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to the defendant's good faith defense. Because a trial was necessary for that defense, the court denied summary judgment.
The court also denied summary judgment on the trustee's conversion claim, and, in so holding, the court seemingly concluded that the trustee could not have it both ways. Specifically, the court noted that the trustee had already proven that the debtor and defendants' principals co-engineered the potentially fraudulent conveyances. But to prove conversion, said the court, one of the required elements is that the defendants refused to return the property upon the rightful owner's request. Because there was no evidence that the debtor's principal did not consent to the defendants' retention of the proceeds, the court held that the trustee failed to prove conversion as a matter of law.
The defendants further contended that these transactions were in the nature of "swaps" under section 546(g)22 and, thus, immune from avoidance actions. Without much explanation, the court held that these transactions did not fall within the definition of a "swap." Even if the transactions could be characterized as swaps, said the court, they would not be immune from fraudulent conveyance actions under section 548(a)(1)(A).
* Official Comm. of Unsecured Creditors v. Pardee (In re Stanwich Fin. Servs. Corp.), 377 B.R. 432 (Bankr. D. Conn. Oct. 2007) (Shiff, J.)
Named defendant successfully objected to a settlement between the liquidating trustee and a non-party to the action. Sometimes, brevity is a good thing. Unfortunately, this short opinion was marred by several cross-referencing footnotes. Nevertheless, it appears that the court denied approval of a settlement between the plaintiff and a non-party when one of the named defendants objected. In this preference action, a named defendant had commenced an indemnification action in another district court against the settling non-party in this adversary. Said the court, because the settlement agreement could affect the named party's rights in that indemnification action, it would inappropriate to approve of this settlement.
* Thacker v. FCC (In re Magnacom Wireless, LLC), 503 F.3d 984 (9th Cir. Sept. 2007) (Ikuta, J.)
The debtor had no interest in the sale proceeds of a new radio spectrum license, which replaced the debtor's existing license. Under the Federal Communications Act, the FCC was entitled to cancel the debtor's license for the use of a radio spectrum upon the debtor's default. The debtor filed its chapter 11 petition the day before defaulting to the FCC. The FCC cancelled the debtor's license after obtaining relief from stay without objection and subsequently filed a proof of claim for the balance owed on the purchase price of the license. The trustee23 successfully objected to the FCC's proof of claim because the FCC was able to sell a new license for use of the same radio spectrum at a substantially higher price than the debtor's
22 This case was commenced pre-BAPCPA, so the court applied the pre-BAPCPA version of that section.
23 The case was converted to chapter 7 at some point during the proceedings, and a trustee was appointed.
