In re Kaiser Group International, Inc.

272 B.R. 846
CourtUnited States Bankruptcy Court, D. Delaware
DecidedJanuary 9, 2002
DocketNo. 00-2263(MFW) to 00-2301(MFW)
StatusPublished
Cited by2 cases

This text of 272 B.R. 846 (In re Kaiser Group International, Inc.) 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 Kaiser Group International, Inc., 272 B.R. 846 (Del. 2002).

Opinion

MEMORANDUM OPINION

ERWIN I. KATZ1, Bankruptcy Judge.

This matter comes before the Court on the motions of Nova Hut a.s. (“Nova Hut”) and the International Finance Corporation (the “IFC”) for leave to withdraw their respective proofs of claim, numbers 1918, 32742 and 1714, in the above-noted bank[848]*848ruptcy case. For the reasons stated below the motions for leave are granted with the following conditions 1) the Court retains jurisdiction over the subject matter and parties of the related adversary, 01-928, and 2) Nova Hut and the IFC are barred from asserting any future claims against Debtors.

BACKGROUND

On or about June 27, 1997 Nova Hut entered into a contract (the “Contract”) with ICF Kaiser Netherlands B.V. (“Kaiser Netherlands”), a nondebtor subsidiary of Kaiser Group International Inc., et al, (“Debtors”), for the design and construction of . phase 1 of a flat roll products minimill by Kaiser Netherlands for the benefit of Nova Hut. Debtors guaranteed the performance by Kaiser Netherlands (the “Guarantee”) and pledged assets for a letter of credit issued by Corestates Bank, N.A.3 (the “Bank”) as an additional guarantee of the Contract. The IFC loaned funds to Nova Hut for the project and in exchange was given a conditional assignment of Nova Hut’s rights under the Contract and the Guarantee.

The Contract between Kaiser Netherlands and Nova Hut contains provisions regarding required performance levels. In October and November of 2000 the performance tests were conducted by Kaiser Netherlands. The parties dispute whether the minimill facility passed the tests. On or about February 16, 2001 Nova Hut drew on the line of credit that was secured by Debtors’ assets.

Debtors filed their Chapter 11 petitions with the Court on or about June 9, 2000. On December 5, 2000 Debtors’ plan of reorganization was confirmed by the Bankruptcy Court. Nova Hut appealed the confirmation order.

Nova Hut and the IFC filed' individual claims against the estate relating to the Guarantee. On or about September 27, 2000 Debtors filed their first objection to the claims of Nova Hut and the IFC, numbers 1918 and 1714, respectively. Nova Hut and the IFC filed their responses. On or about March 19, 2001 Debtors’ filed their Eleventh Omnibus Objection to Claims which included an objection to claim 3274 of Nova Hut. Nova Hut filed its response.

On April 8, 2001 Debtors filed as adversary4 01-928 their counterclaims and amended objections to the claims of Nova Hut and the IFC. The causes of action outlined by Debtors in the complaint include claims against Nova Hut and the IFC related to the Contract, the Guarantee and the allegedly wrongful draw on the line of credit by Nova Hut. The IFC and Nova- Hut filed their motions for leave to withdraw their proofs of claim on June 12 and June 21, 2001, respectively. Limited, if any, discovery has taken place between the parties. Since April 8, 2001 the parties have filed numerous pleadings in the adversary case but so far only one significant issue, other than the one presently before the Court, has been fully briefed.5

DISCUSSION

The IFC seeks leave to withdraw its proof of claim with prejudice as to any claim against Debtors under the Guarantee and without prejudice to, waiver of, or effect on any of the IFC’s other rights or defenses. Nova Hut seeks withdrawal [849]*849without prejudice but with the condition that Nova Hut bring no claims against Debtors under the Guarantee. The question currently before the Court is whether leave should be granted under Bankruptcy Rule 3006.

Standards For The Withdrawal of a Proof of Claim

The question of whether a party can withdraw a proof of claim is governed by Federal Rule of Bankruptcy Procedure 3006. This Rule states:

A creditor may withdraw a claim as of right by filing a notice of withdrawal, except as provided in this rule. If after a creditor has filed a proof of claim an objection is filed thereto or a complaint is filed against that creditor in an adversary proceeding, or the creditor has accepted or rejected the plan or otherwise has participated significantly in the case, the creditor may not withdraw the claim except on order of the court after a hearing on notice to the trustee or debt- or in possession, and any creditors’ committee elected pursuant to § 705(a) or appointed pursuant to § 1102 of the Code. The order of the court shall contain such terms and conditions as the court deems proper. Unless the court orders otherwise, an authorized withdrawal of a claim shall constitute withdrawal of any related acceptance or rejection of a plan.

Fed. R. Bankr.P. 3006.

In those instances where withdrawal is not a matter of right, the Code is silent as to the considerations to be taken by the court in deciding whether to grant leave. Before the enactment of Federal Bankruptcy Rule 3006 the courts looked to Federal Rule of Civil Procedure 41 as governing. Advisory Committee Note to Bankruptcy Rule 3006. Rule 3006 “recognizes the applicability of the considerations underlying Rule 41(a) F R Civ P to the withdrawal of a claim after it has been put in issue by an objection.” Advisory Committee Note to Bankruptcy Rule 3006. Courts have taken this statement to mean that the same considerations used by courts analyzing voluntary dismissal under Federal Rule 41 should be used in determining the question of withdrawal under Bankruptcy Rule 3006. Resorts Int’l. Inc. v. Lowenschuss (In re Lowenschuss), 67 F.3d 1394, 1399 (9th Cir.1995) (citing Advisory Committee Note to Bankruptcy Rule 3006 in support of using Rule 41(a)(2) considerations); In re 20/20 Sport, Inc., 200 B.R. 972 (Bankr.S.D.N.Y.1996); Adkinson v. LTV Corp. (In re Chateaugay Corp.), 165 B.R. 130, 132 (S.D.N.Y.1994); In re County of Orange, 203 B.R. 977 (Bankr. C.D.Cal.1996) (using Federal Rule 41(a) case law standards in determining whether to grant leave to withdraw claims).

The standard used by the courts in determining whether to allow voluntary dismissal of an action under Federal Rule 41 is whether the defendant will suffer some actual legal prejudice as a result of the dismissal. Westlands Water Dist. v. U.S., 100 F.3d 94, 96 (9th Cir.1996); Am. Nat’l Bank & Trust Co. of Sapulpa v. Bic Corp., 931 F.2d 1411, 1412 (10th Cir.1991); Templeton v. Nedlloyd Lines, 901 F.2d 1273, 1274 (5th Cir.1990). Case law has not developed a precise definition of “legal prejudice.” Westlands, 100 F.3d at 97. Cases focus on the “the rights and defenses available to the defendant in future litigation”. Id. (citing Moore’s Federal Practice). The Ninth Circuit in Westlands

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Related

In Re Kaiser Group Intern., Inc.
272 B.R. 846 (D. Delaware, 2002)

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272 B.R. 846, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-kaiser-group-international-inc-deb-2002.