In Re CK Liquidation Corp.

339 B.R. 283, 55 Collier Bankr. Cas. 2d 1774, 2006 Bankr. LEXIS 387, 46 Bankr. Ct. Dec. (CRR) 70, 2006 WL 753202
CourtUnited States Bankruptcy Court, D. Massachusetts
DecidedMarch 20, 2006
Docket14-13801
StatusPublished

This text of 339 B.R. 283 (In Re CK Liquidation Corp.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re CK Liquidation Corp., 339 B.R. 283, 55 Collier Bankr. Cas. 2d 1774, 2006 Bankr. LEXIS 387, 46 Bankr. Ct. Dec. (CRR) 70, 2006 WL 753202 (Mass. 2006).

Opinion

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before this Court is a “Motion to Proceed In Forma Pauperis” filed by Robert White, a creditor in this case. Although rulings on such motions are typically informed by a limited and short history of prior proceedings, the appropriate disposition of this motion requires its review in proper extended context.

I. BACKGROUND

CK Liquidation Corporation, formerly known as Cadkey Corporation (the “Debt- or”), filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code, see 11 U.S.C. § 101, et seq., on August 22, 2003. The Debtor, a manufacturer and distributer of software used in the construction industry, filed the Chapter 11 case with the goal of selling its assets as a going concern in order to maximize its value and retain its employees.

On August 29, 2003, the Debtor filed a motion seeking leave to sell its assets free and clear of all liens, claims, encumbrances and other interests (the “Sale Motion”). The Debtor also requested pre-approval of certain bidding procedures (the “Proposed Bidding Procedures”) relative to the sale. A hearing on the Proposed Bidding Procedures was scheduled for September 9, 2003.

On September 4, 2003, the United States trustee filed notice of her appointment of an Unsecured Creditors Committee. That Creditors Committee, comprised of four (4) members, included Nded, Inc. of Boise City, Idaho. Nded, Inc. was represented on the Creditors Committee by its President, Robert White (“White”).

On September 8, 2003, Microcontrol Systems, Inc. (a secured creditor), Harold Bowers (the largest unsecured creditor) and the Creditors Committee each filed an objection to the Proposed Bidding Procedures. On that date, White also filed an objection to the Proposed Bidding Procedures. In that objection, which was filed on White’s behalf by an attorney well experienced in bankruptcy law, White represented that he was a creditor of the estate in his individual capacity.

White’s objections were similar to the other three objections — complaining, inter alia, that the terms of the proposed sale *285 were not in the best interest of creditors and that immediate sale of the assets was not warranted or necessary at that time. White did not disclose in his objection that he was trying to establish an investment group so that he could bid to purchase the assets himself. 1

On September 12, 2003, this Court issued an order establishing the bidding procedures for the sale, sustaining in part and overruling in part, the various objections. That order also set the sale hearing for October 20, 2003.

On October 9, 2003, White filed an objection to the proposed sale. He complained that the sale of the assets was “chilled” by ownership claims made by Harold Bowers to certain intellectual property which the Debtor intended to sell. The Creditors Committee was also concerned with the intellectual property issues, and requested that this Court determine the extent of Bowers’ interest prior to the sale. White asked instead for a 30-60 day continuance of the sale date. White failed to expressly indicate that he was preparing a sale bid himself. Attached, however, to White’s objection were emails sent to the Debtor’s dealers asking for revenue projections that White could employ relative to his “business plan” and “joint venture.”

The problems associated with the Bowers ownership claims were ultimately resolved for the purpose of the sale hearing. 2 On November 6, 2003, after an evidentiary hearing, this Court approved a sale of the Debtor’s assets to Kubotek Corporation, 3 for the sum of $2,850,000.00 (the “Sale Order”). 4

On November 14, 2003, White filed a notice of appeal of the Sale Order, pro se, 5 *286 and elected to have the appeal heard by the District Court. On November 8, 2004, the Sale Order was affirmed by the District Court. White v. Official Comm. of Unsecured Creditors (In re Cadkey Corp.), 317 B.R. 19 (D.Mass.2004) (Gorton, J.). White appealed further to the First Circuit Court of Appeals. On September 12, 2005, the First Circuit affirmed the District Court’s order. White then filed a petition for writ of certiorari to the United States Supreme Court, which was denied on February 21, 2006. White has since filed in the United States Supreme Court a motion for rehearing on the denial of his petition.

On February 2, 2004, the Debtor filed a motion to convert its case to one under Chapter 7 of the Bankruptcy Code. The motion was allowed, without objection, on March 4, 2004. Thereafter, John A. Bur-dick was appointed as Chapter 7 trustee (the “Trustee”). On March 19, 2004, the Trustee filed a motion to retain Attorney Michael Goldberg (“Goldberg”), who formerly represented the Creditors Committee, as special counsel to represent the Trustee, inter alia, in connection with the appeal by White. White opposed, arguing that such retention would represent a duplication of effort. On July 6, 2004, White filed a second objection to the Trustee’s motion to employ special counsel. In that objection, White alleged that Goldberg had made false representations to the Court during the sale hearing. On August 17, 2004, this Court overruled White’s objections and granted the Trustee’s motion to retain Goldberg as special counsel.

On August 13, 2004, White filed in this Bankruptcy Court a motion to vacate the Sale Order (the “Motion to Vacate”). In the Motion to Vacate, White again claimed that Goldberg, while acting as counsel for the Creditors Committee, and Attorney James Wilton (“Wilton”), counsel for the Debtor, had each defrauded the Court by misrepresenting both what unsecured creditors could expect to receive from the sale and their expected requests for compensation. As grounds for this contention, White relied on statements Goldberg and Wilton had made at the sale hearing in response to an inquiry from the Court as to the likely impact of the sale upon the expected dividend for creditors. 6 White claimed that fees owed to Goldberg and White had consumed all of the sale proceeds.

A hearing on the Motion to Vacate was initially set for September 7, 2004. However, White filed a motion seeking an extension of the hearing date, in order to obtain more affordable air fare to travel to Massachusetts.

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339 B.R. 283, 55 Collier Bankr. Cas. 2d 1774, 2006 Bankr. LEXIS 387, 46 Bankr. Ct. Dec. (CRR) 70, 2006 WL 753202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ck-liquidation-corp-mab-2006.