[00:00:00] Speaker 03:
on camera.

[00:00:02] Speaker 03:
So with that, Madam Clerk, would you please call the first case?

[00:00:07] Speaker 03:
In Ray Reno City Center owner LLC, Brian Davidoff appearing for appellants, Brian Levy appearing for appellee.

[00:00:17] Speaker 03:
All right.

[00:00:17] Speaker 03:
Good morning.

[00:00:19] Speaker 04:
Mr. Davidoff, would you like to reserve any time?

[00:00:22] Speaker 01:
I would, Your Honor.

[00:00:22] Speaker 01:
I'd like to reserve three minutes at the end.

[00:00:25] Speaker 04:
All right.

[00:00:25] Speaker 04:
Very good.

[00:00:26] Speaker 04:
Please begin.

[00:00:27] Speaker 01:
Thank you, Your Honours.

[00:00:28] Speaker 01:
Good morning.

[00:00:29] Speaker 01:
I'm here obviously for Christopher Bivore and the related appellant parties.

[00:00:35] Speaker 01:
I certainly acknowledge what Your Honour is saying to focus on specific issues.

[00:00:40] Speaker 01:
What I'd like to begin with, Your Honours, is

[00:00:44] Speaker 01:
Context is relevant in any decision.

[00:00:47] Speaker 01:
And so I'd like to spend a couple of minutes regarding the facts leading up to the dismissal order.

[00:00:53] Speaker 01:
What we know is that at the time of the bankruptcy filing, the debtor schedules this real estate asset at $153 million.

[00:01:03] Speaker 01:
That value is never challenged by Delphi.

[00:01:06] Speaker 01:
It's never challenged by anyone in the bankruptcy case, not even in Delphi's motion for relief from stay.

[00:01:12] Speaker 01:
Delphi itself files a proof of claim for $106 million.

[00:01:16] Speaker 01:
My clients collectively file claims which aggregate approximately $80 million.

[00:01:23] Speaker 01:
Those claims are objected to.

[00:01:24] Speaker 01:
No objections are ultimately resolved by the bankruptcy court, although there was a hearing at least on one of the objections, but none of them were ultimately resolved by the bankruptcy court.

[00:01:35] Speaker 01:
My client, Mr. Bevor, individually, the appellant had guaranteed the Delphi debt.

[00:01:41] Speaker 01:
The debtor made three attempts to get a plan confirmed, an initial plan, an amended plan, and a second amended plan.

[00:01:47] Speaker 01:
They could not get those plans across the French line.

[00:01:51] Speaker 01:
After lots of litigation, the appellants are able to obtain termination of exclusivity, they file a plan, and critically here in this case, Your Honor, because I think that this

[00:02:04] Speaker 01:
is a feature of much of our argument is that we believe that the appellant's plan

[00:02:12] Speaker 01:
provided a potentially viable path to this case.

[00:02:17] Speaker 01:
We offered $7.5 million more to Delphi.

[00:02:21] Speaker 01:
We offered to pay unsecured creditors 95 cents on the dollar on confirmation versus the debtors plan, which was going to provide them $500,000 over a number of years.

[00:02:33] Speaker 01:
And also very importantly,

[00:02:36] Speaker 01:
The appellant's plan was going to provide a means to resolution of what generated this entire bankruptcy case, which was the dispute over management that the Griffin members had purported to remove Mr. Bivore and his companies as the managers.

[00:02:51] Speaker 01:
So the appellant's plan was going to provide all those things.

[00:02:54] Speaker 01:
It provided a potentially viable alternative.

[00:02:58] Speaker 01:
So when the debtor couldn't get their plan confirmed, they bring their dismissal motion.

[00:03:03] Speaker 01:
And the dismissal motion is predicated on this Madison refinance.

[00:03:08] Speaker 01:
And your owners are aware that the Madison refinance is to be using three parts.

[00:03:15] Speaker 01:
One is to pay the balance of the money due to Delphi.

[00:03:18] Speaker 01:
And as a senior secured creditor, we can't object and don't object to that.

[00:03:23] Speaker 01:
then some amount of money, $835,000, is to pay administrative claims.

[00:03:29] Speaker 01:
We think, correctly, although those claims can be paid, there should have been an opportunity to object.

[00:03:36] Speaker 01:
That was not afforded to any parties.

[00:03:38] Speaker 01:
But most critically, there's this handful 18 claims that are attached to an exhibit to the dismissal motion, which they say are the only general unsecured claims that they're going to pay.

[00:03:52] Speaker 01:
They're going to leave us out.

[00:03:54] Speaker 01:
And those 18 claims, they say they're allowed, but actually when you look at the exhibit, the exhibit indicates some of them are subject to further negotiation.

[00:04:02] Speaker 01:
They aggregate $2.2 million versus the $80 million of objected claims that my clients had filed.

[00:04:10] Speaker 01:
And then critically, the dismissal motion says, specifically, I'm going to read just a couple lines from it.

[00:04:16] Speaker 01:
If the bankruptcy case is dismissed, the debtor will consummate the refinance transaction with Madison Capital.

[00:04:23] Speaker 01:
What is more, upon the closing of the refinance transaction, the debtor will pay the Chapter 11 administrative expenses and allow general unsecured claims.

[00:04:32] Speaker 01:
That's baked into the motion.

[00:04:35] Speaker 01:
And the motion then also provides that the Griffin members would be revested with their equity interests.

[00:04:40] Speaker 01:
We obviously oppose that.

[00:04:41] Speaker 01:
We say it violates JIVIC.

[00:04:42] Speaker 01:
We say it's a Sub Rosa plan.

[00:04:45] Speaker 01:
We say that the case has been prosecuted for the benefit of the Griffin members.

[00:04:49] Speaker 01:
Bankruptcy court overrules all of it.

[00:04:51] Speaker 01:
Mr. David Uth, but you didn't appeal that order, did you?

[00:04:55] Speaker 01:
Which part, Your Honor?

[00:04:55] Speaker 02:
The order approving the settlement.

[00:04:57] Speaker 01:
No, we did not.

[00:04:59] Speaker 01:
We did not.

[00:05:01] Speaker 01:
But, obviously, a settlement, the issue that we have, Your Honor, is simply the dismissal.

[00:05:06] Speaker 01:
The dismissal incorporated the settlement.

[00:05:10] Speaker 02:
But the settlement, Your Honor, was... As for the dismissal, on that part, I didn't see that you objected, you didn't say that, you didn't raise an argument that there was no cause.

[00:05:23] Speaker 02:
You're just raising the Jevic argument.

[00:05:25] Speaker 01:
That is correct.

[00:05:26] Speaker 01:
We don't challenge the bankruptcy court had authority to dismiss the case in its discretion, but we do challenge the way it was dismissed, that it violated JIVIC.

[00:05:37] Speaker 01:
And Your Honor, to your question, yes, it is correct that we did not object to the dismissal.

[00:05:42] Speaker 01:
Excuse me, the settlement was with Delphi.

[00:05:49] Speaker 01:
We objected to it, but we didn't appeal it.

[00:05:52] Speaker 01:
That is correct.

[00:05:53] Speaker 01:
But that issue is distinct from this Madison refinance transaction and the dismissal motion.

[00:06:02] Speaker 01:
Critically, the dismissal order specifically says it is hereby ordered the motion is granted.

[00:06:08] Speaker 01:
It doesn't say it's granted in part and denied in part.

[00:06:11] Speaker 01:
It just says it's granted.

[00:06:13] Speaker 01:
And then it goes on to say that the debtor is authorized and empowered to do and perform all acts necessary to implement the refinance transaction.

[00:06:25] Speaker 01:
The dismissal order implicitly, if not explicitly, incorporates the Madison refinance transaction.

[00:06:35] Speaker 01:
And that's an integrated transaction.

[00:06:38] Speaker 01:
That transaction says Delphi is going to get paid, the unsecured creditors are going to get paid, the administrative claims are going to get paid.

[00:06:46] Speaker 01:
And that's what the dismissal order does.

[00:06:49] Speaker 02:
So with the case dismissed and the debtor authorized and empowered,

[00:06:55] Speaker 02:
doesn't say the party has the absolute right to do that, but authorizing and empowered, wouldn't you have an ability to challenge or raise issues in state court?

[00:07:11] Speaker 01:
Your honor, the transaction's been approved by the bankruptcy court.

[00:07:15] Speaker 01:
It says that the debt is authorized and empowered to do that.

[00:07:18] Speaker 01:
The fact that the bankruptcy judge doesn't say, I'm not approving the interest rate or I'm not approving the specific terms of the loan, that to us is not relevant to the dismissal, but the details.

[00:07:31] Speaker 02:
You think it's a distinction, there's not a distinction between what the court did and if the court had said they shall do it.

[00:07:41] Speaker 02:
authorizing to empower, in essence, would be equivalent to the bankruptcy court saying, you shall do this.

[00:07:51] Speaker 01:
That is correct, Your Honor, for two reasons.

[00:07:54] Speaker 01:
One is that the dismissal order specifically incorporated the entire dismissal motion.

[00:08:01] Speaker 01:
Again, it granted that motion, not in part, it didn't deny it in part, it granted the entire motion and it then authorized and empowered the debtor to carry out a transaction

[00:08:14] Speaker 01:
that when you look at it, it is an integrated transaction.

[00:08:18] Speaker 01:
It didn't say that we're only authorizing and empowering the payment of the senior creditor.

[00:08:25] Speaker 04:
So, Mr. Davidoff, could the order be fixed?

[00:08:29] Speaker 04:
Let's say we remanded it.

[00:08:31] Speaker 04:
We vacated it and remanded it because it wasn't consistent with Javik.

[00:08:35] Speaker 04:
Could the bankruptcy court fix the order by just saying, the motion is granted in part, and I'm not requiring any of these actions?

[00:08:43] Speaker 04:
You can do what you want with this money and this, you know.

[00:08:48] Speaker 04:
the Madison refinancing?

[00:08:50] Speaker 04:
Would that make it okay?

[00:08:51] Speaker 01:
Your Honor, I think that the court here should have done what the court in Portmore did, and I know you were on the panel on that court.

[00:08:59] Speaker 01:
The court should have rejected it.

[00:09:01] Speaker 01:
The court wasn't there to rewrite the transaction for the parties.

[00:09:06] Speaker 01:
There was a transaction presented to the bankruptcy court that proposed a certain methodology.

[00:09:11] Speaker 01:
It either complied with Javik or it didn't.

[00:09:15] Speaker 01:
And I think that what

[00:09:17] Speaker 01:
the alternatives for the court is to say, okay, if you're going to do it this way, I can't do it this way, but not if I'm going to allow you to undo this, to kind of take part of the transaction

[00:09:33] Speaker 01:
pay the senior secured credit, but not pay anybody else because that wasn't presented to the court.

[00:09:38] Speaker 01:
Now, if it was reversed and remanded with that instruction, I suppose then the parties could figure out, go back into the bankruptcy court and figure out whether Madison's willing to do a deal under those circumstances.

[00:09:51] Speaker 01:
I don't know.

[00:09:52] Speaker 01:
We would have to revisit that.

[00:09:53] Speaker 04:
So Delphi's been paid off.

[00:09:56] Speaker 01:
Delphi, I believe that, yes, the payment was made, and I believe that Delphi has indeed removed its lien on the property.

[00:10:04] Speaker 04:
What about all the other people?

[00:10:08] Speaker 04:
Maybe we don't know what's happened with the rest of the terms of what they were going to do after the case was dismissed.

[00:10:16] Speaker 04:
I'm just wondering, can that egg be unscrambled?

[00:10:19] Speaker 01:
Your Honor, I anticipated that question, and we believe that that egg can be unscrambled.

[00:10:24] Speaker 01:
Number one is, again, we don't challenge the Delphi part, okay?

[00:10:30] Speaker 01:
With regard to the unsecured creditors, to the extent they have been paid,

[00:10:34] Speaker 01:
and they were impaid properly, that money can be clawed back.

[00:10:38] Speaker 01:
I mean, bankruptcy courts claw back money on a regular basis.

[00:10:41] Speaker 01:
We're talking about 18 creditors of $2.2 million.

[00:10:44] Speaker 01:
And to the extent that we are right and the court agrees that the revesting of the equity in the Griffin members was inappropriate when a particular group of creditors weren't paid and others were, certainly that can be recovered as well.

[00:11:00] Speaker 01:
we think the egg can be unscrambled.

[00:11:03] Speaker 01:
It is not too complex not to be unscrambled.

[00:11:07] Speaker 01:
So, Your Honour, I guess within the time that I have, I just want to focus, if I can, on the Purimord decision.

[00:11:16] Speaker 01:
Appellees rely on that case for

[00:11:21] Speaker 01:
for their position.

[00:11:23] Speaker 01:
But when you look at what the bankruptcy court did in Port Amor, the bankruptcy court actually had very similar facts to what we have, which is that the debtor in that case proposed two alternatives.

[00:11:35] Speaker 01:
The one being, I'll pay certain creditors and not others.

[00:11:38] Speaker 01:
The other one being, I'll pay other creditors and then we'll have a reserve for the objecting creditor.

[00:11:44] Speaker 01:
And the bankruptcy court rejected both of those.

[00:11:47] Speaker 01:
And then Your Honor on the back said, okay, when the bankruptcy court ultimately having rejected both those alternatives and entered a plain vanilla dismissal order, that's all it said, case is dismissed.

[00:11:59] Speaker 01:
That was okay.

[00:12:01] Speaker 01:
And that was affirmed by the bankruptcy appellate panel.

[00:12:04] Speaker 01:
So we get it, Your Honor.

[00:12:06] Speaker 01:
But that is exactly the opposite of what the bankruptcy court did in this case.

[00:12:11] Speaker 01:
And Your Honor, unless you have any questions, I'll rest at that.

[00:12:15] Speaker 04:
Questions?

[00:12:16] Speaker 04:
No.

[00:12:16] Speaker 04:
All right.

[00:12:16] Speaker 04:
Thank you, Mr. Davidoff.

[00:12:21] Speaker 04:
Mr. Levy, we are ready for you.

[00:12:24] Speaker 00:
Good morning, Your Honors.

[00:12:25] Speaker 00:
Brian Levy on behalf of the Appellees.

[00:12:29] Speaker 00:
Let me start with standing, Your Honors.

[00:12:32] Speaker 00:
It was not addressed by Mr. Davidoff, but it's a threshold issue that he has the burden of proof on.

[00:12:38] Speaker 00:
There is no standing for the appellants in this case.

[00:12:42] Speaker 00:
They did not suffer an injury.

[00:12:43] Speaker 00:
They do not have an injury that's redressable by this court.

[00:12:46] Speaker 00:
They are not persons aggrieved.

[00:12:48] Speaker 00:
The three examples that they provide in their reply brief all go to show why they don't have standing.

[00:12:57] Speaker 00:
The first complaint they have is that the plan might have been confirmed.

[00:13:03] Speaker 00:
Theoretically, hypothetically, conjecturally, this plan could have been confirmed.

[00:13:09] Speaker 00:
The East Coast Foods case says the conjectural injury is not sufficient to converse standing.

[00:13:15] Speaker 00:
The two specific points that they raise with respect to the items included in that plan, the disputed management question.

[00:13:29] Speaker 00:
The disputed management question largely involves the grandfather of the debtor,

[00:13:33] Speaker 00:
the grandparent entity of the debtor.

[00:13:36] Speaker 00:
The debtor's not a party to the pre-petition arbitration that was commenced prior to the bankruptcy, was ongoing during the bankruptcy, and remains ongoing today.

[00:13:47] Speaker 00:
So that is resolvable outside of bankruptcy.

[00:13:50] Speaker 00:
There's no reason to go back into bankruptcy to resolve the management question.

[00:13:56] Speaker 00:
The last argument they raise on standing is resolution of the beaver guarantees.

[00:14:01] Speaker 00:
As Judge Corbett aptly noted, the liability of the beaver guarantees the deficiency amount of Delphi's claim was fixed by the settlement agreement and that order approving the settlement agreement was not appealed.

[00:14:19] Speaker 00:
So that is a fixed finite number that was decided before the dismissal that was not impacted by the dismissal and the fact that the

[00:14:29] Speaker 00:
Appellants, you know, somehow in an unexplained way would have gotten an additional seven and a half million dollars to offer to Delphi.

[00:14:37] Speaker 00:
That is still a possibility for them now.

[00:14:39] Speaker 00:
They can go to Delphi now and negotiate seven and a half million dollars for release of any liability on the guarantees.

[00:14:49] Speaker 00:
None of those injuries are redressable in bankruptcy if the court was to overturn the order and essentially what they're trying to do is they are essentially trying to force an involuntary bankruptcy at this point.

[00:15:08] Speaker 00:
The debtor didn't want an in-bankruptcy.

[00:15:09] Speaker 00:
The debtor no longer wanted to confirm a plan.

[00:15:12] Speaker 00:
They are trying to force the debtor into an involuntary bankruptcy

[00:15:15] Speaker 00:
And they are not eligible to be petitioning creditors in involuntary bankruptcy.

[00:15:19] Speaker 00:
They do not have, their claims are all contingent as to liability, and they're subject to both bona fide dispute as to liability and amount.

[00:15:31] Speaker 00:
So for those reasons, the appellants lack standing.

[00:15:36] Speaker 00:
Moving on to the GEVIC issues.

[00:15:41] Speaker 00:
There's a tremendous disconnect between what the dismissal order actually says and what the appellants say the dismissal order says.

[00:15:51] Speaker 00:
There's also a disconnect between how the appellants characterize the Fortemayor dismissal order and the dismissal order in this case.

[00:16:03] Speaker 00:
I think if the court reads those two dismissal orders,

[00:16:09] Speaker 00:
from the dismissal order from the Bankruptcy Court in Port-de-Moller and the dismissal order from the Bankruptcy Court in this case, they're on all floors with each other.

[00:16:21] Speaker 00:
This characterization of a distribution of equity interest to the Griffin members is grossly mischaracterization.

[00:16:32] Speaker 04:
Well, I mean, couldn't you see this as a kind of wink, wink, nudge, nudge?

[00:16:37] Speaker 04:
We're not really – we're just dismissing it, but we're going to do all of these things and the bankruptcy court is blessing it by authorizing and empowering.

[00:16:47] Speaker 04:
I mean, that's – looks like it's not just a straight dismissal.

[00:16:51] Speaker 04:
In that sense, you're trying to thread a needle here of getting a dismissal while satisfying the requirements of Madison, the funder.

[00:17:00] Speaker 04:
Why, you know?

[00:17:01] Speaker 00:
One feature of this order is that this order specifically incorporated the bankruptcy court's oral findings effects.

[00:17:15] Speaker 00:
So we can look to what the court wrote orally and consider that

[00:17:23] Speaker 00:
done just for title insurance purposes.

[00:17:24] Speaker 00:
That was to satisfy the title insurance company that this thing could close, that there was no interference from the bankruptcy to prevent this from closing.

[00:17:32] Speaker 00:
If you read the dismissal order, there's absolutely no direction to pay any credit or even Delphi.

[00:17:37] Speaker 00:
There's no direction to pay Delphi.

[00:17:42] Speaker 00:
The court was not endorsing any of the payments.

[00:17:45] Speaker 00:
And that's the same in Portemoyer.

[00:17:46] Speaker 00:
The court in Portemoyer, and Judge Brain, you were on the appellate panel for this.

[00:17:51] Speaker 02:
Help me understand the difference between empower and order.

[00:17:59] Speaker 00:
Empower says you can do it if you'd like to do it in order says you have to do it.

[00:18:08] Speaker 00:
And what we're saying, your honor, is that here.

[00:18:12] Speaker 00:
There was a dismissal, and then the debtor was free to proceed with its financial affairs just like any entity that's not in bankruptcy.

[00:18:20] Speaker 00:
It was not subject to the oversight by the bankruptcy court.

[00:18:23] Speaker 00:
It was not subject to the absolute priority rule.

[00:18:25] Speaker 00:
It could pay whichever unsecured creditors it chose to pay.

[00:18:29] Speaker 00:
In Puerto Mayor, the bankruptcy court also had knowledge of the debtor's post-dismissal intentions.

[00:18:40] Speaker 00:
And yes, there's discussion in that order where the debtor asked the court to order those payments to be made, and the court said, I'm not gonna order those payments to be made, but it had the knowledge that those payments would be made upon the straight dismissal of the case.

[00:18:58] Speaker 00:
And that's the same thing here.

[00:18:59] Speaker 00:
The additional $2.2 million that was to go to unsecured creditors, and the court's knowledge of that before the dismissal order is no different

[00:19:08] Speaker 00:
Then the court's knowledge important my or of that the debtor was going to, in that case was going to obtain a loan from non estate funds and use the dip account to pay certain unsecured creditors but not all unsecured creditors.

[00:19:26] Speaker 00:
The court in Port Amor also made an important distinction that the Bankruptcy Code does not impose the same requirements on dismissal as confirmation.

[00:19:36] Speaker 00:
And we can see that in the different language that the code uses.

[00:19:42] Speaker 00:
In section 726 and the absolute priority rule, the code uses the word distribution.

[00:19:48] Speaker 00:
In 349, the code uses the word revest.

[00:19:52] Speaker 00:
Congress meant something different between a distribution and revesting.

[00:19:57] Speaker 00:
The appellants equate those two provisions and those two terms.

[00:20:01] Speaker 00:
Just because the property revested in the debtor once the case was dismissed doesn't make it a distribution to the managing members of the debtor entity.

[00:20:14] Speaker 00:
And in the whole issue of whether it's the Griffin members of the debtor itself, that's all issues of this arbitration that's still ongoing.

[00:20:22] Speaker 00:
Those are non-banker C issues.

[00:20:27] Speaker 00:
Importantly, the dismissal in this court, in this case, unlike Injevik did not provide for a distribution.

[00:20:35] Speaker 00:
There was no distribution of assets.

[00:20:37] Speaker 00:
It was a dismissal and the

[00:20:40] Speaker 00:
and the debtor could continue on with its financial affairs as it saw fit post-dismissal.

[00:20:51] Speaker 00:
Last argument on this point, Your Honors, under the reasoning that the appellants put forth, it would really bar any debtor from ever dismissing a Chapter 11 case unless every single creditor

[00:21:07] Speaker 00:
is paid in full, and then that would include, you know, a creditor whose claim is objected to.

[00:21:12] Speaker 00:
They would either have to pay in full or consent to the dismissal of the case.

[00:21:16] Speaker 00:
That's completely inconsistent with 11-12B, I'm sorry, 11-12B, which allows for dismissal that's in the best interest of creditors in the estate.

[00:21:27] Speaker 00:
There are situations where, you know, dismissal is best for all creditors, the creditor body as a whole.

[00:21:35] Speaker 00:
It doesn't have to be,

[00:21:37] Speaker 00:
what's best for every single creditor, regardless of the validity of their claim.

[00:21:43] Speaker 02:
Mr. Levy, what about Judge Brand's question about remand?

[00:21:52] Speaker 02:
What would happen if we remanded and said that the judge, yes, she can dismiss the case, but she shouldn't authorize or empower anything.

[00:22:03] Speaker 02:
It should just be straight, plain,

[00:22:08] Speaker 02:
Case dismissed order.

[00:22:11] Speaker 00:
Yeah, good question, Your Honor.

[00:22:12] Speaker 00:
And then like Mr. Davidoff, I've given us some thoughts too.

[00:22:14] Speaker 00:
I don't know how you want to scramble this egg.

[00:22:17] Speaker 00:
Delphi has been paid, mechanics lien holders have been paid, unsecured creditors have been paid.

[00:22:23] Speaker 00:
This case was dismissed in February.

[00:22:25] Speaker 00:
The debtor is engaged in new transactions from February to here we are in late October.

[00:22:32] Speaker 02:
But did the debtor need to be empowered to do that?

[00:22:37] Speaker 02:
Couldn't the debtor have done that just if the order was very straightforward and just said the case dismissed?

[00:22:46] Speaker 02:
Couldn't all those things have happened anyway?

[00:22:49] Speaker 00:
Yes, all those things absolutely could happen with the one caveat of was the title insurance company able to insure without some sort of empowerment type language?

[00:23:04] Speaker 00:
That is really an unknown, but the record is clear that that was the sole reason for including that language in the dismissal order.

[00:23:25] Speaker 00:
With respect to the complaint about the unequal treatment of general unsecured creditors, again, this happened in Port Amor.

[00:23:33] Speaker 00:
This was the dispute over the use of the funds provided from a non-estate source and the DIP account.

[00:23:45] Speaker 02:
Let me ask one more question.

[00:23:46] Speaker 02:
This may be naive on me, but if it was remanded and there was just a case dismissed,

[00:23:55] Speaker 02:
Well, certain things that the debtor has done, you know, does the title insurance company care now?

[00:24:02] Speaker 02:
I mean, the things that the title insurance company cared about, we're not unwinding those things.

[00:24:07] Speaker 02:
Those have all been done, right?

[00:24:10] Speaker 00:
If it's remanded with the instruction from the court to enter a plain vanilla

[00:24:19] Speaker 00:
dismissal order at this point.

[00:24:21] Speaker 02:
I've always thought vanilla is a complicated flavor myself, but I understand.

[00:24:25] Speaker 02:
No sugar.

[00:24:31] Speaker 00:
I agree with you that not all vanilla ice cream is the same.

[00:24:42] Speaker 00:
So long as there's no effect on any of the post-petition transactions, if it's just this case is dismissed,

[00:24:49] Speaker 00:
then I don't really see an issue there.

[00:24:56] Speaker 00:
The concern is if the debtor is pulled back into a bankruptcy that it doesn't wanna be in, that the creditors are brought back into a bankruptcy that they agree to accept less than their full claims.

[00:25:11] Speaker 00:
I mean, it's an absolute mess if the bankruptcy is reinstated.

[00:25:17] Speaker 02:
Well, but, yeah, okay.

[00:25:20] Speaker 02:
Okay, so you're saying to remand, we basically have to reinstate and the dismissal order wouldn't take effect until the new order was entered.

[00:25:28] Speaker 02:
Okay, because it'd be a reversal and a remand.

[00:25:32] Speaker 00:
I think you would have to, I think you would have to reverse and remain with specific instructions just to dismiss the case on.

[00:25:41] Speaker 00:
I guess retroactive to February.

[00:25:47] Speaker 00:
Honestly, your honor, I hadn't really contemplated this scenario.

[00:25:59] Speaker 00:
Your honor, but I don't think we need to get there.

[00:26:04] Speaker 00:
I think the

[00:26:06] Speaker 00:
The U.S.

[00:26:06] Speaker 00:
trustee was correct when they didn't identify a jevic issue.

[00:26:10] Speaker 00:
I think the bankruptcy court was correct when they didn't identify a jevic issue.

[00:26:15] Speaker 00:
There were no distributions made.

[00:26:20] Speaker 00:
dismissal and the debtor was thereafter free to enter into financial transactions that were not subject to the Bank of the Code, that were not subject to the oversight of the Bank of the Court, they're not subject to the absolute priority rule, they could pick and choose which creditors they wanted to pay, this is no different than

[00:26:45] Speaker 00:
Were the court affirmed the dismissal order in that case?

[00:26:49] Speaker 00:
And with that, I'll see the last 37 seconds.

[00:26:54] Speaker 02:
This case, I cleared many years ago, the late, great Judge Kenneth Treadwell, bankruptcy judge.

[00:27:01] Speaker 02:
And he always used to refer to as the highest court in the land being the title insurance company.

[00:27:06] Speaker 02:
And in essence, that's what we have here is that this in power language, I take it Mr. Liddy, that this didn't really

[00:27:14] Speaker 02:
This was prompted by the title insurance company and not the court.

[00:27:20] Speaker 00:
Correct, Your Honor.

[00:27:21] Speaker 00:
I didn't come into this case until the... I came into this case through representation of Madison.

[00:27:27] Speaker 00:
So I was not involved in making the sausage on that one, but from reading the transcript, that's my understanding.

[00:27:34] Speaker 00:
Thank you.

[00:27:35] Speaker 00:
Thank you all for your time.

[00:27:36] Speaker 04:
All right.

[00:27:36] Speaker 04:
Thank you, Mr. Levy.

[00:27:38] Speaker 04:
Mr. Davidoff, I think you have a little bit more than three minutes.

[00:27:42] Speaker 01:
Thank you, Your Honors.

[00:27:44] Speaker 01:
First, let me address one of the later comments of Mr. Levy, which is to say that he says that essentially we were trying to act like as though we were creating involuntary bankruptcy.

[00:27:54] Speaker 01:
No, not at all.

[00:27:55] Speaker 01:
We simply want to ensure what was done was compliant with the bankruptcy code in the Supreme Court.

[00:28:02] Speaker 01:
Your Honors, the

[00:28:04] Speaker 01:
With regard to the question regarding what can the court do, I see two paths.

[00:28:10] Speaker 01:
The one path is what you asked me, Judge Brand, which is what if you just instructed that the case was a remand that the dismissal should be without

[00:28:21] Speaker 01:
any conditions.

[00:28:23] Speaker 01:
I suppose the court could do that.

[00:28:25] Speaker 01:
The legal effects are what they are.

[00:28:28] Speaker 01:
Whatever the effect is on the title insurance company, it is what it is.

[00:28:33] Speaker 01:
Not sure what the fallout is, but I suppose that's one alternative.

[00:28:36] Speaker 01:
The other alternative, which we had thought of prior to this hearing, was that we don't challenge the payment to Delphi, because they're a senior creditor.

[00:28:47] Speaker 01:
We can't challenge that under Javik.

[00:28:49] Speaker 01:
I'm not sure that that's what we would look to go after.

[00:28:52] Speaker 01:
On the other hand, the court could reinstate the bankruptcy case and the payments could be clawed back.

[00:29:01] Speaker 01:
And yes, it is true that there is a bankruptcy case that's reopened again.

[00:29:05] Speaker 01:
We know that the parties don't want it, but the dismissal did not comply with Gevick.

[00:29:10] Speaker 01:
Let me finally address the standing issue.

[00:29:14] Speaker 01:
While the appellants relying on East Coast food say that we really weren't injured, we've quoted to the court the Lujan decision, the United States Supreme Court, where it talks about having standing meaning an injury in fact.

[00:29:27] Speaker 01:
And I believe the points that Mr. Levy focused on, which are the points that we believe there is a direct injury,

[00:29:36] Speaker 01:
is supported not only by the Lujan decision but actually by Djivic because in Djivic

[00:29:43] Speaker 01:
There, too, the opposing party said that there wasn't a kind of no harm, no foul, that they were going to lose everything if the bankruptcy court didn't approve the dismissal and even after the dismissal that they weren't going to get anything, so kind of no harm, no foul.

[00:29:58] Speaker 01:
But the Supreme Court really undermines that and specifically says that the loss of litigating a potentially valuable claim is itself an injury.

[00:30:07] Speaker 01:
The court talks about, even if the claim might be fruitless, the mere fact that you've lost that opportunity, and we lost the opportunity to continue to prosecute our plan of reorganization, to try to negotiate what we thought was a better plan of reorganization with Delphi.

[00:30:27] Speaker 01:
And finally, as to the standing issue, Your Honor, we quoted truck insurance, and the court's very well aware of that.

[00:30:34] Speaker 01:
United States Supreme Court case where the court really for standing purposes really just looks at party and interest.

[00:30:41] Speaker 01:
And I think by every definition of the word, my clients were parties in interest, whether because they were guarantors, whether they are providers of services to the debtor, whether because they were a management company of the debtor, they were parties in interest and have standing.

[00:30:57] Speaker 01:
Thank you, Your Honor.

[00:30:58] Speaker 04:
All right.

[00:30:59] Speaker 04:
Thank you very much, both of you, for your good arguments.

[00:31:01] Speaker 04:
This matter will be submitted, and we will issue a decision promptly.

[00:31:08] Speaker 04:
Thank you.

[00:31:10] Speaker 04:
Madam Clerk, would you call the next case?