Ebell Media, Inc. v. Reaty Corp. (In re Ebell Media, Inc.)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
14 years 2 months ago

Citation:

In re Ebell Media, Inc., No. 10-55654 (9th Cir. Dec. 19, 2011)

Tag(s):

Ruling:

In this not-for-publication memorandum, the Ninth Circuit affirmed a bankruptcy court’s grant of stay relief—based on the corporate debtor having commenced its chapter 7 case in bad faith—to allow a prepetition arbitration to conclude.

Procedural context:

The Ninth Circuit acted on the appeal by the debtor from the district court’s order affirming the bankruptcy court’s order granting stay relief.

Facts:

The debtor and a creditor were parties to a prepetition arbitration. When the arbiter informed the parties that she was prepared to enter an award, the debtor filed its chapter 7 petition. The creditor sought stay relief to conclude the arbitration. The bankruptcy court found that the debtor commenced the case in bad faith because (1) the case involved solely a two-party dispute; (2) the only possible effect of the bankruptcy filing was to stop the arbitration; and (3) there was no estate to administer. The bankruptcy court found that the debtor’s bad faith constituted cause for stay relief. The circuit court held that “there can be no doubt that the petition was filed in bad faith” and that the bankruptcy court did not abuse its discretion in granting stay relief.

Judge(s):

W. Fletcher and Rawlinson, Circuit Judges, and Singleton, Senior District Judge, District of Alaska, sitting by designation

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