Case CSS Doc 2301 Filed 03/07/14 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

Transcription

1 Case CSS Doc 2301 Filed 03/07/14 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE IN RE: : Chapter 11 : ALLIED SYSTEMS HOLDING, INC. : Case No (CSS) : (Jointly Administered) : DEBTORS. : Objections Due: March 24, 2014 by 4:00 p.m. : Hearing Date: April 21, 2014 at 10:00 a.m. MOTION OF TIMOTHY AND CARRIE HOLT FOR RELIEF FROM STAY UNDER SECTION 362 OF THE BANKRUPTCY CODE Timothy Holt and Carrie Holt (collectively, the Holts or Movants ) hereby move (the Motion ) for relief from the automatic stay pursuant to Section 362(d) of the Bankruptcy Code in order to pursue personal injury claims against the above-captioned debtors (the Debtors ). In support of the Motion, the Movants respectfully state as follows: BACKGROUND The Bankruptcy Cases 1. On May 17, 2012 (the Involuntary Petition Date ), involuntary petitions under Chapter 11 of the Bankruptcy Code were filed in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court ) against Allied Systems Holdings, Inc. ( Allied Holdings ) and Allied Systems, Ltd. (L.P.) ( Allied Systems ). 2. On June 10, 2012, the remaining Debtors (direct or indirect subsidiaries of Allied Holdings) filed voluntary petitions with the Bankruptcy Court. 3. On June 10, 2012, Allied Holdings and Allied Systems consented to the entry of an order for relief under chapter 11 of the Bankruptcy Code [D.I. 68]. On June 11, the Bankruptcy Court entered an order granting relief under Chapter 11 of the Bankruptcy Code. An

2 Case CSS Doc 2301 Filed 03/07/14 Page 2 of 7 order directing the joint administration of the Debtors cases (the Cases ) was entered on June 11, 2012 [D.I. 89]. 4. The Debtors are authorized to operate their business as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. An official committee of unsecured creditors was appointed by the Office of the United States Trustee on June 20, To date, no trustee or examiner has been appointed in these Cases. The Potential Civil Action 6. On April 14, 2011, at approximately 2:56 p.m., the Holts were travelling in a vehicle, driven by Timothy Holt, which was stopped in the outside southbound lane of State Highway 331, at the intersection with U.S. Highway 64 (East Main Street) in Russellville, Arkansas. 7. On April 14, 2011, at approximately 2:56 p.m., Freddie Garrison ( Garrison ) was traveling in a 1996 Volvo model R60 car-hauler (the Allied Vehicle ), VIN 4RCAG7040TH010004, in the outside southbound lane of State Highway 331, approaching the intersection with U.S. Highway 64 (East Main Street) in Russellville, Arkansas. 8. Allied Systems is the owner of the Allied Vehicle. The Allied Vehicle was being operated by Garrison with permission from and within the scope of employment by Allied Systems. 9. Garrison failed to properly stop the Allied Vehicle at the above-referenced intersection and collided into the side or rear of the Holt s vehicle. The impact and force of the collision between the Allied Vehicle and the Holt s vehicle caused both damage to the Holt s vehicle and bodily injury to Timothy and Carrie Holt. 2

3 Case CSS Doc 2301 Filed 03/07/14 Page 3 of 7 the incident. A. 10. Garrison was issued a citation for careless and prohibited driving at the scene of 11. A copy of the Arkansas Motor Vehicle Crash Report is attached hereto as Exhibit JURISDICTION AND VENUE 12. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and Venue is proper pursuant to 28 U.S.C and This is a core proceeding pursuant to 28 U.S.C. 157(b). The statutory predicate for the relief requested herein is 11 U.S.C. 362(d) and Rules 4001 and 9014 of the Federal Rules of Bankruptcy Procedure. RELIEF REQUESTED 14. The Bankruptcy Court lacks jurisdiction over personal injury claims pursuant to 28 U.S.C. 157(b)(5). Thus, the Movants cannot pursue or liquidate their personal injury claims before this Bankruptcy Court. By this Motion, the Movants seek relief from the automatic stay for the purpose of allowing the Movants to commence litigation in the Circuit Court of Pope County, Arkansas (or any other court of competent jurisdiction) and to liquidate any claims against the Debtors, or if appropriate, the Debtors insurance providers. BASIS FOR RELIEF 15. Relief from the automatic stay of 11 U.S.C. 362(a) is governed by 11. U.S.C. 362(d) which reads, in pertinent part, as follows: On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under the subsection (a) of this section, such as by terminating, annulling, modifying or conditioning such stay - (1) for cause... 3

4 Case CSS Doc 2301 Filed 03/07/14 Page 4 of 7 11 U.S.C. 362(d). Although the Movants bear the initial burden to show that cause exists, once a prima facie case of cause is shown, the Debtors (as the parties opposing stay relief) have the ultimate burden of disproving the existence of cause pursuant to Section 362(g) of the Bankruptcy Code. See, e.g., In re West 22 nd St. Corp., 214 B.R. 751, 756 (Bankr. S.D.N.Y. 1997). 16. Cause is not defined by the Bankruptcy Code. Consequently, a bankruptcy Court must decide what constitutes cause to lift the automatic stay on a case-by-case basis. See Izzarelli v. Rexene Prod. Co. (In re Rexene Prod. Co.), 141 B.R. 574, 576 (Bankr. D.Del. 1992). According to the Court in Rexene, the legislative history of Section 362 of the Bankruptcy Code provides that cause may be established by a single factor such as a desire to permit an action to proceed... in another tribunal or lack of any connection with or interference with the pending bankruptcy case. Rexene, 141 B.R. at 576 (citing H.R. rep. No , 95 th Cong., 1st Sess., (1977)). Courts determine what constitutes cause based on the totality of the circumstances in each particular case. Baldino v. Wilson, 116 F.3d 87, 90 (3d Cir. 1997). 17. The Court in Rexene provides a balancing test to determine whether cause exists to lift the automatic stay. 141 B.R. at 576. Under Rexene, the balancing test looks at three factors to decide whether to lift the automatic stay, including: a) Any great prejudice to either the bankrupt estate or the debtor will result from continuation of the civil suit; b) the hardship to the [non-bankrupt party] by maintenance of the stay considerably outweighs the hardship of the debtor; and c) the movant has a probability of prevailing on the merits. 4

5 Case CSS Doc 2301 Filed 03/07/14 Page 5 of 7 Rexene, 121 B.R. at 576. Accord In re Continental Airlines, Inc., 152 B.R. 420, 424 (D. Del. 1993); See also, Int'l Bus. Machines v. Fernstrom Storage and Van Co. (Matter of Fernstrom Storage and Van Co.), 938 F.2d 731, 735 (7th Cir.1991). 18. To establish cause, the Movants must show that the balance of hardships from not obtaining relief tips significantly in [their] favor. Alt. Marine, Inc. v. Am. Classic Voyages, Co. (In re Am. Classic Voyages, Co.), 298 B.R. 222, 235 (D. Del. 2003) (internal citations omitted). The Debtors Will Not Suffer Great Prejudice 19. As to the first factor, granting the Movants relief from the stay will not impose great prejudice on the Debtors or impede the administration of the Cases. See In re Marvin Johnson s Auto Service, Inc., 192 B.R. 1008, 1014 (Bankr. N.D. Alaska 1996) (noting the court should consider the extent to which trial in a non-bankruptcy forum will interfere with the progress of the bankruptcy case.) Nothing before the Bankruptcy Court will be held in abeyance as a result of the Movants commencing their personal injury action. Nor do the Movants anticipate that members of the Debtors senior management will be deposed in connection with any future personal injury action since the relevant activities do not involve management activities. Furthermore, if the Debtors insurance company is tasked with the defense of the resulting action, it is unlikely that the attention of Debtors bankruptcy counsel will be required. 20. More importantly, the Movants are willing to limit any recovery from the resulting litigation to either the extent of the applicable insurance coverage or to any settlement obtained between the Debtors insurance company and the Movants. 5

6 Case CSS Doc 2301 Filed 03/07/14 Page 6 of 7 Hardship of the Movants Outweighs That of the Debtors 21. As to the second factor, hardship to the Movants considerably outweighs any hardship to Debtors if the stay is lifted. 22. As an initial matter, it is difficult for the Debtors to claim any hardship at this point in the Cases. Upon information and belief, the sale of the Debtors assets closed on December 27, The Debtors presumably maintain the requisite insurance policies that cover personal injury actions such as the Movants potential action. The Movants claims against the Debtors will ultimately need to be liquidated anyway. 23. The Holts, on the other hand, have been forced to bear the costs of the injuries suffered at the hands of the Debtors and its employee Garrison. Unless the Bankruptcy Court lifts the automatic stay and permits the Movants to proceed with the personal injury action against the Debtors and the Debtors insurance provider, the Movants face the prospect of no recovery, no claims against the Debtors, and would be forced to bear the continued costs of the alleged injuries, including past and future medical expenses. 24. It makes little sense to force the Movants to wait indefinitely to obtain recovery from the Debtors insurance when the burden on the Debtors if any, is minimal. Movants are Likely to Succeed on the Merits 25. As to the third factor, the required showing of probable success is very slight. In re Rexene, 141 B.R. at 578 ( Only strong defenses to state court proceedings can prevent a bankruptcy court from granting relief from stay... ). 26. As set forth in the Arkansas Motor Vehicle Crash Report attached as Exhibit A, the police issued Garrison a citation for careless and prohibited driving at the scene of the incident. Garrison s description of the incident shows that he was at fault. The injuries suffered 6

7 Case CSS Doc 2301 Filed 03/07/14 Page 7 of 7 and medical expenses incurred will be adequately proven through the litigation process. The probability of success on the merits is high, or at least well beyond the very slight probability of success required to satisfy this the third prong in favor of stay relief. 27. No prior request for the relief sought herein has been made to this or any other Court. NOTICE 28. The Movants have served a copy of this Motion on the Office of the United States Trustee and counsel for the Debtors, the Official Committee of Unsecured Creditors, and the secured lenders in the Cases. The Movants submit that such notice is sufficient for the purpose of this Motion. CONCLUSION 29. For the reasons set forth above, Timothy and Carrie Holt respectfully request that this Court enter an order substantially in the form attached hereto modifying the automatic stay to allow the commencement and prosecution of the state court action; and granting such other and further relief as is just and proper. Dated: March 7, 2014 COOCH AND TAYLOR, P.A. /s/ R. Grant Dick IV R. Grant Dick IV (De. No. 5123) 1000 West Street, 10 th Floor The Brandywine Building Wilmington, DE Telephone: Facsimile: gdick@coochtaylor.com Attorneys for Timothy Holt and Carrie Holt 7

8 Case CSS Doc Filed 03/07/14 Page 1 of 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al., Debtors. Chapter 11 Case No (CSS) Jointly Administered Objection Deadline: March 24, 4:00 p.m. Hearing Date: April 21, 10:00 a.m. TO: The Persons on the Attached Service List NOTICE OF MOTION Timothy and Carrie Holt have filed the Motion for Relief from Stay Under Section 365 of the Bankruptcy Code (the Motion ) which seeks the following relief: Entry of an order modifying the automatic stay to allow the commencement and prosecution of the state court action You are required to file a response to the attached motion on or before March 24, 2014 at 4:00 p.m. At the same time, you must also serve a copy of the response upon movant's attorney: R. Grant Dick, IV, Esquire Cooch and Taylor P.A West Street, 10th floor Wilmington, DE Gdick@coochtaylor.com a.m. HEARING ON THE APPLICATION WILL BE HELD ON APRIL 21, 2014 AT 10:00 IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: March 7, 2014 Wilmington, Delaware COOCH AND TAYLOR, P.A. /s/ R. Grant Dick IV R. Grant Dick IV (No. 5123) The Brandywine Building 1000 West Street, 10 th Floor Wilmington, DE Telephone: (302) / Fax: (302) gdick@coochtaylor.com

9 Case CSS Doc Filed 03/07/14 Page 1 of 8 EXHIBIT A

10 Case CSS Doc Filed 03/07/14 Page 2 of 8

17 Case CSS Doc Filed 03/07/14 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE IN RE: : Chapter 11 : ALLIED SYSTEMS HOLDING, INC. : Case No (CSS) : (Jointly Administered) : DEBTORS. : [Re: Docket No ] : ORDER GRANTING LIMITED RELIEF FROM THE AUTOMATIC STAY Upon consideration of the Motion of Timothy and Carrie Holt for Relief from Stay Under Section 362 of the Bankruptcy Code (the Motion ) 1 and due and sufficient notice of the Motion having been given under the circumstances; and it appearing that no other or further notice need be provided; and the Court having determined that sufficient cause exists to grant the Motion; and after due deliberation thereon and good and sufficient cause appearing therefor it is hereby ORDERED that: The Motion is GRANTED to the extent described herein; and it is further ORDERED that the automatic stay is hereby modified as of the date hereof to allow the Movants to commence litigation against the Debtors in the appropriate Arkansas state court and to prosecute and liquidate the Movants personal injury claims (the Claims ) against the Debtors; and it is further ORDERED that the Movants may liquidate their Claims against the Debtors either through settlement or adjudication of the Claims and may enforce any such settlement or judgment solely through the application of the proceeds of Debtors' insurance to the extent that any such proceeds are available; and it is further 1 Capitalized terms not herein defmed shall have the same meaning ascribed to them in the Motion.

18 Case CSS Doc Filed 03/07/14 Page 2 of 2 ORDERED that the automatic stay shall otherwise remain in full effect, including but not limited to the prohibition of any actions to enforce a judgment or award, or collect or exercise control over any property of the Debtors, except for the application of any available insurance proceeds as provided herein; and it is further ORDERED that this Court shall retain jurisdiction over all matters related to the implementation of this Order. Dated: April, 2014 Wilmington, Delaware THE HONORABLE CHRISTOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE

19 Case CSS Doc Filed 03/07/14 Page 1 of 3 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al., Debtors. Chapter 11 Case No (CSS) Jointly Administered CERTIFICATE OF SERVICE I, R. Grant Dick, IV, Esquire certify that I caused one true and correct copy of the MOTION OF TIMOTHY AND CARRIE HOLT FOR RELIEF FROM STAY UNDER SECTION 362 OF THE BANKRUPTCY CODE to be sent on March 7, 2014 in the manner indicated to the following: VIA Hand Delivery Mark D. Collins, Esquire Christopher M. Samis, Esquire Marisa A. Terranova, Esquire Richards Layton & Finger One Rodney Square Wilmington, DE William D. Sullivan, Esquire William A. Hazeltine, Esquire Sullivan Hazeltine Allinson LLC 901 N. Market St., Suite 1300 Wilmington, DE David L. Buchbinder, Esquire Office of the U.S. Trustee J. Caleb Boggs Federal Building Suite 2207 Wilmington, DE Michael R. Nestor, Esq. John T. Dorsey, Esq. Donald J. Bowman, Jr. Young Conaway Stargatt & Taylor, LLP 1000 North King Street Wilmington, DE 19801

20 Case CSS Doc Filed 03/07/14 Page 2 of 3 Adam G. Landis, Esq. Kerri K. Mumford, Esq. Jeffrey Drobish, Esq. Landis Rath & Cobb LLP 919 Market Street, Suite 1800 Wilmington, DE Via U.S. Mail, Postage Prepaid Jeffrey W. Kelley, Esquire Ezra H. Cohen, Esquire Matthew R. Brooks, Esquire TROUTMAN SANDERS LLP Bank of America Plaza 600 Peachtree Street, Suite 5200 Atlanta, GA Michael G. Burke, Esquire Brian J. Lohan, Esquire Dennis Kao, Esquire SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY Robert A. Klyman, Esq. Glen B. Collyer, Esq. Gregory O. Lunt, Esq. Latham & Watkins LLP 355 South Grand Avenue Los Angeles, CA Adam C. Harris, Esq. Robert J. Ward, Esq. Lawrence V. Gelber, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, NY 10022

21 Case CSS Doc Filed 03/07/14 Page 3 of 3 Dated: March 7, 2014 Wilmington, Delaware COOCH AND TAYLOR, P.A. /s/ R. Grant Dick IV R. Grant Dick IV (No. 5123) The Brandywine Building 1000 West Street, 10 th Floor P.O. Box 1680 Wilmington, DE Telephone: (302) Fax: (302) gdick@coochtaylor.com