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Holding: The Fifth Circuit held that the bankruptcy court had jurisdiction to enjoin state court actions against debtors' former officers and directors and non-debtor corporations to enforce the plan's injunction. The claimants in this case asserted claims derivative of the debtors' claims, which were reserved in the plan. Lastly, the bankruptcy court's inherent contempt power extended to imposing sanctions on claimants that filed pleadings in the state court actions after the bankruptcy court enjoined those actions.
iii. In re Maguire Group Holdings, Inc., 508 B.R. 504 (Bankr. S.D. Fla. 2014)
Issue: Whether case can be reopened in order to modify discharge injunction.
Holding: Creditor which, together with Chapter 11 debtors, had provided architectural, design, and related services for Connecticut public works project would not be allowed to reopen reorganized debtors' cases and to modify the discharge injunction so that it could proceed with state-court litigation of its indemnification claim against debtor, even though creditor had agreed to seek relief only against the insurer with which debtor had maintained a "claims-made" architects and engineers professional liability and contractors pollution liability policy. Pursuant to terms of settlement agreement between reorganized debtors and their insurer, debtors had contingent obligation of up to $150,000 to reimburse insurer for monies that insurer would spend to defend creditors' claims, and so allowing creditor relief from the discharge injunction to pursue an indemnification claim against debtors was virtually certain to cause debtors to incur costs and, thus, impair their fresh start.
iv. In re Chatham Parkway Self Storage, LLC, 507 B.R. 13 (Bankr. S.D. Ga. 2014).
Issue: Chapter 11 debtor filed post-confirmation motion to compel execution of loan documents, as contemplated in its confirmed plan of reorganization.
Holdings: Bankruptcy court had authority to direct the parties to execute the loan documents in order to protect confirmation order and aid in plan's execution. Addendum expressly stated that debtor would execute the loan documents in favor of bank based on terms of repayment set forth in plan. Debtor had drafted four iterations of plan and addendum before terms of repayment were sufficiently detailed and acceptable to both parties, final terms and conditions of plan and addendum were direct result of mediated settlement between the parties, and plan and addendum set forth material terms of loan repayment, including such items as secured claim amount, retention of existing lien, treatment of 12 interest-only payments, treatment of remaining amortized payments, payment due dates, interest rates, final balloon payment, effects of prepayment, responsibilities of guarantors, and consequences of default.
©2014 William L. Norton III
