In re Vencor, Inc.
| Decision Date | 19 September 2002 |
| Docket Number | No. 99-3316 (MFW).,No. 99-3282 (MFW).,No. 99-3256 (MFW).,No. 99-3225 (MFW).,No. 99-3308 (MFW).,No. 99-3203 (MFW).,No. 99-3312 (MFW).,No. 99-3239 (MFW).,No. 99-3276 (MFW).,No. 99-3314 (MFW).,No. 99-3303 (MFW).,No. 99-3257 (MFW).,No. 99-3326 (MFW).,No. 99-3268 (MFW).,No. 99-3264 (MFW).,No. 99-3306 (MFW).,No. 99-3260 (MFW).,No. 99-3322 (MFW).,No. 99-3272 (MFW).,No. 99-3215 (MFW).,No. 99-3219 (MFW).,No. 99-3204 (MFW).,No. 99-3318 (MFW).,No. 99-3266 (MFW).,No. 99-3226 (MFW).,No. 99-3207 (MFW).,No. 99-3243 (MFW).,No. 99-3199 (MFW).,No. 99-3313 (MFW).,No. 99-3205 (MFW).,No. 99-3289 (MFW).,No. 99-3259 (MFW).,No. 99-3284 (MFW).,No. 99-3304 (MFW).,No. 99-3321 (MFW).,No. 99-3211 (MFW).,No. 99-3320 (MFW).,No. 99-3249 (MFW).,No. 99-3236 (MFW).,No. 99-3220 (MFW).,No. 99-3279 (MFW).,No. 99-3310 (MFW).,No. 99-3292 (MFW).,No. 99-3218 (MFW).,No. 99-3301 (MFW).,No. 99-3206 (MFW).,No. 99-3238 (MFW).,No. 99-3283 (MFW).,No. 99-3296 (MFW).,No. 99-3280 (MFW).,No. 99-3229 (MFW).,No. 99-3269 (MFW).,No. 99-3224 (MFW).,No. 99-3277 (MFW).,No. 99-3293 (MFW).,No. 99-3221 (MFW).,No. 99-3258 (MFW).,No. 99-3281 (MFW).,No. 99-3212 (MFW).,No. 99-3202 (MFW).,No. 99-3261 (MFW).,No. 99-3251 (MFW).,No. 99-3325 (MFW).,No. 99-3288 (MFW).,No. 99-3230 (MFW).,No. 99-3286 (MFW).,No. 99-3305 (MFW).,No. 99-3213 (MFW).,No. 99-3250 (MFW).,No. 99-3315 (MFW).,No. 99-3246 (MFW).,No. 99-3210 (MFW).,No. 99-3291 (MFW).,No. 99-3252 (MFW).,No. 99-3247 (MFW).,No. 99-3311 (MFW).,No. 99-3200 (MFW).,No. 99-3227 (MFW).,No. 99-3274 (MFW).,No. 99-3271 (MFW).,No. 99-3201 (MFW).,No. 99-3323 (MFW).,No. 99-3242 (MFW).,No. 99-3278 (MFW).,No. 99-3231 (MFW).,No. 99-3234 (MFW).,No. 99-3254 (MFW).,No. 99-3299 (MFW).,No. 99-3297 (MFW).,No. 99-3309 (MFW).,No. 99-3255 (MFW).,No. 99-3240 (MFW).,No. 99-3265 (MFW).,No. 99-3233 (MFW).,No. 99-3222 (MFW).,No. 99-3232 (MFW).,No. 99-3290 (MFW).,No. 99-3244 (MFW).,No. 99-3275 (MFW).,No. 99-3300 (MFW).,No. 99-3228 (MFW).,No. 99-3235 (MFW).,No. 99-3287 (MFW).,No. 99-3253 (MFW).,No. 99-3245 (MFW).,No. 99-3302 (MFW).,No. 99-3273 (MFW).,No. 99-3294 (MFW).,No. 99-3285 (MFW).,No. 99-3209 (MFW).,No. 99-3223 (MFW).,No. 99-3267 (MFW).,No. 99-3295 (MFW).,No. 99-3208 (MFW).,No. 99-3248 (MFW).,No. 99-3241 (MFW).,No. 99-3270 (MFW).,No. 99-3317 (MFW).,No. 99-3319 (MFW).,No. 99-3217 (MFW).,No. 99-3263 (MFW).,No. 99-3327 (MFW).,No. 99-3237 (MFW).,No. 99-3324 (MFW).,No. 99-3214 (MFW).,No. 99-3216 (MFW).,No. 99-3298 (MFW).,No. 99-3262 (MFW).,No. 99-3307 (MFW).,99-3199 (MFW).,99-3200 (MFW).,99-3201 (MFW).,99-3202 (MFW).,99-3203 (MFW).,99-3204 (MFW).,99-3205 (MFW).,99-3206 (MFW).,99-3207 (MFW).,99-3208 (MFW).,99-3209 (MFW).,99-3210 (MFW).,99-3211 (MFW).,99-3212 (MFW).,99-3213 (MFW).,99-3214 (MFW).,99-3215 (MFW).,99-3216 (MFW).,99-3217 (MFW).,99-3218 (MFW).,99-3219 (MFW).,99-3220 (MFW).,99-3221 (MFW).,99-3222 (MFW).,99-3223 (MFW).,99-3224 (MFW).,99-3225 (MFW).,99-3226 (MFW).,99-3227 (MFW).,99-3228 (MFW).,99-3229 (MFW).,99-3230 (MFW).,99-3231 (MFW).,99-3232 (MFW).,99-3233 (MFW).,99-3234 (MFW).,99-3235 (MFW).,99-3236 (MFW).,99-3237 (MFW).,99-3238 (MFW).,99-3239 (MFW).,99-3240 (MFW).,99-3241 (MFW).,99-3242 (MFW).,99-3243 (MFW).,99-3244 (MFW).,99-3245 (MFW).,99-3246 (MFW).,99-3247 (MFW).,99-3248 (MFW).,99-3249 (MFW).,99-3250 (MFW).,99-3251 (MFW).,99-3252 (MFW).,99-3253 (MFW).,99-3254 (MFW).,99-3255 (MFW).,99-3256 (MFW).,99-3257 (MFW).,99-3258 (MFW).,99-3259 (MFW).,99-3260 (MFW).,99-3261 (MFW).,99-3262 (MFW).,99-3263 (MFW).,99-3264 (MFW).,99-3265 (MFW).,99-3266 (MFW).,99-3267 (MFW).,99-3268 (MFW).,99-3269 (MFW).,99-3270 (MFW).,99-3271 (MFW).,99-3272 (MFW).,99-3273 (MFW).,99-3274 (MFW).,99-3275 (MFW).,99-3276 (MFW).,99-3277 (MFW).,99-3278 (MFW).,99-3279 (MFW).,99-3280 (MFW).,99-3281 (MFW).,99-3282 (MFW).,99-3283 (MFW).,99-3284 (MFW).,99-3285 (MFW).,99-3286 (MFW).,99-3287 (MFW).,99-3288 (MFW).,99-3289 (MFW).,99-3290 (MFW).,99-3291 (MFW).,99-3292 (MFW).,99-3293 (MFW).,99-3294 (MFW).,99-3295 (MFW).,99-3296 (MFW).,99-3297 (MFW).,99-3298 (MFW).,99-3299 (MFW).,99-3300 (MFW).,99-3301 (MFW).,99-3302 (MFW).,99-3303 (MFW).,99-3304 (MFW).,99-3305 (MFW).,99-3306 (MFW).,99-3307 (MFW).,99-3308 (MFW).,99-3309 (MFW).,99-3310 (MFW).,99-3311 (MFW).,99-3312 (MFW).,99-3313 (MFW).,99-3314 (MFW).,99-3315 (MFW).,99-3316 (MFW).,99-3317 (MFW).,99-3318 (MFW).,99-3319 (MFW).,99-3320 (MFW).,99-3321 (MFW).,99-3322 (MFW).,99-3323 (MFW).,99-3324 (MFW).,99-3325 (MFW).,99-3326 (MFW).,99-3327 (MFW). |
| Citation | 284 B.R. 79 |
| Parties | In re VENCOR, INC., et al., Debtor. |
| Court | U.S. Bankruptcy Court — District of Delaware |
William H. Sudell, Eric D. Schwartz, Michael G. Busenkell, Morris Nichols Arsht & Tunnell, LLP, Wilmington, DE, Thomas J. Maloney, Lindsee P. Granfield, Cleary Gottlieb Steen & Hamilton, New York City, for Debtors.
Susan K. Morris, James M. Morris, Morris & Morris, P.S.C., Lexington, KY, for Movants.
James L. Patton, Edward J. Kosmowski, Young Conaway Stargatt & Taylor, LLP, Wilmington, DE, Richard Mancino, Michael J. Kelly, Wilkie Farr & Gallagher, New York City, for Ventas Entities.
This matter is before the Court on the Rule 60(b) Motion for an Order Setting Aside the Injunctive Relief Granted to the Non-Debtor Ventas filed by several personal injury and other claimants ("the Movants").2 The Motion is opposed by Vencor, Inc., and several of its affiliates (collectively "the Debtors") and Ventas, Inc. ("Ventas"). The Debtors have also filed a Motion against the Movants' counsel for Sanctions under Rule 9011 of the Federal Rules of Bankruptcy Procedure. For the reasons set forth below, we deny both Motions.
Prior to May, 1998, Ventas operated, inter alia, several nursing homes under the name Vencor, Inc. ("Old Vencor"). On May 1, 1998, Old Vencor changed its name to Ventas and spun off its nursing home operations to a newly incorporated entity named Vencor, Inc. ("New Vencor"). Ventas retained ownership of the real estate and became New Vencor's landlord at many of the facilities. As of the spinoff date, there were numerous personal injury and other claims from operation of the nursing homes pending against Old Vencor. As part of the spinoff, New Vencor agreed to assume the defense of those claims and to indemnify Ventas for any liability arising therefrom.
On September 13, 1999, New Vencor and several of its affiliates filed for relief under chapter 11 of the Bankruptcy Code. The Debtors' Fourth Amended Joint Plan of Reorganization was confirmed by order dated March 19, 2001 ("the Confirmation Order"). As part of that Plan, Ventas agreed to contribute $40 million to the funding of a settlement with the United States and agreed to amendments of certain leases which it had with the Debtors, thereby reducing their rental obligations. In exchange, Ventas was given a release of certain claims which creditors of the Debtors might have against it, including a release of the personal injury and other claims arising from the operation of the nursing homes prior to May 1, 1998. (Plan at § 11.02(b).)
On May 25, 2001, after the Plan was confirmed, the Movants filed a class action complaint in the United States District Court for the Western District of Kentucky against Ventas alleging that the release in the Confirmation Order was obtained fraudulently.3 That action was dismissed on February 1, 2002, by the District Court, which found that the complaint was an impermissible collateral attack on the Confirmation Order.
Thereafter, on March 19, 2002, the Movants filed the instant Motion which seeks to modify (or vacate) that part of the Confirmation Order which provided a release to Ventas of their claims against it. The Debtors and Ventas have opposed the Motion. In addition, the Debtors have filed a Motion seeking sanctions against counsel for the Movants under Rule 9011 of the Federal Rules of Bankruptcy Procedure.
At the initial hearing held on May 23, 2002, we expressed our concern about certain allegations raised by the Movants that: (1) the Debtors had filed notices of bankruptcy in actions commenced by claimants who had claims only against Ventas, and (2) the Debtors were using the release of Ventas to prevent claimants from asserting any claim against Ventas or the Debtors.4 We directed the Debtors to provide a report on what position the Debtors were taking with respect to the pre-spinoff claims. A report was filed by the Debtors on June 20, 2002, advising that, since the Debtors had agreed to indemnify and defend Ventas from all pre-spinoff claims, they were not using (and would not use) the release of Ventas as a defense to any such claims. The report further refuted the factual assertions of the Movants that they had improperly filed Notices of Bankruptcy in lawsuits filed solely against Ventas or Old Vencor.5
A continued hearing on the Motion was held on June 24, 2002, at which time we heard argument. Supplemental briefs were filed by the parties on July 15 and 22, 2002.6
This Court has jurisdiction over the Motions, which are core proceedings pursuant to 28 U.S.C. § 1334 and § 157(b)(1), (b)(2)(A), (L), and (O).
The Movants seek an Order vacating the Confirmation Order to the extent that it provided a release of any of the personal injury or other claims against Ventas. That Motion is predicated on their allegation that Ventas and the Debtors have committed a fraud on the claimants and the Court. The Debtors and Ventas deny these allegations. Further, they assert that the Motion is procedurally defective and must be denied as untimely.
The Motion is filed by the Movants pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. Thus, the Movants assert that the Motion is timely since it was filed within one year of the Confirmation Order.
The Debtors respond that Rule 60(b) is not available to revoke an order confirming a chapter 11 plan. We agree. The Federal Rules of Civil Procedure are not generally applicable to bankruptcy proceedings except as specifically incorporated by the Federal Rules of Bankruptcy Procedure. While Rule 9024 of the Federal Rules of Bankruptcy Procedure does make Rule 60 applicable to contested matters in bankruptcy cases, it does so subject to certain restrictions. Of particular note is that Rule 9024 expressly requires that any action to revoke a confirmation order under chapter 11 must be filed within the time specified in section 1144.
Section 1144 provides that a party requesting revocation of an order confirming a chapter 11 plan must file its request within 180 days of entry of that order. 11 U.S.C. § 1144. This deadline is strictly enforced. See, e.g., Dale C. Eckert Corp. v. Orange Tree Assoc., Ltd. (In re Orange Tree Assoc., Ltd.), 961 F.2d 1445, 1447 (9th Cir.1992); In re Longardner & Assoc., 855 F.2d 455, 460 (7th Cir.1988); 680 Fifth Ave. Assoc. v. EGI Co. Servs., Inc. (In re 680 Fifth Ave. Assoc.), 209 B.R. 314, 322-23 (Bankr.S.D.N.Y.1997).
Even if Rule 9024 did not expressly provide that a motion to revoke a confirmation order had to be filed within the time specified in section 1144, such a request would still have to comply with the time limits in that section rather than those in Rule 60(b). Rules of procedure may not modify substantive law. 28 U.S.C. § 2075. See, e.g., Branchburg Plaza Assoc., L.P. v. Fesq (In re Fesq), 153 F.3d 113, 116-20 (3d Cir.1998); Pelletier v. Donald (In re Donald), 240 B.R. 141, 147 (1st Cir. BAP 1999); In re Rickel & Assoc., 260 B.R. 673, 678 (Bankr.S.D.N.Y.2001).
In this case, the Movants have not filed their motion within the time required by Rule 9024 or section 1144. The Confirmation Order was entered on March 19, 2001, and the Motion was not filed until March 19, 2002, exactly one year later. Thus, the Motion must be denied as untimely.
The Movants assert, however, that the action filed by them in the...
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...are bound by that. The cases cited by the Trustee and the Noteholders to support the third party releases are clearly distinguishable. The Vencor case did not deal with whether a plan could allow a release of a third party claim; instead it involved whether a plan which had been confirmed c......
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