Diamond Enterprises, LTD., LP, v. Michael Younessi (In re Michael Younessi)

The Ninth Circuit BAP follows a Pennsylvania bankruptcy court decision with facts more similar than those in Ninth Circuit precedent.

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Case Type:
Case Status:
Reversed and Remanded
No. CC-18-1337-FLKu, 2019 WL 3003903 (9th Circuit, Jul 10,2019) Published
Modification order reset the 180-day deadline for creditor to file its adversary proceeding seeking revocation of debtor's chapter 11 plan confirmation under section 1144.
Procedural context:
Creditor sued debtor and his company in state court for fraud, breach of fiduciary duty, securities violations, and other claims. Following a trial, the state court ruled against debtor and in favor of creditor. Next, debtor filed his chapter 11 petition. Creditor filed an adversary complaint seeking a determination that the state court judgment was nondischargeable. Debtor filed his proposed chapter 11 plan. Creditor was the only voting creditor to cast a ballot rejecting the plan. Creditor also objected to the plan. The bankruptcy court entered an order confirming the plan. Creditor filed a motion for reconsideration of the confirmation order. The bankruptcy court entered an order granting the motion for reconsideration. Over 180 days after the original confirmation order, but less than 180 days after the modification, creditor filed a complaint to revoke confirmation, contending that the original confirmation order was procured by fraud. The bankruptcy court dismissed the complaint because it was barred by the 180-day deadline in section 1144.
Creditor contributed over $2 million toward the purchase of real estate and interests in debtor's companies. Debtor and creditor's manager obtained a $1.2 million line of credit secured against the investment properties. Debtor began withdrawing money for personal use without creditor's manager's knowledge or permission.
Faris, Lafferty, Kurtz

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