Opinion
Case No. 01-31609-7
September 25, 2002
ORDER
In this Chapter 7 case, which was converted from Chapter 11 upon the Debtor's motion by Order entered September 4, 2002, after due notice a hearing by telephone conference was held on September 25, 2002, on the Objection to Stipulation between Jore Bankruptcy Estate, Inc., Jore Corporation, and Boris Gusev and Nadezhda M. Gusev ("Gusevs") filed September 6, 2002, as amended September 13, 2002, by Haverhill Research Institute, Inc. ("Haverhill") and William Kovacs ("Kovacs"). Haverhill and Kovacs were represented at the hearing by attorney Kimberly Dynowicz ("Dynowicz"). Gusevs were represented by attorney Jon Shields ("Shields"). The Chapter 11 Debtor was represented by attorney Harold V. Dye ("Dye"). Dan Gabig also appeared. No testimony or exhibits were admitted. The Court heard argument of counsel. Haverhill and Kovacs object to this Court's Order entered August 26, 2002, which approved the Stipulation between the Chapter 11 Debtor and Gusevs filed August 26, 2002. In that Order the Court noted that, under 11 U.S.C. § 365, the Debtor had failed to assume the Asset Sale and Purchase Agreement of certain intellectual property and other personal property with the Gusevs ("Agreement"), and therefore that executory contract must be deemed rejected pursuant to § 365. Haverhill and Kovacs object that they have possession of the Magnetic Thermal Diffusion Machine, which is the subject of the Agreement, under a separate sale agreement with the Gusevs, and that the rights to that machine and certain patents are the subject of an existing lawsuit in the United States District Court for the District of Massachusetts.
The Court notes that the Chapter 7 Trustee is represented in this case by attorney Joel Guthals ("Guthals"), who was listed to be included in the telephonic hearing. However, the telephone conferencing service failed to join Guthals in the telephone conference call. Because of the operation of 11 U.S.C. § 365, the Court ordered that the Asset Sale and Purchase Agreement, which the Chapter 11 Debtor-in-Possession failed to timely assume, was deemed rejected by operation of that statute. The Chapter 7 Trustee is free to move for relief and rehearing of this Order.
The Court concurred that its Order approving the Stipulation is overbroad to the extent it vests title to assets in Gusevs. The Court deemed the Agreement between the Debtor and Gusevs rejected because it was not timely assumed pursuant to § 365 while the case was pending under Chapter 11. That aspect of its Order entered August 26, 2002, will remain in place. With respect to the remaining aspects of the Stipulation and Order otherwise determining the rights to the machine, patents and other intellectual property and personal property, the Court deems those matters outside its jurisdiction. Gusevs, Haverhill and Kovacs are free to proceed with their litigation in the United States District Court for the District of Massachusetts for a determination of their respective rights and interests in the machine, patents and other intellectual property and personal property under applicable nonbankruptcy law.
IT IS ORDERED Haverhill's and Kovacs' objection to Stipulation, filed September 6, 2002, as amended September 13, 2002, is sustained in part; this Court's Order entered August 26, 2002, is vacated to the extent that it vested title to all assets that were the subject of the Asset Sale and Purchase Agreement between the Chapter 11 Debtor and Gusevs in the Gusevs; and Haverhill, Kovacs and Gusevs are free to litigate their respective interests in the subject intellectual and personal property under applicable nonbankruptcy law in the United States District Court for the District of Massachusetts or other appropriate forum.
IT IS FURTHER ORDERED the Chapter 7 Trustee is granted fifteen (15) days from the date of this Order in which to file a motion for relief from this Order and request a hearing.