In re Desa Holdings Corp.

353 B.R. 419, 2006 Bankr. LEXIS 2874, 47 Bankr. Ct. Dec. (CRR) 84, 2006 WL 3030202
CourtUnited States Bankruptcy Court, D. Delaware
DecidedOctober 25, 2006
DocketNo. 02-11672 KG
StatusPublished
Cited by3 cases

This text of 353 B.R. 419 (In re Desa Holdings Corp.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Desa Holdings Corp., 353 B.R. 419, 2006 Bankr. LEXIS 2874, 47 Bankr. Ct. Dec. (CRR) 84, 2006 WL 3030202 (Del. 2006).

Opinion

MEMORANDUM OPINION 1

KEVIN GROSS, Bankruptcy Judge.

The Court has before it the Motion of Joshua Ross for (I) Clarification Regarding Stipulation and Agreed Order Lifting Automatic Stay and (II) Determination Regarding Order Approving Sale Free of Liens and Encumbrances (“the Motion”). A sister court has asked parties in litigation before it to seek clarification of an order of this Court, which has given rise to the matter sub judice. The underlying legal issue in the state court litigation is whether a buyer of assets is liable on a “successor liability” claim.2

RELEVANT BACKGROUND FACTS AND PROCEDURAL SETTING

DESA Holdings Corporation and DESA International LLC, Hk/a DESA International, Inc. (“Debtors”), filed voluntary bankruptcy petitions for relief in this Court on June 8, 2002. The Court thereafter set a bar date for the filing of pre-petition claims of December 18, 2002 (“Bar Date”), and a bar date for filing administrative claims of April 23, 2004 (“Administrative Bar Date”).

In November 2002, Debtors sold substantially all of their assets through an auction process to the highest bidder, HIG — DESA Acquisition LLC, now known as DESA LLC (“Buyer”). The Order (a) Authorizing & Scheduling a Public Auction for Sale of All Debtors’ Assets or One of Debtors’ Divisions Free & Clear of All Liens Claims & Encumbrances (b) Approving Procedures for Submission of Qualifying Bids (c) Approving Form & Manner of Notice (D.I.224) required Debtors to give notice by mail where practical, [421]*421and by publication in a nationally circulated newspaper where notice by mail was not practical. Debtors complied, including publication in the national edition of The Wall Street Journal. On December 12, 2002, the Court entered an Order (a) Authorizing the Debtors’ Sale of Substantially All of Their Assets, Free & Clear of Liens, Claims, & Encumbrances, (b) Approving an Asset Purchase Agreement, (c) Authorizing the Sale, Assumption & Assignment of Certain Executory Contracts & Unexpired Leases in Connection with Such Sale, (d) Granting Superpriority Liens, & (e) Granting Related Relief (“the Sale Order”) (D.I.520) which provided, in relevant part:

B. Notice of the Sale Motion, the Auction, and the Sale Hearing has been given in accordance with Fed. R. Bankr.P.2002, 4001 and 6004 and the Bidding Procedures Order. The foregoing notice constitutes good and sufficient Notice of the Sale Motion and the Sale Hearing, and no other or further notice of the Sale Motion and the Sale Hearing or the entry of this Sale Order need be given.
G. The transactions contemplated by the Final Asset Purchase Agreement are undertaken by the Debtors and the Buyers at arm’s length, without collusion and in good faith within the meanings of sections 363(m) and 364(e) of the Bankruptcy Code, and such parties are entitled to the protections of sections 363(m) and 364(e) of the Bankruptcy Code.
H. A sale of the Acquired Assets other than one free and clear of Liens would adversely affect the Debtors’ bankruptcy estates and would be of substantially less benefit to the estates of the Debtors.
* * *
2. Pursuant to section 363(b) of the Bankruptcy Code, the Debtors are authorized to sell the Acquired Assets (including the Assumed Contracts) to the Buyer upon the terms and subject to the conditions set forth in the Final Asset Purchase Agreement, with such modifications as may be agreed to by the parties.
4. The sale of the Acquired Assets to the Buyer shall be free and clear of Liens (other than Liens created by the Buyer) pursuant to section 363(f) of the Bankruptcy Code, whether known or unknown, including, but not limited to, any of the Debtors’ creditors, vendors, suppliers, employees, executory contract counterparties, lessors, customers or users of goods manufactured or sold by the Debtors, and the Buyer shall not be liable in any way (under any theory of successor liability or otherwise) for any claims that any of the foregoing or any other third party may have against any of the Debtors, provided further that, except as expressly provided in the Final Asset Purchase Agreement, with regard to employees’ claims, the free and clear delivery of the Acquired Assets shall include, but not be limited to, all asserted or unas-serted, known or unknown, employment related claims, payroll taxes, employee contracts, employee seniority accrued while employed with any of the Debtors and successorship liability, with any and all valid and enforceable Liens thereon, including those [422]*422asserted by the Lenders, shall be transferred, affixed, and attached to the net proceeds of such sale, with the same validity, priority, force, and effect as such Liens had upon the Acquired Assets immediately prior to the Closing.
10. Pursuant to sections 105(a) and 363 of the Bankruptcy Code, all Persons (as defined in section 101(41) of the Bankruptcy Code) are hereby enjoined from taking any action against the Buyer or the Buyer’s affiliates (as they existed immediately prior to the Closing) to recover any claim which such Person has against the Debtors or the Debtors’ affiliates (as then exist immediately following the Closing).
15. The Buyer has not assumed or otherwise become obligated for any of the Debtors’ liabilities other than as expressly set forth in the Final Asset Purchase Agreement, and the Buyer has not purchased any of the Excluded Assets (as defined in the Final Asset Purchase Agreement). Consequently, all holders of liabilities or Claims (as defined in section 101(5) of the Bankruptcy Code) are hereby enjoined from asserting or prosecuting any Claim or cause of action against the Buyer or Acquired Assets to recover an account of any Claim or liabilities other than Assumed Liabilities pursuant to the Final Asset Purchase Agreement or other than pursuant to this Sale Order. All persons having any interest in the Excluded Assets are hereby enjoined from asserting or prosecuting any claim or cause of action against the Buyer for any liability or Claim associated with the Excluded Assets.

(Sale Order at ¶¶ B, G and H, and ¶¶ 2, 4, 10 and 15)

The movant, Joshua Ross (“Movant”) was allegedly injured while working on January 15, 2004. The alleged injuries occurred 25 months after the Sale Order, after the Bar Date, and prior to the Administrative Bar Date. Movant alleges that a defective heater which Debtors manufactured caused his injuries. In order to recover for his injuries, Movant on March 11, 2005, filed the Motion to Allow a Late-Filed Claim (“Late Claim Motion”) (D.I. 1580) and the Motion for Relief from the Automatic Stay to Pursue Personal Injury Claims (“Lift Stay Motion”) (D.I.1581). Debtors informed Movant that they would oppose the Late Claim Motion and the Lift Stay Motion. Movant and Debtors thereafter negotiated a resolution of Movant’s Late Claim Motion and Lift Stay Motion, the terms of which were contained in the Stipulation and Agreed Order by and Among the Debtors and Joshua Ross (“Lift Stay Order”) (D.I.1608), which the Court approved on March 30, 2005, and which provided, inter alia,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
353 B.R. 419, 2006 Bankr. LEXIS 2874, 47 Bankr. Ct. Dec. (CRR) 84, 2006 WL 3030202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-desa-holdings-corp-deb-2006.