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PRICE v. SPOKANE ROCK I, LLC

Summarizing by Bradley Pearce

WHATLEY, JR v CANADIAN PACIFIC RAILWAY, LTD

Summarizing by Lars Fuller

IN RE: OPUS EAST LLC, ET AL.

Case Type:
Business
Case Status:
Affirmed
Citation:
No. 16-2202 (3rd Circuit, Sep 28,2017) Not Published
Tag(s):
Ruling:
The Third Circuit Court of Appeals affirmed the district court's (D. Del.) opinion affirming the bankruptcy court's decision 1) that the debtor was solvent when it transferred certain assets pre-petition and 2) that the debtor's chairman did not breach his fiduciary duty to the debtor when he authorized the transfer of the debtor's assets.
Procedural context:
The chapter 7 trustee filed an adversary proceeding seeking to recover pre-petition transfers and alleging breach of fiduciary duty claims. The bankruptcy court conducted a trial and ruled against the trustee on those claims. The trustee appealed, and the district court affirmed. The trustee appealed to the Third Circuit Court of Appeals.
Facts:
A network of real estate companies were owned by two trusts. The debtor was a subsidiary that developed and sold commercial real estate projects, and it created special purpose entities for each real estate project it developed. The debtor started on a project to build an office for the National Oceanic and Atmospheric Administration, but it soon ran into troubles and the debtor tried to sell the project. The debtor then filed chapter 7 bankruptcy. The chapter 7 trustee filed an adversary proceeding seeking to recover allegedly fraudulent and preferential pre-petition transfers that he claimed happened when the debtor was insolvent. The bankruptcy court held a two-week trial after which it found that the trustee failed to prove that the debtor was insolvent at the time of the transfers under the balance sheet test, the cash flow test, and the inadequate capital test. The bankruptcy court also concluded that the debtor's chairman did not breach his fiduciary duty to the debtor when he authorized the transfers. The trustee appealed, and the district court found that the bankruptcy court did not clearly err in concluding that the debtor remained solvent at the time of the transfers and that the chairman did not breach his fiduciary duties. Accordingly, the district court affirmed the bankruptcy court's decision. The trustee appealed to the Third Circuit Court of Appeals.
Judge(s):
Chagares, Restrepo, and Roth

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