Ritchie Special Credit Investments, Ltd. v. United States Trustee

Summarized by Brian Hockett , Thompson Coburn LLP
15 years 6 months ago

Citation:

____ F.3d ____, No. 09-3271 (8th Cir. Sept. 2, 2010)

Tag(s):

8th Circuit

Ruling:

The Eighth Circuit affirmed the appointment of Chapter 11 trustee pursuant to 11 U.S.C. § 1104 because a creditor did not show that it would be prejudiced by appointment of a single trustee in the jointly administered cases even though the Chapter 11 trustee previously served as a receiver for the debtors in an action brought by the U.S. government against the debtors/Ponzi scheme perpetrators that creditor suggested predisposed trustee to forfeit assets to U.S. government and even though one of the estate's main assets would be a claim against the other jointly administered debtor's estate.

Procedural context:

Appeal to Eighth Circuit from the district court's affirmance of the bankruptcy court's order order appointing Chapter 11 trustee and overruling objection by creditor to the appointment of a single trustee in jointly administered cases.

Facts:

Petters Company, Inc. ("PCI") and Petters Group Worldwide, LLC ("PGW") were engaged in a Ponzi scheme under the direction of Thomas A. Petters, who has since been convicted of twenty counts and sentenced to fifty years' imprisonment. Douglas Kelley ("Kelley") was appointed as a federal court receiver prior to filing the bankruptcy cases for PCI and PGW. Kelley filed bankruptcy petitions for PCI and PGW as authorized under his appointment as a receiver by the federal district court. After the bankruptcy filing, the U.S. Trustee appointed Kelley as Chapter 11 trustee for both PCI and PGW. A creditor of PGW opposed the appointment of Kelley as trustee because the creditor believed that there were conflicts inherent in serving as receiver for the benefit of the U.S. government prior to the bankruptcy case filing and would be conflicts in serving as a trustee for both bankruptcy estates.

Judge(s):

Wollman, Ebel, Colloton

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