Furlough v. Cage (In re Technicool Systems, Inc.)

Newly appointed Circuit Judge Willett has a way with words.

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Case Type:
Business
Case Status:
Affirmed
Citation:
17-20603 (5th Circuit, Jun 20,2018) Published
Tag(s):
Ruling:
Affirmed district court and held that Appellant did not have standing to appeal order granting chapter 7 trustee's motion to employ special counsel "because the order did not reach his wallet." The opinion discusses how standing to appeal a bankruptcy court's order is narrower than standing to appeal an Article III court's order: to have standing to appeal a bankruptcy court order, the appellant must show that it was "directly and adversely affected pecuniarily by the order of the bankruptcy court."
Procedural context:
Appellant, equity owner of chapter 7 debtor, appealed district court order affirming bankruptcy court's decision that he did not have standing to object to chapter 7 trustee's application to employ special counsel because he was not a creditor and did not have a stake it the estate. Appellant purchased a claim during the appeal, but that was not sufficient to confer upon him standing as a creditor as of the petition date or the date of the bankruptcy court's ruling.
Facts:
National Oilwell Varco (NOV) purchased $3 million worth of "desert-proof" industrial-strength air conditioners from Technicool Systems (TS) for use on oil-and-gas rigs around the world. The air conditioners failed. NOV, represented by Stacey & Baker PC (SBPC), sued TS in state court. TS filed chapter 7. NOV obtained stay relief to pursue claims against TS's owner (Appellant). Discovery revealed Appellant created several other companies closely related to TS. The chapter 7 trustee sought to consolidate the related businesses and to pierce the corporate veil, and filed an application to employ SBPC as special counsel for this litigation. Appellant objected on the basis that SBPC was not disinterested and its representation of NOV, TS's largest creditor, created a conflict.
Judge(s):
Willett, Smith, Wiener

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