In re Amerejuve, Inc.
| Decision Date | 29 April 2015 |
| Docket Number | Case No. 14-35482 |
| Parties | In re: Amerejuve, Inc. Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
[Refers to Docket Numbers 82 and 83]
Three creditors filed an involuntary Chapter 11 petition against Amerejuve, Inc. (the Debtor), a privately-held company in Houston. In response, the president and majority shareholder of the Debtor, Morteza Naghavi (Naghavi), authorized the filing of a voluntary Chapter 11 petition. After Naghavi took this action, the parties that filed the involuntary petition filed a motion to appoint a trustee under § 1104 of the Bankruptcy Code.1 The Court held a hearing on this motion, and then made oral findings of fact and conclusions of law and orally granted the relief sought; thereafter, an order granting the motion was docketed; and since then, the trustee has been in control of the Debtor's assets and operations.
Naghavi now returns to this Court with: (1) a Motion to Modify or Amend Findings of Fact and Conclusions of Law Regarding Order Directing Appointment of a Chapter 11 Trustee,[Doc. No. 82]; and (2) a Motion to Modify or Amend the Order Directing Appointment of a Chapter 11 Trustee, [Doc. No. 83] (). Naghavi contends that this Court erred in finding that he embezzled funds of the Debtor and wants this Court to amend its findings and conclusions to delete this finding.
There is no question that this Court made an oral finding that Naghavi embezzled money from the Debtor, and that this was one basis, among others, for this Court's entry of an order granting the motion to appoint a trustee. The Court now issues this Memorandum Opinion for these reasons: (1) to set forth written findings of fact and conclusions of law to memorialize the Court's oral findings and conclusions made at the close of the hearing held on the motion to appoint a trustee;2 and (2) to set forth why it will deny the Motion and adhere to its initial finding that Naghavi embezzled funds of the Debtor.
In his pending pleadings, Naghavi seems to be requesting only that this Court remove its findings and conclusions regarding embezzlement—thereby suggesting that Naghavi does not challenge this Court's findings and conclusions regarding the alternative grounds which this Court cited to appoint a trustee. Stated differently, his pleadings suggest that Naghavi does not challenge the appointment of a trustee on the non-embezzlement ground that this Court cited, and therefore accepts the appointment of a trustee. However, in other portions of the Motion, and in paragraph 11 of his reply to the responses opposing the Motion, [Doc. No. 100], Naghavi seems to argue that this Court's findings and conclusions are insufficient to justify the appointment of a trustee on any grounds. Naghavi seems to request that this Court vacate, in itsentirety, its order granting the motion to appoint a trustee;3 or, alternatively, he seems to be suggesting that the Court should enter an order under § 1105 terminating the trustee at this juncture and restoring Naghavi, plus a designated chief restructuring officer, to now take over control of the Debtor. Out of an abundance of caution, the Court will assume that Naghavi is in fact requesting that this Court either entirely vacate its order granting the motion to appoint a trustee or, alternatively, amend its findings and conclusions to delete any reference to embezzlement, and then enter a new order under § 1105 terminating the trustee and restoring Naghavi as president of the Debtor.
For the reasons set forth below, this Court: (1) holds that its original ruling that Naghavi committed embezzlement is correct, and therefore declines to amend its findings and conclusions to delete the finding that Naghavi committed embezzlement; (2) holds that, even if the Court is incorrect about Naghavi having committed embezzlement, it should not vacate its order appointing a trustee because the Court articulated other valid grounds, that provided the basis for the appointment of a trustee; and (3) declines to terminate the trustee and reinstate Naghavi under § 1105.
3. Naghavi resides at 5203 Fieldwood Drive, Houston, Texas 77056. His residence is located in the very toney neighborhood known as "Tanglewood". [H'rg Tr. 30:9-16, Nov. 13, 2014].
4. Naghavi pays approximately $35,000-$40,000 per year in property taxes on his Tanglewood residence. [H'rg Tr. 56:5-9; 73:4-7, Nov. 13, 2014].
5. Naghavi's monthly mortgage payment on his Tanglewood residence is $4,200. [H'rg Tr. 73:8-9, Nov. 13, 2014].
6. Naghavi's 2012 tax return reflects itemized deductions of approximately $63,000 and itemized Schedule C expenses of approximately $65,350, with $25,000 of these expenses being for Naghavi's several consultants and contractors. [H'rg Tr. 76:2-16, Nov. 13, 2014].
7. Prior to the filing of the involuntary petition, Naghavi controlled several entities other than the Debtor, including American Heart Technologies (AHT), MEDITEX IN3 Ventures (MEDITEX), Fairway Medical Technologies (Fairway), and Endothelix. [H'rg Tr. 33:1-37:12, Nov. 13, 2014]. None of these entities, except Endothelix, have ever had any business operations. [H'rg Tr. 39:1-7, Nov. 13, 2014]; [H'rg Tr. 29:3-7, Nov. 14, 2014].
8. According to Naghavi, both he and AHT extended loans to the Debtor. [H'rg Tr. 81:5-11, Nov. 13, 2014]; [H'rg Tr. 19:10-20, Nov. 14, 2014].
To continue reading
Request your trial