Opinion
Case No. 6:16-bk-00184-RAC
08-19-2016
In re BDP INNOVATIVE CHEMICALS COMPANY, Debtor.
Chapter 11 ORDER DIRECTING THE UNITED STATES TRUSTEE TO APPOINT AN EXAMINER AND SCHEDULING PENDING CONTESTED MATTERS FOR TRIAL
[Doc. Nos. 150, 161, 147, 162, and 163]
THIS CASE came before the Court on August 18, 2016, for preliminary hearings on the following contested matters: Emergency Motion for Appointment of a Chapter 11 Trustee (Doc. No. 150), filed by Clear Solutions USA, LLC, and Lance Renfrow (the "Creditors"); Debtor's Response to Motion for Appointment of a Chapter 11 Trustee (Doc. No. 161); Debtor's Third Amended Disclosure Statement (Doc. No. 147); Creditors' Objection to Disclosure Statement (Doc. No. 163); and Debtor's Motion to Designate the Votes of Creditors (Doc. No. 162). After hearing arguments on the Emergency Motion for Appointment of a Chapter 11 Trustee, which included references and allegations related to the other pending matters, the Court determined that a more appropriate course of action was the appointment of an examiner with expanded duties under 11 U.S.C. §§ 105(a) and 1104(c) and to schedule the pending contested matters for trial, as set forth below.
Both the Bankruptcy Code and case law support this Court's sua sponte appointment of an examiner. See, e.g., In re Pub. Serv. Co. of N.H., 99 B.R. 177, 182 (Bankr. D.N.H. 1989) ("[T]he court nevertheless believes it has the power to sua sponte appoint an examiner."); In re UNR Indus., Inc., 72 B.R. 789, 795 (Bankr. N.D. Ill. 1987) ("Under Section 105(a) the Court on its own motion can move for the appointment of an examiner."); In re Landscaping Servs., Inc., 39 B.R. 588, 591 (Bankr. E.D.N.C. 1984) ("In a case . . . when there is a clear need for an independent investigation to develop information . . . the court need not stand helplessly by hoping that a party in interest might ask for the appointment of an examiner."). Furthermore, this Court possesses the authority to expand the scope of an examiner's duties beyond those prescribed in 11 U.S.C. § 1106(a)(3). See, e.g., Gordon Props., LLC v. First Owners' Ass'n of Forty Six Hundred Condo., Inc. (In re Gordon Props.), 514 B.R. 449, 458 (Bankr. E.D. Va. 2013) ("The types of investigations listed in 1104(c) are illustrative. . . . § 1106(a)(3) give[s] the court broad discretion in ordering an investigation and in setting the parameters of an examiner's investigation."); In re Pub. Serv. Co. of N.H., 99 B.R. at 183 (appointing an examiner to mediate an impasse surrounding plan negotiations); In re UNR Indus., Inc., 72 B.R. at 795 (finding that legislative history to § 1106 clearly establishes the court's discretion to expand an examiner's duties if warranted by the circumstances).
Upon consideration of the record, including the adversary proceeding pending between the Debtor and the Creditors, and the arguments of the parties, and in light of the purported financial health of the Debtor, the Court finds that the appointment of a Chapter 11 trustee at this stage would be premature and, perhaps, even harmful to the case. Instead, the Court finds that the continued engagement in litigious attacks, the allegations of underhanded behavior and the proposed sale of assets to an insider, warrants the appointment of an examiner. As contemplated by 11 U.S.C. § 1104(c)(1), an examiner will benefit all interested parties, and may facilitate the speedy progression of this case without imposing an undue cost on the estate.
Accordingly, it is
ORDERED:
1. The United States Trustee is directed to appoint an Examiner pursuant to 11 U.S.C. § 1104(c).
2. In addition to the duties prescribed in 11 U.S.C §§ 1104(c) and 1106(a)(3)-(4), the Examiner shall perform the following duties:
a. Investigate the proposed sale and marketing of the Debtor's business, including the marketing and possible sale of Debtor's causes of action.
b. Aid in mediating and attempting to resolve the impasse surrounding plan negotiations.
c. Investigate allegations that the Creditors are interfering with the Debtor's operations or sale of assets.
d. Investigate the circumstances surrounding the secured debt incurred by Debtor pre-petition.
3. The Examiner shall submit a final report by November 7, 2016, unless otherwise ordered by the Court.
4. The Examiner's fees shall not exceed $50,000.00, unless otherwise ordered by the Court upon an application for reconsideration by any party in interest, including the Examiner.
5. The Court will conduct a trial on the Emergency Motion for Appointment of a Chapter 11 Trustee (Doc. No. 150); Debtor's Response to Motion for Appointment of a Chapter 11 Trustee (Doc. No. 161); Debtor's Third Amended Disclosure Statement (Doc. No. 147); Creditors' Objection to Disclosure Statement (Doc. No. 163); and Debtor's Motion to Designate the Votes of Creditors (Doc. No. 162) on November 10, 2016, at 10:00 a.m., in Courtroom C, 6th Floor, George C. Young Courthouse, 400 West Washington Street, Orlando, Florida 32801.
6. Witness and Exhibit Lists for the scheduled trial shall be exchanged and filed with the Court no later than seven (7) days before the scheduled trial.
ORDERED.
Dated: August 19, 2016
/s/_________
Roberta A. Colton
United States Bankruptcy Judge The clerk is directed to serve a copy of this order on interested parties who are non-CM/ECF users.