Ullrich v. Welt (In re NICA Holdings, Inc.)

Summarized by Matthew Hale , Stichter, Riedel, Blain & Postler, PA
10 years 2 months ago

Citation:

Ullrich v. Welt (In re NICA Holdings, Inc.), — F.3d —, No. 14-14685 (11th Cir. Dec. 17, 2015)

Tag(s):

Ruling:

The Eleventh Circuit held that the assignee under Florida’s Assignment for the Benefit of Creditors statute could not place an assignor entity into bankruptcy without specific authority. Further, the appellant’s appeals from the bankruptcy court’s orders approving settlements between the Chapter 7 Trustee, the assignee, and the assignee’s attorney were not equitably moot because no complex unwinding of transactions affecting third parties was required to provide relief. The bankruptcy court’s decisions were reversed and the case remanded for dismissal.

Procedural context:

Appeals from the bankruptcy court’s orders granting the Chapter 7 Trustee’s motions to compromise controversies between the Chapter 7 Trustee, the assignee, and the assignee’s former attorney/malpractice defendant.

Facts:

NICA Holdings, Inc. assigned its assets to the appellee through an Assignment for the Benefit of Creditors (“ABC”) under Florida law. After the assignee’s sale of NICA’s only valuable asset—a tilapia farm in Nicaragua—fell through, the would-be buyer, Ullrich, brought suit against the assignee alleging he botched the sale and prevented NICA’s effective liquidation. The assignee in turn brought a malpractice suit against his attorneys. The assignee then filed a voluntary Chapter 7 petition for NICA, removing the disputes to bankruptcy court. The Chapter 7 Trustee and the assignee reached a settlement which included a bar order in favor of the assignee, insulating him from pre-petition personal liability. The Trustee then reached a settlement with the malpractice defendants, providing for a cash payment to the estate. After challenging the propriety of the assignee’s bankruptcy filing throughout the case, Ullrich objected to both orders approving the settlements, lost, and appealed. The bankruptcy court denied Ullrich’s efforts to stay implementation of the settlements pending appeal.

Judge(s):

Carnes, Chief Judge, Martin, Circuit Judge, and Walter, District Judge (sitting by designation)

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!