Autobacs Strauss, Inc. v. Autobacs Seven Co. (In re Autobacs Strauss, Inc.)
| Decision Date | 21 May 2012 |
| Docket Number | Bankruptcy No. 09–10358 (CSS).,Adversary No. 09–52849 (CSS). |
| Citation | 473 B.R. 525 |
| Parties | In re AUTOBACS STRAUSS, INC., Debtor. Autobacs Strauss, Inc., and 1945 Route 23 Associates, Inc. and R & S Parts and Service, Inc., by their Chief Liquidating Officer Executive Sounding Board Associates, Inc., Plaintiffs, v. Autobacs Seven Co., Ltd. Kenichi Takeda, Akihiro Yamada, Hiroyoshi Kojima, and Yukuo Takenaka, Defendants. |
| Court | U.S. Bankruptcy Court — District of Delaware |
OPINION TEXT STARTS HERE
Landis Rath & Cobb, Richard S. Cobb, James S. Green, Wilmington, DE, Kramer Levin Naftalis & Frankel LLP, Jeffrey S. Trachtman, Daniel M. Eggermann, Michael J. Sternhell, New York, NY, for Defendants Autobacs Seven Ltd., Koichi Sumino, Kenichi Takeda, Akihiro Yamada and Hiroyoshi Kojima.
Blank Rome LLP, Bonnie Glantz Fatell, Wilmington, DE, Harris N. Cogan, Jeremy L. Reiss, New York, NY, for Yukuo Takenaka.
Young Conaway Stargatt & Taylor, M. Blake Cleary, Jamie N. Luton, Michael S. Neiburg, Wilmington, DE, for Plaintiff Autobacs Strauss.
Milberg LLP, Jonathan M. Landers, Jerome M. Congress, Lois F. Dix, Gary S. Snitow, New York, NY, for All Plaintiffs.
Gibbons P.C., Natasha Songonuga, Wilmington, DE, for Plaintiffs 1945 Route 23 Associates and R & S Parts and Service, Inc., by their Chief Liquidating Officer Executive Sounding Board Associates, Inc.
This adversary proceeding arises in the third Chapter 11 bankruptcy of a chain of stores providing automotive parts and services doing business as “Strauss Discount Auto.” In 2007, through the plan of reorganization in the second Chapter 11 case, a Japanese company known as “AB7”—through two of its newly-formed subsidiaries—purchased the Strauss business for approximately $45 million. AB7 funded its subsidiaries' purchase of the assets. In its simplest terms, this dispute is over whether, (i) as plaintiffs argue, AB7's funding of ABST (both purchase and after) was or should have been solely a capital contribution/equity infusion by AB7 to its subsidiaries; or, (ii) as AB7 argues, its funding was allowed to be and, in fact, was a combination of debt and capital contribution/equity to its subsidiaries.
The plaintiffs in this case are (i) the reorganized debtor in the third Chapter 11 case known as “ABST”; and (ii) certain creditors in the second Chapter 11 case known as the R & S Plaintiffs. Under the plan of reorganization in the second Chapter 11 case, the R & S Plaintiffs were to receive approximately $45 million from the purchaser. At the time of the filing of the third Chapter 11 case, however, they were still owed approximately $8 million. Under ABST's confirmed plan in this—the third—Chapter 11 case, unsecured creditors, including the R & S Plaintiffs, will share pro rata in the proceeds, if any, of this litigation.
The facts surrounding AB7's purchase of the assets and the provisions of the plan of reorganization in the second Chapter 11 case have given rise to a number of claims asserted by the plaintiffs against AB7 and certain AB7–related officers and directors of the debtor known as the “Individual Defendants.” In summary, these claims are:
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