IN RE: EUTSLER
Ninth Circuit won’t rehear DBSI, creating a split with the Seventh Circuit on Sections 106(a)(1) and 544(b)(1).
- Rochelle Quick Take
View Rochelle Summary- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 2:15-bk-00870 (9th Circuit, Dec 27,2017) Published
- Tag(s):
- Ruling:
- BAP for 9th Circuit affirmed ruling of bankruptcy court (ED Wash.) denying motion for relief from stay by creditors seeking to enforce option agreement to purchase stock from ch. 13 debtor. Option provision triggered by bankruptcy filing was unenforceable "res ipsa loquitor" clause and paid-for, unexecuted option was not executory. BAP declined to rule on whether option agreement "rode through" bankruptcy and remained enforceable.
- Procedural context:
- Bankruptcy court (ED Wash.) denied creditors' motion for relief from stay and creditors' motion for reconsideration. Creditors appealed both rulings to BAP for 9th Circuit.
- Facts:
- Debtor founded closely held entity ("Softbase") and served as president and director. Minority shareholders ("Minority Shareholders") held 49% of stock. Buy-Sell Agreement included clause giving Minority Shareholders right to buy remaining stock in event holder filed bankruptcy. Debtor filed bankruptcy under chapter 13, scheduling stock as having value of $5,000. Debtor remained employed by entity. Debtor did not schedule Buy-Sell Agreement as executory contract, or Minority Shareholders as creditors. Bankruptcy court confirmed plan. Minority shareholders, who received no notice of bankruptcy, did not exercise option to buy stock. A year and a half later, Minority Shareholders filed motion for relief from stay seeking to exercise option.
- Judge(s):
- Faris, Spraker, Taylor