Phoenix, LLC v. The Alameda Liquidating Trust (In re Alameda Investments, LLC)
- Summarized by Laura Coordes , Sandra Day O'Connor College of Law Arizona State University
- 10 years 10 months ago
- Citation:
- Phoenix, LLC v. The Alameda Liquidating Trust (In re Alameda Investments, LLC), BAP No. CC-13-1333-PaTaKu (9th Cir. BAP Mar. 5, 2014) (unpublished)
- Tag(s):
-
- Ruling:
- The Ninth Circuit BAP affirmed the bankruptcy court's order determining that the Appellee liquidating trust succeeded to the entire interest in an LLC held by the chapter 11 debtor and that the Appellee enjoyed the same membership interest in the LLC as the debtor had prior to bankruptcy.
- Procedural context:
- Appeal from the bankruptcy court for the Central District of California determining that the trust succeeded to all of debtor's interest in the LLC. The bankruptcy court's interpretation of the Bankruptcy Code was reviewed de novo, while the court's interpretation of the terms of debtor's confirmed plan was reviewed for abuse of discretion.
- Facts:
- Debtor and Appellant each owned a 50% membership interest in West Lakeside, a California LLC. The operating agreement executed by the parties and the LLC manager contained certain transfer restrictions, including a restriction on transfer of membership and economic interests without the prior written approval of a majority of the members. After debtor and its affiliates filed for bankruptcy, the bankruptcy court confirmed a plan that provided for a trust to liquidate and distribute debtor's assets, including the LLC. The LLC and its manager eventually refused to involve the liquidating trustee in the LLC's operations, alleging that debtor's membership interest could not be transferred to the trust without the consent of a majority of members of the LLC and that therefore, the plan did not transfer debtor's membership interest to the trust. The bankruptcy court entered a memorandum decision holding that (1) the operating agreement among the LLC members was not an executory contract; (2) the plan had transferred all interests of debtor in the LLC to the trust; (3) § 541(c)(1)(A) prevented the enforcement of any anti-assignment provisions; (4) the trust was a representative of the bankruptcy estate within the meaning of § 1123(b)(3)(B); and (5) the trust enjoyed the same membership interest in the LLC that debtor had prior to filing the bankruptcy petition.
- Judge(s):
- Pappas, Taylor, and Kurtz
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