White v. Univision of Virginia, Inc. (In Re Urban Broadcasting Corp.)

304 B.R. 263, 2004 U.S. Dist. LEXIS 1235, 2004 WL 184991
CourtDistrict Court, E.D. Virginia
DecidedJanuary 28, 2004
DocketCIV.A.03-1174-A
StatusPublished
Cited by5 cases

This text of 304 B.R. 263 (White v. Univision of Virginia, Inc. (In Re Urban Broadcasting Corp.)) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
White v. Univision of Virginia, Inc. (In Re Urban Broadcasting Corp.), 304 B.R. 263, 2004 U.S. Dist. LEXIS 1235, 2004 WL 184991 (E.D. Va. 2004).

Opinion

*265 MEMORANDUM OPINION

THOMAS SELBY ELLIS, III, District Judge.

At issue in this Chapter 7 bankruptcy appeal is whether an appellant has standing to appeal an order of the bankruptcy court authorizing interim distribution of a claim where, as here, the appellant failed to file an objection to the claim as required by the bankruptcy court’s order and then failed to appear and object at the hearing on the trustee’s motion for interim distribution of the claim.

I.

Appellant Theodore White was the majority shareholder of Urban Broadcasting Corporation (UBC), an affiliate of the Home Shopping Network, and the owner and operator of a Washington, D.C. UHF television station. On August 1, 2000, UBC filed a bankruptcy petition in this district seeking reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101 et seq. On August 23, 2003, UBC’s petition was converted to a Chapter 7 petition. See 11 U.S.C. § 1112.

More than a year after UBC filed its Chapter 11 petition, the appellee, Univision of Virginia, Inc. (Univision), a subsidiary of USA Networks, Inc., filed a timely proof of claim against UBC on October 17, 2001 in the amount of $7.9 million. 1 Univision’s claim arose from an agreement entered into between UBC and Silver King Broadcasting of Virginia, Inc., Univision’s predecessor in interest, on August 21, 1989. Pursuant to that agreement, Silver King had a right to “put” or sell its shares in UBC to UBC and, in the event certain triggering events occurred, UBC had a corresponding obligation to purchase Silver King’s UBC shares for 45% of the fair market value of UBC. The agreement also provided that Silver King’s right to exercise the “put” option would be deemed waived in the event that UBC exercised its “call” option under the agreement. 2

In its October 17 proof of claim, Univision asserted that as Silver King’s successor in interest it was entitled to exercise its “put” right under the agreement because the circumstances triggering the “put” right had occurred, namely (1) UBC had defaulted on its long term debt and (2) UBC had ceased its affiliation with HSN or one of HSN’s subsidiaries. UBC, however, disputed Univision’s right to exercise the “put” option pursuant to the terms of the agreement and filed a timely objection to Univision’s proof of claim on December 18, 2001. The merits of Univision’s claim were litigated in the bankruptcy court for the next year and a half in connection with hearings regarding the confirmation of competing Chapter 11 reorganization *266 plans. Despite this lengthy period of litigation, the claim was never resolved. The primary disputed issue was whether Univision was the proper successor in interest to Silver King and thus had rights under the put-call agreement. 3

In the course of the Chapter 7 proceedings, UBC’s assets were sold and its creditors paid. Once all UBC’s creditors had been paid from the proceeds of the sale of UBC’s assets, the Chapter 7 trustee filed a Motion for Interim Distribution in the bankruptcy court on April 1, 2003 seeking to distribute the debtor’s surplus funds to White and Univision as shareholders. 4 The Chapter 7 trustee concluded that White was entitled to 55% of UBC’s remaining assets and Univision was entitled to 45%. Yet, Univision opposed the trustee’s motion on the ground that it should be paid as a creditor, not a shareholder. Univision, it seems, took this position because distribution as a shareholder might not have a res judicata effect with regard to Univision’s rights under the put-call agreement and thus Univision was concerned that it would remain subject to possible future litigation by White, whom it considered to be aggressively litigious.

Because of Univision’s objection to the Chapter 7 trustee’s Motion for Interim Distribution, the bankruptcy court held a hearing on June 3, 2000. White did not appear at this hearing. The bankruptcy court, concluding that the trustee’s motion required further hearing, entered an order on June 5, 2003 stating that all objections to Univision’s claim and the trustee’s Motion for Interim Distribution would be heard and resolved at a hearing scheduled for July 22, 2003. Moreover, the June 5 order specifically directed that:

(i) Univision shall file an amended proof of claim by June 13, 2003 “and shall serve a copy of the amended proof of claim on the trustee and Mr. White.”
(ii) The Chapter 7 trustee is substituted for UBC with respect to UBC’s objection to Univision’s proof of claim, but that “[njothing in this Order... requires the trustee to prosecute the objection. ..
(iii) White must file any objection to the allowance of Univision’s claim by July 3, 2003 “or be forever barred.”
(iv) Univision shall give notice to the trustee and Mr. White of the July 3 claim objection bar date and the July 22 claim allowance hearing.
(v) The Clerk shall mail a copy of the order to the trustee, counsel for Univision, and White.

In compliance with the June 5 order, Uni-vision timely filed its amended proof of claim and properly notified White of his obligation to object by July 3 on June 13, 2003. White does not dispute that he received proper notice of the June 5 order prior to the July 3 bar date.

On June 30, 2003, White, by counsel, filed three motions: (1) a motion to extend the July 3 deadline for objecting to Univision’s claim; (2) a motion to postpone the related July 22 hearing date; and (3) a *267 motion to authorize the trustee to make a partial distribution of the debtor’s estate to White, ostensibly to pay legal fees. Without holding a hearing on White’s motions and by order dated July 1, 2003, the bankruptcy court denied the motions to extend the July 3 deadline and to postpone the July 22 hearing and declined to consider the motion to authorize the trustee to make a partial distribution on an emergency basis. Specifically, the order stated that:

So much of the motion to extend deadline, postpone hearing date, and authorize partial distribution is denied as seeks to extend the deadline for filing an objection to the Univision amended proof of claim and to postpone the hearing on the objection to claim. That portion of the motion seeking authority for the trustee to make a partial distribution may be set for hearing on any regularly scheduled motions day that provides at least 15 days notice to the chapter 7 trustee and Univision. 5

On July 3, 2003, White, now proceeding pro se, 6 filed a motion seeking reconsideration of the July 1 order.

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
304 B.R. 263, 2004 U.S. Dist. LEXIS 1235, 2004 WL 184991, Counsel Stack Legal Research, https://law.counselstack.com/opinion/white-v-univision-of-virginia-inc-in-re-urban-broadcasting-corp-vaed-2004.