Ryniker v. Sumec Textile Co.
- Case Type:
- Business
- Case Status:
- Reversed and Remanded
- Citation:
- 24-2090 (2nd Circuit, May 27,2026) Published
- Tag(s):
-
- Ruling:
- In a warning to creditors, the court held that service of a summons and complaint on a debt collector was valid service on the creditor that had placed the debt for collection because (1) the assignment documents expressly authorized the debt collector "full power" to act in the creditor's subrogee name or in its own name, (2) the proof of claim filed by the debt collector instructed that all communications to the creditor be sent to the debt collector, and (3) the complaint's caption stated that the plaintiff asked that the bankruptcy court disallow the creditor's claims.
- Procedural context:
- Before the appeal, the bankruptcy litigation adminstrator filed an adversary proceeding against the appellant, seeking to recover preferential transfers and to disallow the creditor's claims. The summons and complaint were served on the debt collector that had been engaged to file a proof of claim in the bankruptcy estate.
When no answer was timely filed, the Administrator moved for entry of default and default judgment, which the bankruptcy court granted.
The creditor then filed a motion to vacate the default judgment with the bankruptcy court. The bankruptcy court denied the motion, and the creditor appealed to the district court. The district court reversed the bankruptcy court, vacating the default judgment and remanding to the bankruptcy court.
Sumec then asked the bankruptcy court to dismiss the adversary proceeding. The bankruptcy court granted the motion and certified its order for direct appeal to the Court of Appeals. The Court of Appeals accepted the direct appeal, and the Administrator timely appealed.
- Facts:
- The appellee, Sumec Textile Company Ltd., is a Chinese company that did business with Décor Holdings, Inc. or one or more of its debtor affiliates (collectively, the "Debtor" or "Debtors"). Sumec had an export credit insurance policy issued by China Export & Credit Insurance Corporation, known as "Sinosure."
In February 2019, the Debtors filed voluntary Chapter 11 petitions. Sumec made a claim on its Sinosure insurance due to the Debtor's failure to pay. Sinosure then hired Brown & Joseph, LLC, to collect the debt and to file a proof of claim in the Debtor's chapter 11 case.
Evidencing the two-step assignment, Sumec granted Sinosure "the full power" to exercise Sumec's rights and remedies to attempt to collect the debt "in our [Sumec's] or its own [Sinosure's] name." In turn, Sinosure granted Brown & Joseph the "full power" to exercise Sinosure's rights, as subrogee of the Sumec debt, "in our [Sinosure's] or its own [Brown & Joseph's] name for the amicable debt collection."
Brown & Joseph filed a proof of claim in the Chapter 11 case, directing that all notices that Sumec was entitled to receive as a creditor should be delivered to Brown & Joseph.
Bryan Ryniker was appointed as the bankruptcy litigation coordinator for the Debtor's claims. In August 2020, Ryniker filed a complaint against Sumec, seeking to recover nearly $700,000 in preferences and to disallow Sumec's claims in the bankruptcy case. The summons and complaint were mailed by prepaid first-class United States mail to Brown & Joseph at the address listed on Sumec's proof of claim. Courtesy copies were sent by email.
Brown & Joseph's corporate counsel received the emailed courtesy copies and forwarded them to Brown & Joseph's "Claims & Investigations Manager," Peter Geldes.
On September 3, 2020, Geldes emailed Ryniker stating that he was "look[ing] into" whether physical copies of the summons and complaint had been received and that he was "reviewing with our… client and the creditor [whether] the payments were made in the ordinary course [of business]." Geldes also asked Ryniker for a spreadsheet regarding the payment history.
Two months later, Geldes emailed Ryniker's staff stating that he had not received a response to his September 3 email. Ryniker's staff responded by emailing the spreadsheet to Geldes and stated that Ryniker would be "happy to provide Sumec with an extension of time to respond to the Complaint until December 15."
Two days later, Geldes responded, stating that he would "work on getting Sumec to provide the [ordinary course of business defense] analysis by the December 15th deadline."
Brown & Joseph missed the December 15 deadline. On the following day, December 16, Geldes emailed to inquire whether Ryniker was willing to make an offer to settle the claim. In the email, Geldes stated that his question was at the behest of Sumec.
Between December 2020 and May 2021, several conferences were scheduled and adjourned by the bankruptcy court. No one appeared on behalf of Sumec.
On February 11, 2021, Ryniker's staff informed Geldes that no further extensions to answer would be granted. Geldes responded, saying that he had relayed this to his client. After notice of his intent, Ryniker then filed a request for entry of default on February 24, 2021.
On March 25, 2021, the bankruptcy court entered default against Sumec. Five days later, Geldes emailed Ryniker and stated that he had not heard anything from Sumec. In this email, Geldes stated that "Brown & Joseph [was] not authorized to accept service on Sumec's behalf."
On May 21, 2021, Ryniker moved for entry of default judgment against Sumec. On July 19, 2021, after no response from Sumec, the bankruptcy court granted default judgment against Sumec for nearly $700,000.
- Judge(s):
- KEARSE, JACOBS, and LOHIER, Circuit Judges
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