Crest One SpA v. TPG Troy, LLC (In the Matter of TPG Troy, LLC)

Summarized by Wayne Greenwald , Jacobs, PC, Greenwald, P.C.
10 years 8 months ago

Citation:

2015 U.S. App. LEXIS 12085

Tag(s):

Ruling:

Order affirming District Court affirming District Court decision affirming Bankruptcy Court 1) dismissing involuntary petition; 2) denying the petitioners’ motion to withdraw the reference; and 3) awarding $513,427.16 in attorneys’ fees and costs pursuant to 11 U.S.C. § 13 303(i)(1).

Procedural context:

Appeal from District Court affirming Bankruptcy Court

Facts:

Petitioners were involved in many pending actions against the debtor and its related entities. The petition was dismissed because a.) petitioners’ claim were subject to bona fide disputes; and b.) question of whether the debtor and related entities were involved in transactions involving the debtor and related entities. Also, court found basis for abstention under 11 U.S.C. § 305. The bankruptcy court wouldn’t award punitive damages, saying the substantial attorneys’ fee award would provide a deterrent to others. The 2nd Circuit found that attorneys’ fees could be awarded under 303(I) despite the bankruptcy court abstaining. It also found that petitioners waived the right to a jury trial over attorneys’ fees during colloquy before the bankruptcy court concerning punitive damages. The 2nd Circuit agreed that pending litigation alone will create a bona fide dispute. However, vigorous extended litigation can. Using the “totality of the circumstances” test in computing attorneys’ fees was approved.

Judge(s):

Winter, Pooler and Sack, Circuit Judges

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