In re: ORCHID CHILD PRODUCTIONS, LLC
- Summarized by Benjamin Fischer , U.S. Bankruptcy Court, District of New Jersey
- 2 months 2 weeks ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- BAP No. CC-23-1011 FLS; Bk. No. 2:20-bk-21080-RK (9th Circuit, Sep 07,2023) Not Published
- Tag(s):
-
- Ruling:
- A Ninth Circuit BAP affirmed a decision of the bankruptcy court. The court reasoned that the production company's state law contract claim was a core proceeding because it concerned the administration of the bankruptcy estate, the sale of estate assets, and the claims allowance process. It further held that the arbitration provision of the contract conflicted with the bankruptcy code. Finally, it rejected the argument that the case was a two-party dispute since it had non-insider claims and was in financial distress.
- Procedural context:
- After filing a chapter 7 bankruptcy petition, the chapter 7 trustee filed a motion to set sale procedures for the sale of footage prepared in connection with its agreement with the production company. The production company initiated an adversary proceeding, and also sought relief from stay to continue arbitration. The production company argued that the bankruptcy court did not have jurisdiction over the proceeding because it involved a state law contract claim; that the Federal Arbitration Act creates a presumption for arbitration; and that the debtor filed the case in bad faith because it had few non-insider creditors. The bankruptcy court rejected all of these arguments, holding that the issues constituted a core proceeding because they implicated whether an asset is property of the estate and whether an estate asset can be sold under § 363. It found that the arbitration provision conflicted with the bankruptcy code. Finally, it held that the petition was not filed in bad faith and noted that the non-insider claims were not insubstantial.
- Facts:
- The debtor entered into an agreement with the production company of the actor James Franco to create, market, and distribute a documentary about his life. The agreement required the parties to submit any dispute to binding arbitration. Later, the production company filed a demand for arbitration, alleging that the debtor breached the agreement. The debtor filed a counterclaim, then filed for bankruptcy.
- Judge(s):
- Faris, Lafferty, & Spraker
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