In denying creditors’ motion to dismiss, the court found that they showed neither an objective futility or subjective bad faith in seeking Chapter 11 relief. Additionally, the court held that a state-court receiver did not qualify under either of § 543(d)’s exceptions to the duties of a custodian to turnover property of the estate.
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Honorable David L. Bissett
The court denied the Defendant’s motion to dismiss in part and granted it in part. Specifically, the court denied the Defendant’s Rule 12(b)(1) motion as it found subject-matter jurisdiction to hear the case. However, the court dismissed the Debtor’s claims for a failure to state a claim upon which relief can be granted.
The court granted in part and denied in part the Defendants’ Rule 12(b) motion to dismiss the Debtor’s Amended Complaint. Specifically, the court dismissed Count I based upon a prior order entered in the bankruptcy case. However, the court did not dismiss Count II or Count III, because the Debtor stated plausible claims upon which relief can be granted and the Defendants failed to provide support to the contrary.
In approving the Chapter 7 trustee’s compromise of a claim filed against the estate, the court finds the proposed settlement reasonable under the circumstances of the case. Notably, the settlement ultimately resulted in a net benefit to the estate and was critical in allowing the trustee to close a significant sale of estate property.
The court dismissed the Plaintiffs’ motion for summary judgment to find a debt non-dischargeable under 11 U.S.C § 523(a)(4). The court found that the Plaintiff failed to meet its burden of proving “defalcation” in accordance with Bullock v. BankChampaign, N.A., 569 U.S. 267 (2013) which required the Plaintiff to prove a heightened culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the relevant fiduciary behavior.
The court found that the West Virginia Computer Crime and Abuse Act applied to telephone calls, and denied the defendant’s motion to dismiss a claim for damages under it. The court also found that the plaintiffs insufficiently pled their claims for intentional infliction of emotional distress and invasion of privacy.
Considering competing proposed Chapter 11 plans, the court finds both plans to be confirmable. Ultimately, the court confirms the Debtor’s proposed plan of reorganization based upon overwhelming support from the creditor body.