In re National Century Financial Enterprises, Inc.

298 B.R. 133, 2003 Bankr. LEXIS 1098, 2003 WL 22077188
Procedural entryThis page is a short order in In re National Century Financial Enterprises, Inc.. Read the opinion of the Court — 298 B.R. 112
United States Bankruptcy Court, S.D. Ohio·Decided August 20, 2003·No. No. 02-65235·Published

Opinion

ORDER ON MOTION OF DEBTORS AND DEBTORS IN POSSESSION FOR AN ORDER ENFORCING AUTOMATIC STAY AGAINST AMEDI-SYS, INC. AND CERTAIN OF ITS AFFILIATES

DONALD E. CALHOUN, JR., Bankruptcy Judge.

This matter came before the Court for hearing upon the Motion of Debtors and Debtors in Possession for an Order Enforcing Automatic Stay Against Amedisys, Inc. and Certain of Its Affiliates (“Motion”), Amedisys Entities’ Brief in Opposition to Debtors’ Motion for an Order Enforcing Automatic Stay (“Memo Contra”), and the Reply Brief of Debtors and Debtors in Possession Supporting an Order Enforcing Automatic Stay Against Amedisys, Inc. and Certain of Its Affiliates (“Reply”).

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Before getting to the legal analysis, a brief factual and procedural history is in order.

I. FACTUAL AND PROCEDURAL HISTORY

On November 8, 2002, the Amedisys Entities commenced an action in the United States District Court, Southern District of Ohio, Eastern Division (Civ. No. C2 02 1105) against JP Morgan Chase Manhattan Bank (“Trustee”), NPF VI, NPFS, NCFE and Lance Poulsen.1 Within the complaint, the Amedisys Entities demanded, inter alia, the turnover of $7.3 million which purportedly represented the proceeds of non-purchased accounts receivable (the “Ohio Action”). On November 18, 2002 (the “Petition Date”), all of the Debtors other than Allied Medical, Inc. (“Allied”) commenced their respective re[135]*135organization cases by filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. On February 14, 2008, Allied commenced its Chapter 11 case. The Debtors’ Chapter 11 eases have been consolidated for procedural purposes only and are being administered jointly. The Debtors are continuing in possession of their respective properties and are operating and managing their businesses, as debtors in possession, pursuant to Sections 1107 and 1108 of the Bankruptcy Code. Debtors have represented to the Court that these cases will require a complex plan of liquidation.

On December 5, 2002, the United States Trustee (the “U.S. Trustee”) appointed a statutory committee of unsecured creditors in these Chapter 11 cases (the “Creditors’ Committee”), pursuant to Section 1102 of the Bankruptcy Code. On January 9, 2003, the U.S. Trustee appointed two official subcommittees. Those subcommittees are the Official Subcommittee of NPF VI Unsecured Creditors (the “NPF VI Subcommittee”) and the Official Subcommittee of NPF XII Unsecured Creditors (the “NPF XII Subcommittee”).

Debtor, National Century Financial Enterprises, Inc. (“NCFE”) is an Ohio corporation. According to the schedules filed, NCFE is the direct or indirect parent of each of the other Debtors. It has been represented to the Court that prior to the Petition Date, the Debtors were one of the country’s largest providers of healthcare accounts receivable financing.

According to representations made to the Court, the Debtors financed and serviced more than $15 billion in healthcare accounts receivable. The Debtors also provided other financing and leasing services to healthcare companies. The Debtors historically financed the purchase of eligible receivables primarily through private placement sales of bonds to institutional investors. All of the Debtors’ outstanding bonds as of the NCFE Petition Date were issued by Debtors NPF VI, Inc. (“NPF VI”) and NPF XII, Inc. (“NPF XII”). As of the NCFE Petition Date, it is reported that the aggregate outstanding principal amount of the bonds issued by NPF VI, the indenture trustee for which is The Chase Manhattan Bank n/k/a JP Morgan Chase & Co., was $924,995,000.00, and the aggregate outstanding principal amount of the bonds issued by NPF XII, the indenture trustee for which is Bank One, N.A. (“Bank One”), was $2,047,500,000.00. As of September 30, 2002, Debtors report that their books and records reflected approximately $3.8 billion in assets and approximately $3.6 billion in liabilities on a consolidated basis.

On or about December 19, 2002, the United States District Court for the Southern District of Ohio, Eastern Division, transferred the Ohio Action to this Court. That transferred case was assigned Adversary Proceeding No. 02-2576. On February 19, 2003, this Court held a status conference regarding the transferred case. On February 21, 2003, the Amedisys Entities filed their First Amended Complaint. The Defendants named in the First Amended Complaint were JP Morgan Chase Manhattan Bank, as Trustee, NPF VI, Inc., National Century Financial Enterprises, Inc., and National Premier Financial Services, Inc. However, the First Amended Complaint did remove JP Morgan as a defendant to certain causes of action.

A. Relief Sought in Ohio Action

In Count One of the First Amended Complaint, the Amedisys Entities seek a declaratory judgment against all the Defendants. The Amedisys Entities seek entry of a declaratory judgment declaring the parties’ respective rights and obli[136]*136gations, including, inter alia, the parties’ respective rights and obligations under the sale agreements, the Trust Agreement and related documents, and the parties’ respective rights and obligations in connection with the funds in the possession or control of the Trustee for the NCFE entities (Adv. Pro. No. 02-2576, First Amended Complaint, p. 13).

In Count Two of the First Amended Complaint, the Amedisys Entities seek a declaration from this Court declaring that their cash in possession or control of the Trustee or the NCF entities — approximately $7.3 million — is an unjust enrichment to Defendants occurring by mistake or fraud. (Adv. Pro. No. 02-2576, First Amended Complaint, p. 14). In Count Three of the First Amended Complaint, The Amedisys Entities seek a turnover and return of Amedisys’ funds in the amount of at least $7,337,569.00. (Adv. Pro. No. 02-2576, First Amended Complaint, p. 14).

In Count Four of the First Amended Complaint, the Amedisys Entities seek a determination that the NCFE entities have specifically breached the sale agreements by failing, inter alia, to timely and properly return funds to the Amedisys entities, failing to properly maintain the lock box accounts, failing to properly maintain a detailed accounting record of all deposits and withdrawals from the reserve accounts, and improperly allocating, distributing and commingling such funds. (Adv. Pro. No. 02-2576, First Amended Complaint, p. 15). In Count Five of the First Amended Complaint, the Amedisys Entities seek specific performance mandating that the NCFE entities remit not less than the $7,337,569.00 amount to the Amedisys entities. (Adv. Pro. No. 02-2576, First Amended Complaint, pp. 15-16). In Count Six of the First Amended Complaint, the Amedisys Entities request a judgment entry determining that the NCFE entities have breached their fiduciary duties by failing and refusing to take actions to ensure the distribution of funds to the Amed-isys entities. (Adv. Pro. No. 02-2576, First Amended Complaint, p. 16).

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

In re National Century Financial Enterprises, Inc., 298 B.R. 133, 2003 Bankr. LEXIS 1098, 2003 WL 22077188 (Ohio 2003).

298 B.R. 133 (In re National Century Financial Enterprises, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related