In re Lp

• Decision Date: 19 August 2011
• Docket Number: 09–38194.Adversary No. 10–03304.,Nos. 09–38188,09–38189,09–38192,09–38190,s. 09–38188
• Citation: 458 B.R. 345
• Court: U.S. Bankruptcy Court — Southern District of Texas
• Parties: In re BIGLER LP; Bigler Land, LLC; Bigler Petrochemical, LP; Bigler Plant Services, LP; Bigler Terminals, LP, Debtors.Amegy Bank National Association, Plaintiff,v.Brazos M & E, Ltd., et al., Defendants.

458 B.R. 345

In re BIGLER LP; Bigler Land, LLC; Bigler Petrochemical, LP; Bigler Plant Services, LP; Bigler Terminals, LP, Debtors.Amegy Bank National Association, Plaintiff,

v.Brazos M & E, Ltd., et al., Defendants.

Nos. 09–38188

09–38189

09–38190

09–38192

09–38194.Adversary No. 10–03304.

United States Bankruptcy Court, S.D. Texas, Houston Division.

Aug. 19, 2011.

OPINION TEXT STARTS HEREWest CodenotesRecognized as Unconstitutional28 U.S.C.A. § 157(b)(2)(C) Jimmie D. Aycock, Jr., Joshua Nielson Eppich, Porter Hedges LLP, Houston, TX, for Amegy Bank National Association.Craig E. Power, Misty A. Segura, Cokinos Bosien & Young, Houston, TX, for Shaw Maintenance, Inc.David S. Elder, Gardere Wynne Sewell LLP, Houston, TX, for Halgo Power, Inc.

MEMORANDUM OPINION ON AMEGY BANK NATIONAL ASSOCIATION'S ORIGINAL COMPLAINT FOR DECLARATORY JUDGMENT AND TO DETERMINE EXTENT, VALIDITY AND PRIORITY OF M & M LIENS [Adv. Docket No. 1]

JEFF BOHM, Bankruptcy Judge.

I. Introduction

This suit concerns three creditors—plaintiff Amegy Bank National Association (Amegy) and two defendants, Shaw Maintenance, Inc. (Shaw) and Halgo Power, Inc. (Halgo)—all of whom were active participants in the main Chapter 11 case and are bound by the plan which was confirmed by this Court. The dispute in this adversary proceeding pertains to the priority of their respective liens. Specifically, Shaw and Halgo request that this Court enter a judgment declaring that they supplied “removables” to the debtors' high purity isobutylene facility (the HPIB Facility) and, therefore, their liens have priority over Amegy's liens. For its part, Amegy, which provided substantial financing to the debtors in the main case, contends that the goods which Halgo and Shaw supplied are not “removables” and, therefore, Amegy's liens are superior to any liens held by Halgo and Shaw.

The trial took place on June 29, 2011, June 30, 2011, July 1, 2011, and July 8, 2011. Seven witnesses testified at the trial, and numerous exhibits were admitted. After closing arguments were made, the Court took the matter under advisement.

The Court now makes the following findings of fact and conclusions of law pursuant to Federal Rules of Bankruptcy Procedure 9014 and 7052. To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such. Moreover, to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves its right to make additional findings of fact and conclusions of law as it deems appropriate or as may be requested by any of the parties.

II. Status of the Main Case

On October 30, 2009, Bigler LP (Bigler), Bigler Land, LLC (Land), Bigler Petrochemical, LP, Bigler Plant Services, LP, and Bigler Terminals, LP (collectively, the Debtors) filed voluntary Chapter 11 petitions. [Finding of Fact No. 4]. The cases were jointly administered under Case No. 09–38188. [Finding of Fact No. 4]. The Debtors owned and operated a petrochemical plant in Pasadena, Texas.

On November 11, 2010, the Debtors filed their Fourth Amended Joint Plan of Liquidation. [Finding of Fact No. 13]. On November 18, 2010, this plan was confirmed, and on November 29, 2010, the plan became effective. [Finding of Fact No. 13]. Since November 29, 2010, the terms of the plan have been—and still are being—effectuated. What primarily remains to be done under the plan is to complete the claims objection process so as to establish which claims will be paid and in what amounts. [Main Case Docket No. 742]. Included in this process is the completion of the adversary proceeding pending before this Court.¹ Indeed, the plan expressly sets forth that, after trial of this adversary proceeding, Amegy will pay Halgo's claim if this Court rules that Halgo's lien on the boilers is superior to the liens that Amegy held on all of the Debtors' assets. Conversely, according to the plan, if Amegy's liens are superior to Halgo's lien, then Halgo will receive nothing. Thus, the plan's treatment of Halgo is an “all or nothing” proposition. The plan treats Shaw in the same manner.

Accordingly, the purpose of this adversary proceeding is to determine which liens have priority, so that a determination can be made as to how much Halgo and Shaw are going to be paid pursuant to the confirmed plan. This Court now issues this Memorandum Opinion to explain its ruling on this dispute.

III. Findings of Fact

A. The Parties

1. Amegy, the plaintiff in this suit, is a banking institution that extended revolving credit loans and term loans to Bigler and issued letters of credit for the benefit of the Debtors. The Debtors granted to Amegy first priority liens on, and security interests in, substantially all of the Debtors' assets, including the real property and improvements located at 1500 North South Street, Pasadena, Texas 77503.² [Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

2. Shaw, one of the defendants in this suit, is a pipe fabrication and installation company that fabricated and installed a process piping system at the HPIB Facility. [Adv. Docket No. 156, p. 15; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

3. Halgo, another defendant in this suit, furnished boilers and related equipment to the HPIB Facility. [Adv. Docket No. 156, p. 16; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

B. Relevant Facts in the Main Case

4. The Debtors each filed a voluntary Chapter 11 petition on October 30, 2009 (the Petition Date). [Main Case Docket No. 1; Adv. Docket No. 156, p. 9; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties]. The cases were jointly administered under Case No. 09–38188. [Main Case Docket No. 31; Adv. Docket No. 156, p. 9; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

5. On March 11, 2010, Halgo filed a secured proof of claim in the amount of $544,918.68 for two boiler units it had supplied to the HPIB Facility. [Claims Register No. 26; Adv. Docket No. 156, p. 9; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties]. In the Summary of Claim of Halgo Power, Inc.—which was attached to the Proof of Claim—Halgo stated that it was entitled to recover attorneys' fees under § 38.001 of the Texas Civil Practice & Remedies Code and 11 U.S.C. §§ 502 and 506. [Claims Register No. 26].

6. On May 6, 2010, Shaw filed a secured proof of claim in the amount of $1,447,557.09 for, among other work and materials provided, the process piping system that it supplied and installed at the HPIB Facility. [Claims Register No. 6; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 2; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

7. Halgo and Shaw both filed a Notice of Perfection of Liens in accordance with 11 U.S.C. § 546(b). [Main Case Docket Nos. 261 & 334; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 2–3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

8. On May 11, 2010, the Debtors filed a motion (the Sale Motion) seeking the following relief: (1) approving the bidding and notice procedures related to the sale of substantially all the Debtors' assets; and (2) approving the sale of substantially all the Debtors' assets. [Main Case Docket No. 309; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 2–3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties]. Both Halgo and Shaw filed Objections to the Sale Motion, asserting, among other things, superior liens on “removables.” [Main Case Docket Nos. 317 & 336; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties]. The Court refused to allow Halgo and Shaw to remove the two boilers and piping system, respectively, but rather granted the Sale Motion on May 28, 2010. [Main Case Docket No. 356]. As a result of the Court granting the Sale Motion, the Court ordered that: (1) all of the Debtors' assets—which include the materials provided by Halgo and Shaw—be sold “free and clear of all liens ... or other interests of any kind or nature whatsoever ...”; and (2) all liens will attach to the proceeds “with the same validity, force and effect, and in the same order of priority, that such Interests [which includes Halgo's lien and Shaw's lien] had prior to the Sale ...” [Main Case Docket No. 428]. Moreover, the Court expressly set forth that Halgo and Shaw could credit bid at the auction. Finally, the auction in no way barred Halgo and Shaw from litigating with Amegy to determine whether their respective liens were superior to Amegy's liens. [Main Case Docket No. 356].

9. On May 12, 2010, Amegy filed a secured proof of claim in the amount of $68,483,026.00. [Claims Register No. 58; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

10. Pursuant to the Court's order, an auction was conducted on June 16, 2010, to sell substantially all of the Debtors' assets. [Main Case Docket No. 405; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

11. Bigler accepted Amegy's credit bid of $38,000,000.00 for the HPIB Facility. [Main Case Docket No. 405; Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties]. Following the June 16, 2010 auction, Amegy assigned its winning bid for the HPIB Facility to Enterprise Products (Enterprise). [Adv. Docket No. 156, p. 10; Adv. Docket No. 156–6, p. 3; Adv. Docket No. 172, p. 2; Adv. Docket No. 173, p. 1; Stipulation by parties].

12. The sale to Enterprise...