In re Ampace Corp.

• Decision Date: 03 May 2002
• Docket Number: Adversary No. A-00-2033.,Bankruptcy No. 98-2772(PJW).
• Citation: 279 B.R. 145
• Parties: In re AMPACE CORPORATION and Ampace Freightlines, Inc., Debtors. Howard Cohen, as Liquidating Trustee for the Estates of Ampace Corporation and Ampace Freightlines, Inc., Plaintiff, v. TIC Financial Systems, Defendant.
• Court: U.S. Bankruptcy Court — District of Delaware

279 B.R. 145

In re AMPACE CORPORATION and Ampace Freightlines, Inc., Debtors Howard Cohen, as Liquidating Trustee for the Estates of Ampace Corporation and Ampace Freightlines, Inc., Plaintiff, v. TIC Financial Systems, Defendant.

Bankruptcy No. 98-2772(PJW).

Adversary No. A-00-2033.

United States Bankruptcy Court, D. Delaware.

May 3, 2002.

Joseph Grey, Stevens & Lee, Wilmington, DE, William R. O'Bryan, Jr., Candice L. Reed, Nashville, TN, for Comdata Network, Inc. f/k/a TIC Financial Systems.

Steven K. Kortanek, Denise Seastone Kraft, Stephanie A. Fox, Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, Wilmington, DE, for Howard Cohen, as Liquidating Trustee.

MEMORANDUM OPINION

PETER J. WALSH, Chief Judge.

Before the court is the motion (Doc. # 13) of Comdata Network, Inc. f/k/a TIC Financial Systems ("Comdata" or "Defendant") for summary judgment. I will deny the motion for the reasons discussed below.

BACKGROUND

Ampace Corporation and Ampace Freightlines, Inc. (collectively, "Debtors") filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code on December 15, 1998 ("Petition Date"). On December 3, 1999 ("Confirmation Date"), Debtors' Fourth Amended Joint Plan of Reorganization ("Plan") was confirmed. (See Confirmation Order (Doc. # 429, Case No. 98-2772).) The "Effective Date" of the Plan, defined therein as "eleven (11) days after the Confirmation Date" (Plan § 1.46), was December 14, 1999.

On the Effective Date, pursuant to the terms of the Plan, the Ampace Liquidating Trust ("Trust") was formed to hold and liquidate Debtors' Non-Operating Assets for the benefit of Debtors' creditors. (Plan § 1.11.)¹ The Plan provides that on the Effective Date, "all of the Assets except for the Calhoun Operating Assets shall be transferred to the Ampace Liquidating Trust free and clear of all Claims and liens and contractually imposed restrictions, except for any lien provided for in this Plan and in the Ampace Liquidating Trust." (Id. at § 8.2.2.) The Plan further provides that "[t]he Liquidating Trustee of Ampace Liquidating Trust, which will be selected by the Creditors' Committee and subject to approval pursuant to the terms of the Plan, will analyze and prosecute all Avoidance Actions and other causes of action and will liquidate the Non-Operating Assets." (Id. at § 2.1.) Pursuant to the terms of the liquidating trust agreement executed in connection with the Plan ("Liquidating Trust Agreement"), Howard Cohen ("Plaintiff") was selected as the Liquidating Trustee ("Trustee") of the Ampace Liquidating Trust ("Trust").

In addition to providing Plaintiff, as Trustee, with sole responsibility over the liquidation of the Non-Operating Assets, the Plan also provides Plaintiff with both the sole responsibility and discretion over the pursuit of Avoidance Actions (id. at §§ 8.2.4², 8.8³), and the exclusive right to object to the allowance of any claims asserted against Debtors' estates (collectively, the "Estate") (id. at § 2.1). Relevant to the instant action, section 14.1 of the Plan provides:

All Avoidance Actions, all Claims relating to Post-Petition transactions under Section 549 of the Bankruptcy Code, all transfers recoverable under Section 550 of the Bankruptcy Code, all causes of action against any Person on account of indebtedness and any other causes of action in favor of the Debtors are hereby preserved and retained for enforcement subsequent to the Effective Date exclusively by Ampace Liquidating Trust.

(Plan § 14.1) (emphasis added). In addition, section 12.1 of the Plan further provides:

Subsequent to the Confirmation Date, the exclusive right to object to the allowance of any Claim is hereby reserved by Ampace Liquidating Trust. Except as otherwise provided in Section 10.3⁴ hereof, objections to Claims shall be filed by Ampace Liquidating Trust with the Bankruptcy Court not later than ninety (90) days after the Effective Date and served upon the holder of such Claim to which the Debtors have objected. Unless otherwise ordered by the Bankruptcy Court, objections to Claims may be litigated to judgment, settled or withdrawn. Ampace Liquidating Trust, in consultation with the Creditors' Committee and in accordance with the terms of the Liquidating Trust Agreement, shall have the discretion to determine whether to prosecute objections to the allowance of any Claim.

(Id. at § 12.1) (emphasis added).

In addition to the inclusion of these provisions in the Plan, similar provisions were included in the Fourth Amended Disclosure Statement ("Disclosure Statement") (Doc. # 382, Case No. 98-2772), approved by Order (Doc. # 395, Case No. 98-2772) of this Court on October 29, 1999. With respect to the Trustee's ability to object to claims, the Disclosure Statement provides:

Prior to Confirmation, any party-in-interest shall have the right to object to the allowance of any Claim. Subsequent to the Confirmation Date Ampace Liquidating Trust will have the exclusive right to object to the allowance of any Claim. Such Objections, if any, shall be filed with the Bankruptcy Court no later than ninety (90) days after the Effective Date.

(Disclosure Statement § 3.11.1.) In addition, with respect to the Trustee's ability to pursue Avoidance Actions, the Disclosure Statement provides:

Except as previously waived or released, all Avoidance Actions, all Claims relating to Post-Petition transactions, all transfers recoverable under Section 550 of the Bankruptcy Code and all causes of action in favor of the Debtors are preserved and retained for enforcement exclusively by Ampace Liquidating Trust subsequent to the Effective Date. Proceeds recovered from such causes of action shall be distributed to Creditors in accordance with the provisions of the Plan.

(Id. at § 3.12.1) (emphasis added). The Disclosure Statement further provides:

Ampace Liquidating Trust will perform an analysis of potential Avoidance Actions and other causes of action. To the extent such actions are identified, Ampace Liquidating Trust may pursue such actions by informal demand and/or by the commencement of litigation. The net proceeds of such Avoidance Actions will be distributed to Creditors pursuant to the terms of the Plan. The Statement of Financial Affairs (the "SOFAS") filed by the Debtors reflects aggregate payments to creditors during the ninety day period prior to the filing of the Debtors' bankruptcy petitions in the amount of approximately $7,320,908. In addition, the SOFAS reflect aggregate payments made by the Debtors to insiders with [sic] the one year period prior to the filing of the Debtors' bankruptcy petitions of approximately $429,000. The Debtors are currently undertaking an analysis of such payments to determine whether any of such payments may be avoidable pursuant to the provisions of the Bankruptcy Code. Thus far, the Debtors have identified potential preferential payments in the amount of $650,000 to LaSalle and $299,750 to First Finance. There can be no assurance that any of such payments are avoidable.

(Id. at 16-17) (emphasis added).

Prior to the Confirmation Date, on January 27, 1999, Defendant filed six proofs of claim totaling $472,546.74 ("Claims"). (Def.'s Mem. (Doc. # 13) at 2.) Under the terms of the Plan, Defendant's Claims are deemed "allowed" in the absence of a timely objection by the Trustee.⁵ Rather than object to Defendant's Claims prior to the March 14, 2000 deadline set forth in section 12.1 of the Plan ("Objections Deadline"), on March 14, 2000, the Trustee filed a motion seeking to extend the Objections Deadline to May 12, 2000 pursuant to 11 U.S.C. § 105(a)⁶ and Fed. R. Bankr.P. 9006(b)(1) ("Rule 9006(b)(1)")⁷. (Id.; Pl.'s Br. (Doc. # 15) at 4.) The Trustee's motion was granted and thereafter, the Trustee filed several additional motions (collectively, "Extension Motions") seeking further extensions of the Objections Deadline. (Pl.'s Br. (Doc. # 15) at 4.) Upon the filing of each of these motions, this Court entered orders granting the requested extension. (Id.) Each order was entered without prejudice to the right of any party to seek to shorten the period by which objections to claims may be filed. On November 8, 2001, the Trustee filed his Third Omnibus Objection (Doc. # 596, Case No. 98-2772) to Defendant's Claims, seeking to reduce certain allegedly overstated Claims to an allowed unsecured non-priority Claim in the amount of $350,120.14. On January 17, 2002, this Court entered an Order (Doc. # 612, Case No. 98-2772) granting the Trustee's Objection.

Prior to objecting to Defendant's Claims, on December 15, 2000, Plaintiff commenced the instant action against Defendant seeking: (i) to avoid allegedly preferential transfers ("Alleged Transfers") pursuant to 11 U.S.C. § 547(b)⁸, and (ii) to recover an amount equal to such Alleged Transfers under 11 U.S.C. § 550⁹. (Complaint at 4.)¹⁰ Defendant answered Plaintiff's complaint ("Complaint") on February 5, 2001 and the parties proceeded to conduct discovery. Thereafter, on September 27, 2001, Defendant filed its motion (Doc. # 13) for summary judgment.

DISCUSSION

I. Standard for Summary Judgment

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).¹¹ The moving party bears the initial responsibility of proving that no genuine issue of material fact is in dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968) (citing Fed.R.Civ.P. 56(e)). In ruling on a motion for summary judgment, ...