In re Suniva, Inc., Case No. 17-10837 (KG)

CourtU.S. Bankruptcy Court — District of Delaware
PartiesIn re: SUNIVA, INC., Debtors.
Docket NumberCase No. 17-10837 (KG)
Decision Date16 March 2018

In re: SUNIVA, INC., Debtors.

Case No. 17-10837 (KG)


March 16, 2018

Chapter 11

Re: D.I. 479 and 499



The present dispute arises from an objection (the "Objection") brought by Georgia Tech Research Corporation ("GTRC") (D.I. 499) to the Motion (the "Motion") filed Pursuant to Federal Bankruptcy Rule 9019(a) and Sections 105(a), 362 and 363 of the Bankruptcy Code for an Order Approving and Authorizing the Stipulation Regarding Certain Cash Collateral (D.I. 479). The Motion seeks the Court's approval of a settlement stipulation (the "Stipulation") between and among Debtor, Wells Fargo Bank, N.A. ("Wells Fargo"), Wanxiang America Corporation ("Wanxiang") and the Official Committee of Unsecured Creditors. If approved, the Stipulation would result in Wanxiang receiving payments totaling $2,585,771.57.1 GTRC objected to the Motion on the ground, as GTRC alleges, that $362,192 of the funds to be remitted to Wanxiang was

Page 2

earmarked for GTRC's receipt, or was subject to a constructive trust and is not property of Debtor's estate.2

What gives rise to the Objection is that GTRC and Debtor had earlier entered into Subrecipient Agreements (the "Agreements") for work to be performed under Department of Energy ("DOE") prime contract numbers DE-EE0006354 and DE-EEE006354.0000. The Agreements are subcontracts with GTRC for work that Debtor agreed to perform under a contract with DOE. Debtor was paid by DOE for its work and GTRC's work.

GTRC objects to the Motion arguing that: (1) DOE paid Debtor $362,192 for FTRC's benefit3, (2) the funds were earmarked for GTRC and therefore were not property of Debtor's estate, or (3) Debtor holds the $362,192 in a constructive trust for GTRC's benefit. If the funds were earmarked for GTRC, or if Debtor holds the $362,192 in a constructive trust for GTRC, then the funds belong to GTRC.


In the Objection, GTRC cites to and quotes from provisions of the Agreements. The specific quoted language from the Agreements is as follows:

3.1. [The Debtor] shall pay GTRC any costs which have been accrued or been encumbered for work related to completed milestones in the Project Management Plan up to the actual date of termination of [the Subrecipient] Agreement and shall not been relieved of the obligation to pay any such costs because of termination of the [Subrecipient] Agreement. . . . .

. . . .

Page 3

3.5. GTRC acknowledges and agrees that the Prime Agreement is being incrementally funded by the Government and that [the Subrecipient] Agreement shall be funded to the extent that the Prime Agreement is funded by the Government, in accordance with the anticipated budget periods set forth in the Prime Agreement. [The Debtor's] obligations concerning future compensation to GTRC shall be contingent on Government funding of the Prime Agreement. [The Debtor] acknowledges that the agreement with GTRC shall be bound by any Go/No Go Decisions by the Government, as set forth in the Project Management Plan, to the same extent that [the Debtor] is bound by such decisions.

GTRC complains that Debtor has received millions of dollars from DOE for research and that GTRC has performed vital services on the research for which it did not receive payment.

GTRC cites many cases for its argument that Debtor did not have an equitable interest in the $362,192 and the funds are therefore not part of Debtor's estate but, instead, belong to GTRC. See, e.g., In re United Milk Products Co., 261 F. Supp. 766 (N.D. Ill. 1966) (holding that milk product manufacturer held milk supplier's money); In re LAN Trainers, Inc., 359 F. 3d 204 (1st Cir. 2003) (finding that debtor did not have an equitable interest in funds); In re SemCrude, L.P., 418 B.R. 98 (Bankr. D. Del. 2009) (finding that...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT