In re KTMA Acquisition Corp.
Citation | 153 BR 238 |
Decision Date | 16 March 1993 |
Docket Number | Bankruptcy No. 4-89-3530. |
Parties | In re KTMA ACQUISITION CORP., d/b/a KTMA TV 23, Debtor. |
Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota |
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Steven L. Freeman, Minneapolis, MN, for the Committee of Unsecured Creditors.
Thomas J. Lallier, Minneapolis, MN, for Sonlight Television, Inc.
Larry B. Ricke, Minneapolis, MN, for trustee.
Katherine A. Constantine, Minneapolis, MN, for Investment Ltd. Partnership.
N. Walter Goins, debtor, pro se.
Albert Turner Goins, Maplewood, MN, assisted N. Walter Goins.
ORDER IMPOSING SANCTIONS
This case came on for hearing on November 4, 1992 on the motions of the Committee of Unsecured Creditors, Sonlight Television, Inc. and the trustee for the imposition of sanctions against N. Walter Goins pursuant to Rule 9011 of the Federal Rules of Bankruptcy Procedure. Steven L. Freeman appeared for the Committee of Unsecured Creditors, Thomas J. Lallier appeared for Sonlight Television, Inc., Larry B. Ricke appeared for the trustee and Albert T. Goins assisted N. Walter Goins appearing pro se. This court has jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(a) and Local Rule 201. Based on the motions, the entire file, the evidence and the arguments of the parties, I make this memorandum order:
FACTS
From 1982 to 1987, N. Walter Goins was the president and the sole shareholder of L.E.O. Broadcasting, Inc., a Minnesota corporation which owned and operated Stations KXLI-TV (Channel 41) and KXLT-TV (Channel 47). In 1987, Goins sold L.E.O. to Halcomm, Inc. in exchange for 110,000 shares of stock amounting to twelve and twenty two one hundreds percent (12.22) ownership interest. Besides Goins, Halcomm's shareholders included Dale W. Lang. Lang was both Halcomm's controlling shareholder and largest creditor. Lang held mortgages and security interests in substantially all of Halcomm's assets.
On November 18, 1988, Halcomm informed its shareholders that it was considering the sale of all or substantially all of the corporation's assets. Halcomm planned to sell its assets to a new corporation. The new corporation was to consist of all the assets of Halcomm, KTMA Acquisition Corp. and Red River Broadcast Corp. Halcomm scheduled a shareholders meeting for December 8, 1988 to obtain approval for the sale.
On November 30, 1988, representatives of KTMA, Red River and Halcomm entered into a Letter Agreement. In the Letter Agreement, the parties agreed to form a new corporation to assume the assets and liabilities of Halcomm, KTMA and Red River. The Letter Agreement explicitly required the approval of the shareholders of Halcomm, KTMA and Red River.
On December 5, 1988, Goins, by written notice to Halcomm, dissented from the sale and expressed his intent to demand the fair value of his shares under Minnesota law. Halcomm's shareholders approved the transaction at the shareholders meeting on December 8, 1988. However, neither KTMA nor Red River were able to obtain financing. The new corporation was never formed and the parties agreed to abandon the transaction.
A year later, on December 30, 1989, Lang, foreclosed on Halcomm's assets and sold them at a public auction. Lang purchased the assets himself at the auction for $5 million.
On July 28, 1989, KTMA, one of the parties to the Letter Agreement, filed a voluntary Chapter 11 case. KTMA operated as a debtor-in-possession until August 27, 1991 when a trustee was appointed pursuant to 11 U.S.C. § 1104.
Shortly after his appointment, the trustee entered into negotiations to sell all or substantially all of the debtor's assets. Ultimately, Sonlight Television, Inc. and the trustee entered into a purchase agreement. News broke of this tentative agreement and Goins filed a Proof of Claim on November 18, 1991. Goins' proof of claim is number 171. In the proof of claim, Goins asserts:
Goins attached a copy of the Letter Agreement and signed the proof of claim.
The trustee filed a motion to approve his sale of the debtor's assets to Sonlight. In response, Goins filed an "Objection of Claimant and Motion for Stay of Approval of Trustee's Motion and Declaratory Relief" on December 12, 1991. The motion asserted:
Goins signed and verified2 his motion.
On December 19, 1991, Goins provided this court with a copy of a "Petition for Writ of Mandamus Against Officer of the United States Donald R. Johnston, Trustee and to Compel Compliance with the Federal Communications Commission's Rules" to be heard by the U.S. Court of Appeals for the District of Columbia.
The trustee investigated Goins' proof of claim and on December 20, 1991 served on Goins a Notice of Taking Deposition and Request for Production of Documents pursuant to Rule 9014 of the Federal Rules of Bankruptcy Procedure. A deposition subpoena was issued by the Clerk of the United States Bankruptcy Court instructing Goins to appear, be deposed and to produce certain documents on December 30, 1991. On December 24, 1991, Goins filed a Motion to Quash asserting:
Goins signed and verified the motion. The motion to quash was denied on December 26, 1991 and the deposition took place as scheduled on December 30, 1991.
The trustee also filed a motion asking the court to determine that the Letter Agreement had been abandoned or to approve his rejection of the agreement. On December 26, 1991, Goins filed a "motion to strike trustee's unauthorized motion to approve rejection of executory contract." Supporting his motion Goins asserts:
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