In re Seegrid Corp.

560 B.R. 93, 2016 Bankr. LEXIS 3839, 2016 WL 6304616
CourtUnited States Bankruptcy Court, D. Delaware
DecidedOctober 27, 2016
DocketCase No. 14-12391 (BLS)
StatusPublished
Cited by1 cases

This text of 560 B.R. 93 (In re Seegrid 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 Seegrid Corp., 560 B.R. 93, 2016 Bankr. LEXIS 3839, 2016 WL 6304616 (Del. 2016).

Opinion

OPINION1

Brendan Linehan Shannon, Chief United States Bankruptcy Judge

Before the Court are Seegrid Corporation’s (“Seegrid” or the “Company”) objections to Claims 19, 20 and 21 (the “Claims”). The Claims were filed by Seeg-rid’s former CEO, Mr. Anthony Horbal (or entities controlled by Mr. Horbal) and seek (i) payment for amounts alleged to be due under Mr. Horbal’s employment [95]*95agreement and (ii) reimbursement of costs relating to Mr. Horbal’s use of Seegrid’s aircraft on company business. The matter was well and fully briefed, and. a two-day evidentiary hearing was held. At trial, the Court admitted into evidence over 60 exhibits and heard the testimony of several witnesses, including Mr. Horbal, .Mr. David Heilman (Seegrid’s Chief Administrative Officer) and Mr. Daniel Shapira (Seegrid’s Chairman of the Board of Directors). For the reasons that follow, the Court will overrule each of Seegrid’s objections and allow Claims 19, 20 and 21 in their entirety.

LBACKGROUND

Seegrid is a fascinating company. It is a high-tech startup based outside Pittsburgh, Pennsylvania, and since its inception in 2003 it has been dedicated to the development of self-driving vehicles for use in industrial applications. As described to the Court, these vehicles (primarily forklifts and pallet trucks) are outfitted with Seegrid’s guidance units. In a nutshell, the guidance units take thousands of images of a route while the vehicle is being driving by a human operator. Based on these images, the goal is then for the vehicle to be able to retrace the route autonomously and repeatedly.2 Seegrid foresees substantial demand for its products in industries that utilize very large manufacturing facilities, such as an automotive plant, a steel mill, or a factory.

Seegrid filed this prepackaged Chapter 11 ease on October 21, 2014 (the “Petition Date”). Also on the Petition Date, Seegrid filed its Plan of Reorganization and an accompanying Disclosure Statement. By Order dated January 20, 2015, this Court confirmed the Plan, and the Plan went effective on January 23, 2015. Seegrid is a reorganized debtor and under the terms of the Plan is entitled to file and prosecute objections to claims.

II. JURISDICTION AND VENUE

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1408. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B) and (O).

III. THE PARTIES’ POSITIONS

A. The Employment Claim

Claim 203 was filed by HERC Management Services, LLC (“HERC”), an entity created and controlled by Mr. Horbal. HERC seeks allowance of an unsecured prepetition claim in the aggregate amount of $282,537.66. The lion’s share of Claim 20 consists of a $200,000 fee payable upon Mr. Horbal’s termination without cause and a $50,000 “quarterly fee” alleged to be due under the Contract. The balance of Claim 20 relates to unpaid health insurance obligations and travel reimbursements.

[96]*96Seegrid objects to Claim 20 on several grounds. First, Seegrid contends that there was no written contract in effect between the parties at the time of Mr. Horbal’s termination. Specifically, Seegrid observes that Mr, Horbal entered into a contract with Seegrid to serve as its “President” on June 16, 2010. In January 2012, however, Mr. Horbal agreed to become Seegrid’s “Chief Executive Officer” upon the resignation of the prior CEO. Since no new agreement was entered into to cover the new position, Seegrid contends that the agreement terminated and did not continue to govern Mr. Horbal’s relationship with the Company. Alternatively, Seegrid contends that Claim 20 should be disallowed because it believes that Mr. Horbal breached his fiduciary duties and was terminated “for cause”.

Mr. Horbal characterizes the Debtor’s position regarding termination of the employment agreement as hyper-technical, and an unfair penalty upon him in a situation where he agreed to assume the role of CEO at the request of the Board. Separately, Mr. Horbal contends that he was not fired “for cause,” that no one at the Company ever suggested that he was being terminated for cause, and that there is no Board resolution that would evidence such a termination. Finally, Mr. Horbal vigorously disputes that he breached his fiduciary duties to Seegrid.

B. The Aircraft Claims

Claims 194 and 215 relate to requests for reimbursement of expenses incurred in connection with Mr. Horbal’s travel on two private aircraft leased by Seegrid.6 Mr. Horbal owns or controls Screaming Eagle, Inc. and Great American Health Plans, Inc., which lease two aircraft to Seegrid and provide for pilot services for these aircraft, respectively. Seegrid contends that Mr. Horbal used the aircraft — and particularly a Gulfstream jet capable of international travel — without necessary authorization and in violation of a policy adopted by the Company’s Board of Directors.

Mr. Horbal asserts that his use of the aircraft was consistent with all applicable policies, was known at the time to other senior managers of Seegrid, and was necessary for the advancement of the interests of the Company. He seeks payment for use of the aircraft during each of the flights in question, as well as payment for the services of the pilots.

IV. LEGAL STANDARD

When a claim objection is filed in a bankruptcy case, the burden of proof as to the validity of the claim “rests on different parties at different times.” In re Allegheny Int’l, Inc., 954 F.2d 167, 173 (3d Cir. 1992). Bankruptcy Rule 3001(f) provides that a proof of claim executed and filed in accordance with the rules of procedure, i.e., includes the facts and documents necessary to support the claim, constitutes prima facie evidence of the validity and amount of the claim. Fed. R. Bankr. P. 3001(f). Pursuant to Bankruptcy Code § 502(a), a claim that is properly filed under Rule 3001 and Code § 501 is “deemed allowed” unless a party in interest objects. 11 U.S.C. § 502(a). “The ob[97]*97jecting party carries the burden of going forward with the evidence in support of its objection which much be of a probative force equal to that of the allegations of the creditor’s proof of claim.” In re Kincaid, 388 B.R. 610, 614 (Bankr. E.D. Pa. 2008) (citing Allegheny, 954 F.2d at 173-74).

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Bluebook (online)
560 B.R. 93, 2016 Bankr. LEXIS 3839, 2016 WL 6304616, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-seegrid-corp-deb-2016.