco are not debtors in this case.
The court will grant the preliminary injunction, but on fairly restrictive terms, which are more particularly detailed later and in a separate order.
II. Facts
In support of its motion, Homestead filed Steven Greenstein’s declaration before the hearing and called both brothers and Marvin Toland, Homestead’s chief financial officer, as witnesses. Broome & Wellington filed no declarations and called no witnesses. At closing arguments, the Official Committee of General Unsecured Creditors supported the request for an injunction (albeit one limited to a 60-day duration), and the major secured creditors concurred with that support.
A. Facts Related to the Acquisition of Homestead
Steven and David Greenstein acquired Homestead in late 2004 through a series of transactions in which they also acquired the assets of London Fog Industries. Essentially, before the transactions, the brothers were co-owners with Broome
&
Wellington of Homestead Fabrics, Ltd. Their shares were split 35%/65%, with a corporation controlled by Steven and
Under the acquisition agreement, Steven and David Greenstein guaranteed Greenco’s obligations to pay the purchase price, as well as all of Greenco’s other obligations. The guaranty is absolute (that is, it is not a guaranty of collection first requiring exhaustion of remedies against Greenco or its designee), and is governed by English law. As with the acquisition agreement, the guaranty is subject to an English choice of forum clause.
Greenco was initially set up as Homestead’s parent, with negligible assets. As part of the acquisition by which Steven and David Greenstein acquired control of the London Fog brand, Greenco exchanged its shares in Homestead for an approximately 60% stake in a new holding company, London Fog Group. In addition, as part of these transactions, Homestead made Greenco its permitted designee under the Fabrics’ acquisition agreement. Homestead then assumed all of Steven and David Greenstein’s and Greenco’s obligations under that agreement.
After these transactions, the brothers were the majority owners in London Fog Group and thus controlled Homestead, which became a wholly owned subsidiary of London Fog Group. Homestead controlled the textile business formerly run by Fabrics. Fabrics, along with Broome & Wellington, wound up with a debt owed by Greenco, which the Greensteins guaranteed and Homestead assumed.
Shortly after Homestead, as well as the other members of the London Fog Group, filed chapter 11 in March 2006, Broome & Wellington (but not Fabrics) filed a proof of claim in Homestead’s case indicating that the acquisition debt still owed was $7,018,710. One week after that proof of claim was filed, Broome & Wellington’s solicitors sent a letter to the Greensteins and Greenco indicating that Broome & Wellington would begin legal action in England within a week if the Greensteins and Greenco did not satisfy the outstanding obligations under the guaranty by that time. Soon thereafter, Homestead filed this adversary proceeding. The court held the initial hearing and took testimony on June 13, 2006; closing arguments were made on June 30, 2006.
B. Facts Related to the Effect on the Greensteins’ Time
In both the initial declaration and the testimony, it is obvious that Steven and David Greenstein spend most of their waking hours working to reorganize the London Fog Group and Homestead. In the words of Mr. Toland, they are “classic workaholics,” who are just as likely to send an email to co-workers at 2 a.m. as at 2 p.m.
2
By way of responsibilities, David Greenstein develops Homestead’s products and sells them to customers, and Steven Greenstein buys the goods that they sell. Although sibling rivalry exists, the brothers convey the impression that they work together well, and respect each other’s talents and contributions. Ultimately, all operational responsibility runs through them;
Homestead itself has annual revenues of about $60 million, and is, according to David Greenstein, marginally profitable. It is growing at present, and currently has combined receivables and inventory of approximately $23 million. Steven Green-stein testified that Homestead currently has approximately 56 open orders, which covered more than a half million “units,” or individual items.
Both brothers testified that spending any substantial time defending a lawsuit in England would have an adverse impact on Homestead. Steven Greenstein testified that if his personal involvement caused him to spend more time in England than planned, Homestead could miss delivery dates and lose orders and customers. Both brothers introduced their personal calendars for the next several months, which showed solid booking of business events and necessary international travel. In addition, most, if not all, of the personal wealth of the Greensteins is tied up in London Fog Group; if it or its constituent parts cannot reorganize, their testimony is that they have no way to respond or pay any judgment Broome & Wellington might obtain.
The testimony regarding Greenco revealed a less hectic schedule, but as Green-co is a holding company, that is to be expected. David Greenstein testified that he and his brother own about 75% to 80% of Greenco along with five other minority shareholders. David Greenstein also testified that he understood that Greenco’s debt to Broome & Wellington was the same as Homestead’s, and that if Greenco were sued in England, he believed that Homestead would have to assist in the defense, since any adverse rulings in England might adversely affect the resolution of the proof of claim here. He also testified that if he or his brother were sued on their guaranty, Homestead would practically be compelled to defend, again given the possible effects on the proof-of-claim proceeding in this court.
C. The Dispute
Homestead stridently disputes Broome & Wellington’s $7 million proof of claim. Indeed, it believes that instead of its owing money to Broome & Wellington, Broome & Wellington may owe Homestead up to $1.5 million. At the hearing, Homestead presented the barest of outlines of this dispute, and that outline was of a potentially long and complicated lawsuit. Broome
&
Wellington stands, and stands firmly, on the sanctity of their contract. It bargained for the right to sue the Greenstein brothers and Greenco separately and in England, and they contend it would be unjust to enjoin them from doing so. Although depriving them of that right, however momentarily, is a detriment, they have not shown any other specific prejudice if they are precluded from pursuing the guaranty litigation in England.
4
That is, they have not shown that any statute of
III. Legal Analysis
Against this background, Homestead seeks to enjoin Broome & Wellington from filing and prosecuting a complaint in England against the Greensteins and Greenco. Applicable legal precedent supports their position.
A. Applicable Standard for an Injunction Under Section 105 Against Preconfirmation Prosecution of Actions Against Nondebtors
In the Ninth Circuit, “ ‘[t]he standard for granting a preliminary injunction balances the plaintiffs likelihood of success against the relative hardship to the parties.’ ”
Ranchers Cattlemen Action Legal Fund United Stockgrowers of America v. Dep’t of Agriculture,
Against this standard, the Ninth Circuit has recognized two sets of criteria that can be used to test the appropriate balance.
The first is a traditional test, under which “a plaintiff must show ‘(1) a strong likelihood of success on the merits, (2) the possibility of irreparable injury to plaintiff if preliminary relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) advancement of the public interest (in certain cases).’ ”
Ranchers Cattlemen,
The second test requires a plaintiff to show
“either
a combination of probable success on the merits and the possibility of irreparable injury
or
that serious questions are raised and the balance of hardships tips sharply in his favor.”
Ranchers Cattlemen,
The Ninth Circuit has repeatedly stressed that “ ‘[tjhese two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases. They are not separate tests, but rather outer reaches of a single continuum.’ ”
Ranchers Cattlemen,
Other sets of criteria apparently also meet the Ninth Circuit’s continuum test. With respect to a request for a preliminary injunction seeking to uphold and enforce a prior order of the bankruptcy court, the Ninth Circuit has indicated that “our usual preliminary injunction standard does not apply to injunctions issued by the bankruptcy court pursuant to 11 U.S.C. § 105.”
Beck v. Fort James Corp (In re Crown Vantage, Inc.),
In support of this statement, the Ninth Circuit cited to the Seventh Circuit’s decision in
In re L & S Industries, Inc.,
[I]n order to issue a preliminary injunction, a court sitting in bankruptcy need not meet all three requirements outlined above [that is, lack of an adequate remedy at law, irreparable harm and a likelihood of success on the merits]. The Bankruptcy Act provides the court with broad equitable powers to preserve its own jurisdiction.... Accordingly, a bankruptcy court can enjoin proceedings in other courts when it is satisfied that such proceedings would defeat or impair its jurisdiction over the case before it. In other words, the court does not need to demonstrate an inadequate remedy at law or irreparable harm.
Id. at 932.
These decisions concerned existing orders. Here, however, the plaintiffs seek to enjoin Broome & Wellington in order to protect orders of this court yet to be entered. As a matter of jurisdiction and power, this court has the ability to enter such an order; there is little or no doubt that some actions against nondebtors could “defeat or impair” this court’s jurisdiction,
In re L & S Industries,
But whether this court should exercise this power is a different question. Given the uncertainty of the connection between the actions sought to be enjoined and future orders of this court, a somewhat higher showing is required than simply adducing evidence that the remedy sought merely “conform[s] to the objectives of the Bankruptcy Code.” 5 The English litigation’s effects on this court’s jurisdiction over the proof of claim and on the debtor’s executives are speculative, future events, while the entry of an injunction against prosecution is decidedly present and concrete.
To take into account the balancing required by Ranchers Cattlemen, this court adopts a modified version of the traditional standard for preliminary in-junctive relief, first stated more than twenty years ago:
The first requirement is that there be the danger of imminent, irreparable harm to the estate or the debtor’s ability to reorganize. Second, there must be a reasonable likelihood of a successful reorganization. Third, the court must balance the relative harm as between the debtor and the creditor who would be restrained. Fourth, the court must consider the public interest; this requires a balancing of the public interest in successful bankruptcy reorganizations with other competing societal interests.
In re Monroe Well Serv., Inc.,
the most important element will be the balancing of harms. In this regard, the bankruptcy court, as a court of equity, has almost plenary discretion in fashioning the injunction so as to maximize protection and minimize prejudice. The court can condition the continuing effectiveness of the injunction on continued positive progress in the case, can require security to ensure a lack of harm to the creditor, or can require the protected individual to agree to restriction on the transfer of his or her assets.
2 Collier on Bankruptcy, supra, at ¶ 105.02[2],
B. Monroe Well Service Factors
Homestead has the burden of establishing the various
Monroe Well Service
factors by a preponderance of the evidence.
Chase Manhattan Bank v. Third Eighty-Ninth Assocs. (In re Third Eighty-Ninth Assocs.),
1. Irreparable Harm to the Estate or the Debtor’s Ability to Reorganize
Homestead must first establish an impact on the estate; or in the words of
Monroe Well Service,
whether there is a “danger of imminent, irreparable harm to the estate or the debtor’s ability to reorganize.”
Monroe Well Service,
a. Overburdening the Greensteins
The testimony is uncontradicted that Steven and David Greenstein are each necessary to any successful reorganization of Homestead. It is also uncontradicted that diversion of the brothers’ time would harm Homestead by depriving it of key players at a time that their services would be necessary in formulating a plan of reorganization, or in promoting or otherwise furthering Homestead’s business.
Whether one sets the percentage of their time at 70% (once the sale of the London Fog trademarks are completed) or 100% (currently), the Greensteins are integral parts of the debtor’s reorganization efforts. Any material diversion of their time or energies would result in a loss to the estate. In such cases, courts have easily found that the loss of such key participants at a crucial period in the operational life and reorganization of the debt- or may constitute irreparable harm to the estate and to the reorganization effort.
See e.g., In re M.J.H. Leasing, Inc.,
b. Adverse Effect on Resolution of Claim
Homestead also argues that litigation in England would adversely affect the resolution of Broome & Wellington’s proof of claim here. That effect is both legal and practical. It is legal in that some application of claim preclusion (since the claim against Greenco is the claim Homestead assumed) or issue preclusion (since the Greensteins’ guaranty is of the assumed debt).
See, e.g., Adelphia Comm. Corp. v. Associated Elec. & Gas Ins. Serv., Ltd. (In re Adelphia Comm. Corp.),
The legal analysis brings into direct issue this court’s ability to equitably distribute a debtor’s assets.
See Stellwagen v. Clum,
But that is more a point about balancing harms than irreparable harm to the estate
This issue becomes murkier because the court assumes that under principles of comity, this court would initially look to the issue and claim preclusive effect that English courts would give to any judgment obtained against the Greensteins or Green-co with respect to assessing that foreign judgment’s effect on the proof of claim process.
See, e.g., Hilton v. Guyot,
But the extension of such principles of comity is, in some sense, discretionary. As one bankruptcy court stated the issue recently:
[I]t must be recognized that neither the United States Constitution nor any statute of the United States requires federal courts to give full faith and credit to the judgments of foreign nations. Aetna Life Ins. Co. v. Tremblay,223 U.S. 185 [,32 S.Ct. 309 ,56 L.Ed. 398 ] (1912). However, under the principles of international comity, United States federal courts generally will under some circumstances give effect to judicial acts of courts in foreign nations. See Remington Rand Corporation-Delaware v. Business Systems, Inc.,830 F.2d 1260 (3d Cir.1987), and Philips Medical Systems Int’l B.V. v. Bruetman, 8 F.3d 600 (7th Cir.1993).
The Supreme Court opinion in Hilton v. Guyot provides the guiding principles. Comity is defined as “the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.” Hilton v. Guyot,159 U.S. 113 , 163-64[,16 S.Ct. 139 ,40 L.Ed. 95 ] (1895). Comity “is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.” Id.
Herbstein v. Bruetman (In re Bruetman),
In a manner similar to the comity analysis, this court has the power under domestic law to control the application of claim or issue preclusion. See Restatement (Second) Judgments § 26(1)(1982) (court in first action may make exception for claim preclusive effect in second action); § 29 (similar discretion with respect to issue preclusion). Courts retain significant ability to vary from guidelines and principles to achieve fairness and justice; claim and issue preclusion are not ossified precepts and inflexible rules. Id. § 26, com. i; § 29, com. j; Klein, Ponoroff & Borrey, supra (issue preclusion).
In the present setting, for example, this court need not sit idly by and allow another court to make findings and judgments that would impair this court’s jurisdiction. It could easily order that the English proceedings have no effect on the resolution of the proof of claim, in essence holding, in advance since the proof of claim was first filed, that claim and issue preclusion principles from any English proceeding will not apply to the proof of claim resolution. Id.
Such a finding would protect and preserve this court’s jurisdiction over the proof of claim, and thus minimize any claimed harm from the preclusive effects of the foreign litigation. But it would not assist Homestead; it would only alleviate the demands such litigation would exact from the Greensteins and Greenco. Merely restricting the scope of issue and claim preclusion blinks the practical effect of allowing an English proceeding to be filed. This court is convinced from the testimony that any resolution of the amounts owed under the Fabrics acquisition agreement will be long, protracted and, to use a technical term, messy. The Greenstein brothers’ time will be consumed in a dispute that, from Homestead’s legitimate and reasonable point of view, is better resolved after a plan of reorganization is conceived if not confirmed. The loss of the time and talents of the Greensteins would bring about irreparable harm to Homestead.
2. Reasonable Likelihood of a Successful Reorganization
Little evidence was introduced regarding Homestead’s reorganization efforts. On this point,
Monroe Well Service
requires that “there must be a reasonable likelihood of a successful reorganization.” Here, the thrust of the evidence was that if Homestead were to reorganize, the full attention of Steven and David Greenstein would be necessary. Unfortunately, this evidence does not help establish this prong of the analysis. But the court can take
In addition, Homestead is a company that is marginally profitable, and substantial. It is a good candidate for reorganization. With such ingredients-an aggressive, proactive history while in bankruptcy, and a debtor with a potentially profitable operating business-Homestead should be given some time to develop a successful plan.
3. Balancing Harms
The evidence relevant to the first two elements of
Monroe Well Service
focus on the estate. But those interests must be balanced against the harms to the interests of the entities sought to be enjoined. Here, Broome & Wellington has an important interest that would be adversely affected by an injunction: the enforcement of bargained-for rights.
J.C. Penney Co., Inc. v. Giant Eagle, Inc.,
Monroe Well Service states this element as follows: “[T]he court must balance the relative harm as between the debtor and the creditor who would be restrained.” As phrased, however, it is clear that this element overtly and consciously acknowledges that each party to the litigation has rights to be considered, and overly and consciously attempts to determine which of those rights is paramount. The court starts by noting that the relationship between the amount of Broome & Wellington’s claim-approximately $7 million-and Homestead’s operating assets and revenues-approximately $23 and $60 million, respectively-means that resolution of Broome & Wellington’s proof of claim will have to be part of any reorganization strategy. Given that Broome & Wellington has submitted that proof of claim in this case, it is important that this court control the determination of the claim as part of its equitable adjustment of the claims of all creditors. As a result, some form of staying the English litigation would promote and enhance the prospect of a successful reorganization. Or, put negatively, if the English litigation proceeds unabated, the chances of a successful reorganization here are lessened.
Moreover, it was uncontradicted that the collective wealth of the Greenstein brothers and Greenco is tied up in London Fog Group and Homestead. Even if Broome & Wellington obtained a judgment in England, there would be nothing against which it could look for payment. Indeed, Broome & Wellington’s collection success
As a result, the required balancing tips in favor of Homestead. It needs and requires the undistracted attention of the Greenstein brothers more than Broome & Wellington needs to immediately file its lawsuit. Any stay, however, need not, and indeed should not, be permanent. A short stay to allow Homestead to get its reorganization on track gives significant benefits to Homestead while not materially prejudicing Broome & Wellington.
4. Public Interest
When exercising the formidable power to issue injunctions, a court must always consider the public interest. Here, an injunction raises several public interest issues: the interest in successful reorganizations, the interest in international comity, and the interest in protecting the claims resolution process.
The public interest in successful reorganizations is significant.
Rehab-Works, Inc. v. Lee (In re Integrated Health Serv., Inc.),
But an injunction also adversely affects freedom of contract and, derivatively, international comity. At issue here is an injunction against enforcement of a contract governed by English law, which contains an English forum selection clause. Upholding any contract is an important public interest,
see, e.g., J.C. Penney Co.,
The core concerns of these interests, however, are preserved if the court limits the duration of any injunction it enters, and ensures that Broome & Wellington is not prejudiced by any delay. A limited duration injunction simply postpones the vindication of the rights granted under the acquisition agreement. It does not destroy them.
Finally, not only is there a public interest in reorganization, but there is also an interest in the swift and just resolution of claims against bankruptcy debtors.
See Wolinsky v. Maynard (In re Maynard),
C. Analysis
Both sides have aptly pointed to
Chase Manhattan Bank v. Third Eighty-Ninth Associates (In re Third Eighty-Ninth As
sociates),
The bankruptcy judge granted the injunction on the basis that the guarantors were each essential to the reorganization and had collectively offered conditional funding of the plan of reorganization. The injunction, however, was limited in time to the first four months of the case. Id. at 146.
On appeal, the district court upheld one of the injunctions, and reversed the bankruptcy court on the others. The injunction as to Thomas LaSala was upheld since the debtor produced evidence that supported a finding that he was “responsible for collecting rent and common charges, paying bills, making repairs, assuring that the building is rented to its highest capacity, conducting tenant relations, supervising building staff and acting as liaison with the board of the Monarch.” Id. at 148. He spent “up to” 50% of his time on these activities and in “managing the debtor.” Id. While the district court noted that “the ‘key’ nature of Thomas’ role in the Debt- or’s business and reorganization may not have been established to the degree” discussed in other cases, “it was not clearly erroneous to conclude that the estate would be adversely affected if deprived of his services.” Id. This, the court added, was a sufficient basis to find that the estate would suffer irreparable harm if Thomas continued to defend the lawsuit. Id. at 148 n. 2.
The district court reversed as to Sopher and Kenneth LaSala. Unlike the case with Thomas, there was no documentary or direct testimonial evidence on Kenneth’s level of participation in the debtor’s business or reorganizational efforts. Without credible and direct evidence as to Kenneth LaSala’s personal involvement, the district court found no basis for the injunction. Id. at 148.
Although the court found that Sopher would be “impaired” by continuing to defend the Chase guaranty action, it then found that the relevant party-the estate-would not. Sopher’s primary contribution was setting policy, and the district court found no evidence in the record that continuing defense of the lawsuit would impair Sopher’s contributions to the debtor in this regard. Id.
Third Eighty-Ninth Associates
thus demonstrates each of the elements in a guarantor stay under 11 U.S.C. § 105(a). The district court correctly matched the
In this case, when the appropriate balancing is done, Homestead has made out a sufficient case for a limited injunction. As in Third Eighty-Ninth Associates, diverting key personnel-here Steven and David Greenstein-would irreparably harm Homestead’s reorganization process. Although Homestead has not shown that a successful reorganization is likely, it has shown that it is a likely candidate for such a reorganization, and that it has taken significant steps to achieve such a reorganization. Against this, Broome & Wellington has insisted on its important and indisputable contract rights, but it has not shown any real prejudice from any delay in filing an English proceeding. While the public interest in the sanctity of contract and the respect due to foreign proceedings is high, it is counterbalanced by the local interest in reorganization and the speedy resolution of claims. Again, as in Third Eighty-Ninth Associates, a limited duration for the injunction preserves the principle benefits of these rights for Broome & Wellington while allowing Homestead to reorganize.
As a result, an injunction is appropriate, but only on terms that balance the interests listed above.
D. Terms of the Injunction
Based upon the factors and analysis above, this court will issue an injunction that will expire on the effective date of any plan confirmed in Homestead’s case or on December 31, 2006, whichever comes first. While the injunction is in effect, the Green-stein brothers and Greenco may not transfer any of their assets except in the ordinary course of business (as, as applicable, in the ordinary course of their personal affairs) without prior written notice to (or prior written consent of) Broome & Wellington and after court approval with prior written consent of Broome & Wellington. In addition, to the extent that any limitations or other similar period may run or expire between or among the parties during the pendency of the injunction, that limitation or other period shall be extended.
IY. Conclusion
Injunctions are not lightly granted, and the benefits of bankruptcy are not casually extended to nondebtors. Here, however, Homestead has shown that diversion of its two key executives, David and Steven Greenstein, would cause irreparable harm to Homestead’s business and to its reorganization prospects, and that pursuit by Broome & Wellington of its guaranties of Steven and David Greenstein and Greenco would cause such a diversion. In addition, the harm to Broome & Wellington, by losing its unfettered right to pursue its guaranties, is less concrete, and can be ameliorated by an appropriately crafted injunction. When all the evidence is surveyed, Homestead has thus met the standard for obtaining a preliminary injunction.
This opinion constitutes the court’s findings of facts and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052, and constitutes the separate reasons for entering an injunction in accordance with Federal Rule of Bankruptcy Procedure 7065. An order
Notes
. Broome & Wellington also accepted a position on the Official Committee of General Unsecured Creditors.
. David Greenstein testified that his current work responsibilities occupy "most of the day that I’m awake. And I’m an insomniac."
. In response to questions about how much of their time would be necessary in the business, the response was that 100% of the brothers’ time would be necessary until some planned asset sales in August, and thereafter perhaps 70% of their time would be required to run the debtor.
. At closing arguments, Broome & Wellington's counsel alluded to possible prejudice with respect to other parties. See note 7 infra.
. For this reason the court also rejects those cases under Section 105 that attempt to find “unusual circumstances” sufficient to impose a permanent injunction supposedly necessary to protect the postconfirmation effects of an order of confirmation.
See, e.g., Class Five Nevada Claimants v. Dow Corning Corp. (In re Dow Corning Corp.),
. No opinion is expressed as to whether an identity of interest sufficient to apply claim or issue preclusion would be sufficient identity to extend the automatic stay.
Cf. El Puerto de Liverpool
S.A.
de C.V. v. Servi Mundo Llantero
S.A.
de C.V. (In re Kmart Corp.),
. Under such facts, a court could find that Broome & Wellington's proposal to litigate in England against guarantors who cannot respond to judgments is just a disguised method of proceeding against the debtor on the essentially identical claim, which obviously would be a violation of the automatic stay of 11 U.S.C. § 362(a). Here, however, Broome & Wellington has argued (but introduced no evidence) that its purpose in litigating against the Greensteins and Greenco in England is to obtain a determination of default that is necessary for Broome & Wellington to pursue third parties. These third parties, under the Fabrics acquisition agreement, were to be released only after paying the full acquisition price for Fabrics' assets.
. The debtor was a limited partnership. Its general partners were Jacob Sopher and La-Sala 89th Street Development Company. This company, in turn, was a partnership whose managing general partners were Kenneth LaSala and Thomas LaSala.