IN RE GIBSON GROUP, INC.

• Decision Date: 21 July 1992
• Docket Number: Adv. No. 1-92-0017.,Bankruptcy No. 1-90-00280
• Citation: 143 BR 111
• Parties: In re The GIBSON GROUP, INC., Debtor. CANADIAN PACIFIC FOREST PRODUCTS, LTD., etc., Plaintiff, v. J.D. IRVING, LTD., et al., Defendants.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

143 B.R. 111 (1992)

In re The GIBSON GROUP, INC., Debtor CANADIAN PACIFIC FOREST PRODUCTS, LTD., etc., Plaintiff, v. J.D. IRVING, LTD., et al., Defendants.

Bankruptcy No. 1-90-00280, Adv. No. 1-92-0017.

United States Bankruptcy Court, S.D. Ohio, W.D.

July 21, 1992.

Michael G. Kohn, Cincinnati, Ohio, for Blum.

Jeffrey Marks, Cincinnati, Ohio, for Canadian Pacific.

John D. Luken, Cincinnati, Ohio, for Wipp.

Quintin F. Lindsmith, Columbus, Ohio, for Irving.

Charles Caldwell, Asst. U.S. Trustee, Cincinnati, Ohio.

DECISION

BURTON PERLMAN, Chief Judge.

The matter before the court is an adversary proceeding in which the plaintiff, Canadian Pacific Forest Products, Ltd. is a secured creditor seeking to avoid and recover alleged preferential and fraudulent transfers made by debtor, the Gibson Group, Inc. In its complaint, plaintiff names three defendants, J.D. Irving, Ltd. ("Irving"), Blum International, Inc. ("Blum"), and West Indies Pulp and Paper, Ltd. ("WIPP"). In the complaint reference is made to Lake Utopia Paper ("Lake Utopia"), a division of Irving. The complaint states that debtor was a broker for the sale of paper products, that Lake Utopia was one of its suppliers to which it was in arrears in its account, that Blum was a customer of debtor as was WIPP, and that pre-filing transactions occurred involving debtor and these three parties which should be set aside. Plaintiff says that in those transactions there was an issuance in favor of Lake Utopia of notes totaling $1,300,000 by Blum and a like transfer by WIPP in the amount of $1,700,000, and that as a consequence of those transfers, debtor's indebtedness to Lake Utopia was reduced by $3,000,000. In the first Claim of the complaint, plaintiff says that the transfers from Blum and WIPP to Lake Utopia were preferential pursuant to § 547(b) and should be avoided. In the second Claim of the complaint, plaintiff alleges that the cancellation of accounts receivable owing to debtor from Blum in the amount of $1,300,000 is a fraudulent transfer pursuant to § 548(a). The third Claim of the complaint makes a like allegation with respect to the cancellation of the indebtedness by WIPP to the debtor in the amount of $1,700,000. The fourth Claim of the complaint appears to be one based upon § 550 for the recovery of amounts transferred.

This court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered in this District. This is a core proceeding arising under 28 U.S.C. § 157(b)(2)(A), (F) and (H).

In response to the adversary complaint, defendants each filed motions to dismiss for failure to state a claim pursuant to F.R.Civ.P. 12(b)(6) (made applicable in bankruptcy pursuant to B.R. 7012). We discuss, first, the motion by Irving. Irving asserts that plaintiff, an individual creditor, lacks standing pursuant to the Code and case law to bring this action. Irving argues that since debtor and the official creditors' committee had decided not to pursue the avoidance and recovery action, plaintiff is foreclosed as a matter of law from bringing this action. Movant Irving and plaintiff have exhaustively briefed the issues of standing with extensive (and baffling) excursions into questions of benefit or harm, to unsecured creditors or the estate.

While in its complaint plaintiff asserts that it "has been authorized to prosecute this action" pursuant to an order of this court entered January 17, 1992, defendant Irving correctly points out that in connection with our ruling, we specifically reserved for consideration in the adversary proceeding itself, the question of the propriety of bringing the action in the first place by this creditor. It is now that question of standing which is before us on this motion to dismiss.

Both statutes, § 547 and § 548, confer upon the trustee (or the debtor-in-possession pursuant to §§ 1107(a) and 1108)), the power to avoid preferences and fraudulent conveyances. That designation is express. Upon an appropriate showing, however, notwithstanding the absence in the statute of authority for others to exercise the trustee's power under discussion, a creditors' committee has been authorized to pursue such actions, and even on occasion a single creditor, as is the case here. See e.g., In re Shelby Motel Group, Inc., 123 B.R. 98, 103 (N.D.Ala.1990) (individual creditor has implied right under § 1109 to initiate avoidance action). The authorities make it very clear, however, that before a creditor can exercise the...