In re Silver Bros. Co., Inc.
| Decision Date | 17 March 1995 |
| Docket Number | Bankruptcy No. 88-395-JEY. |
| Citation | 179 BR 986 |
| Parties | In re SILVER BROTHERS COMPANY, INC., Debtor. |
| Court | U.S. Bankruptcy Court — District of New Hampshire |
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Victor Dahar, Chapter 7 Trustee, Manchester, NH.
Jon Schneider, Goodwin, Proctor & Hoar, Boston, MA, for debtor.
Lawrence M. Edelman, M. Elaine Beauchesne, Sanders and McDermott, Hampton, NH, for Miller Brewing Co.
William S. Gannon, Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester, NH, for Frances Murray.
James E. McGuire, Brown, Rudnick, Freed & Boston, Boston, MA, for Stewart F. Grossman.
Neil D. Warrenbrand, Looney & Grossman, Boston, MA, for Murray Creditor Trust.
Geraldine Karonis, Manchester, NH, for U.S. Trustee.
TABLE OF CONTENTS
Page No
Introduction 989
Procedural Context ........ 989 - 1004
Phase I ............... 989 - 998
Phase II 999
Phase III ............. 999 - 1000
Phase IV .............. 1000 - 1003
Phase V ............... 1003 - 1004
Findings of Fact .......... 1004 - 1006
Relevant Case Law ......... 1006 - 1009
Conclusion ................ 1009 - 1012
This case is before the Court for decision following a two-day evidentiary hearing held on a motion to vacate an Order of this Court dated July 12, 1990. The July 1990 Order addressed conditions of assignment of a counterclaim in a pre-bankruptcy lawsuit between the debtor and Miller Brewing Company to Frances G. Murray, the wife of David Murray, the debtor's principal officer and stockholder.1 This Court actually vacated the July 1990 Order by Order dated December 8, 1992 but the 1992 Order was appealed by Frances G. Murray.
On January 24, 1994 the District Court entered an Order regarding the appeal which (1) Reversed the December 8, 1992 Order due to certain procedural irregularities involved in the entry of that Order resulting in a reinstatement of the July 1990 Order; (2) Remanded the case to this Court to determine on a proper evidentiary record whether the July 1990 Order should or should not be vacated; and (3) Affirmed this Court's Order dated May 26, 1993 which provided for further procedures to sell, settle, or litigate the counterclaim in question. The effect of the District Court's action was to delay any implementation of the May 1993 Order until on remand this Court determined whether the July 1990 Order would be vacated.
The matter is unusually complicated by virtue of this procedural history and accordingly it will be useful to set out in some detail the matters of record that have established the procedural context for this decision before getting into the findings and conclusions resulting from the evidentiary trial.
This case was filed under Chapter 11 of the Bankruptcy Code on June 23, 1988 and converted to a Chapter 7 case on March 17, 1989. Among the bankrupt estate's assets were counterclaims by Silver Brothers Company, Inc. ("Silver Brothers") against Miller Brewing Company ("Miller"), which have been asserted in pending litigation in the United States District Court for the District of New Hampshire ("District Court") entitled Miller Brewing Company v. Silver Bros. Co., Inc., Hospitality Holdings Corp., and Stewart F. Grossman, Trustee of the Murray Creditors' Trust, Civil Docket No. 88-CV-229-B. The law suit (filed June 9, 1988) was commenced and the counterclaims (filed June 14, 1988) were asserted prior to the filing of this bankruptcy case.
On June 1, 1990, the Chapter 7 Trustee filed a "Notice of Intent to Assign Pending Law Suit" (Court Doc. No. 222), in which the Trustee indicated an intent to assign all interests in the lawsuit, including both the case in chief and the counterclaims, to Frances R. Murray for $3,000.00.2 The Trustee stated that he "does not feel that pursuing the counterclaim will result in any funds that would be available to unsecured creditors. . . . and that the cost of litigation would exceed any recovery. . . . ".
An Objection to the assignment was filed by Miller (Court Doc. No. 223), and the matter came on for hearing before visiting Bankruptcy Judge Goodman on July 10, 1990, at which time Miller made an offer of $10,000 for the assignment of the lawsuit. Judge Goodman continued the matter for bidding to the highest bidder on July 11, 1990, and the successful bidder was Frances Murray, with a bid of $15,000.00 together with certain additional undertakings. The Court on the Trustee's recommendation rejected a higher $20,000 cash bid by Miller Brewing Company. On July 12, 1990, Judge Goodman held a further hearing at which the terms of the offer and approval were clarified. Following this hearing, the Trustee revised and re-submitted a proposed order of approval which was entered later that date.
The Order dated July 12, 1990 (Court Doc. No. 227), begins with a recital of the procedural history of the various offers for assignment of the counterclaim and notes "the record of the hearing reflects the bidding process that took place" and that "the successful bidder was Frances R. Murray" and then in the decretal portion of the Order provides as follows:
It is ORDERED, ADJUDGED and DECREED as follows:
It will be noted that the decretal portion of this Order does not explicitly approve an assignment of the counterclaims to Frances R. Murray.
The hearings that resulted in the July 1990 Order show in their transcripts that the proposal before Judge Goodman was constantly shifting and Mr. Williams acting for Frances Murray was constantly "negotiating" with the Court as to what type of offer would be acceptable. The hearings over the three-day period, July 10, 11, and 12, 1990, are all covered by one transcript (Transcript docketed December 10, 1991). The foregoing development and final action is reflected in the following pertinent extracts from the transcript:
(July 10, 1990)
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(Transcript, July 10, 1990, at pp. 2-5)
(July 11, 1990)
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