Opinion
Case No. 98-51923
July 18, 2002
Daniel H. Golden, Esq., Stroock Stroock Lavan LLP., New York, NY., Craig I. Lifland, Esq., Zeisler Zeisler, P.C., Bridgeport, CT., Attorneys for Scott Cable Communications.
Ira Goldman, Esq., Shipman Goodwin Hartford, CT., Attorney for State Street Bank and Trust Company as Indenture Trustee.
Alan Shapiro, Esq., United States Department of Justice Tax Division, Washington, D.C., Attorneys for Internal Revenue Service.
Anne M. Nevins, Esq., Assistant United States Attorney, United States Department of Justice, Bridgeport, CT.
Joan Pilver, Esq., Office of the Attorney General, State of Connecticut Hartford, CT., Attorney for State of Connecticut Department of Revenue Services.
Patricia Beary, Esq., New Haven, CT., Assistant United States Trustee.
ORDER GRANTING DEBTOR'S APPLICATION TO USE CASH COLLATERAL AND DENYING MOTIONS TO CONVERT OR APPOINT TRUSTEE
On June 7, 2001, this court, sua sponte, transferred adversary proceeding 98-5104 along with any "administrative expense and cash collateral applications associated with it" to the bankruptcy court for the district of Delaware, pursuant to 28 U.S.C § 1412, Rule 1014 F.R.Bankr.P., and 11 U.S.C. § 105. The quoted language was intended to provide the maximum latitude to the Delaware court, so that it could consider any requests by Scott for the payment of administrative expenses arising out of that adversary proceeding. As stated on the record on June 5, 2002, any such determination by the Delaware court would be paid from cash collateral allowed here after notice and a hearing.
Familiarity with the record is assumed. See United States v. State Street Bank and Trust (In re Scott Cable) ("Scott"), 263 B.R. 6 (Bankr. D. Conn. 2001).
Scott's instant cash collateral application is opposed by the IRS, the office of the United States Trustee, and the State of Connecticut Department of Revenue Services, (collectively, "the government") for the reasons, inter alia, that Scott has a conflict of interest and its intervention in the transferred adversary proceeding is redundant to the efforts of the defendant State Street Bank and would impose an unwarranted and unreasonable economic burden on the creditors of Scott's estate. But, as noted at the June 5th hearing, the Delaware court had expressly found that Scott's intervention in the adversary proceeding was warranted:
The IRS has also filed separate motions to convert this case to chapter 7, see 11 U.S.C. § 1112, and for the appointment of a chapter 11 trustee. For the same reason, i.e., the debtor's alleged conflict of interest, it opposes the debtor's cash collateral application. The State of Connecticut and the United States Trustee support the IRS' position.
The United States argues that Debtor is not entitled to intervene as a "party in interest" because it has no meaningful financial or other interest to protect in the adversary proceeding. I disagree.
Although Debtor may not have a significant financial interest in the outcome of the adversary proceeding, it does have an interest and fiduciary duty, as debtor-in-possession, to ensure that the Estate's assets are distributed in accordance with the proper legal and equitable priorities of the parties in interest. It also has an interest in the adversary proceeding because the outcome of the proceeding has the potential to disrupt Debtor's current capital structure as established by the confirmation order entered in connection with Debtor's prior reorganization case.
In re Scott Cable Communications, Inc., 2002 WL 417013 at *3 (Bankr. D. Del., March 4, 2002). The final order of the Delaware Bankruptcy Court is not subject to collateral review.
The State of Connecticut's suggestion that "once this court approves a cash collateral order, . . . the money will be spent" is rejected for the reason that no fee applications will be approved without a notice and opportunity for objection. See transcript of June 5, 2002 hearing at 32-34. The United States Trustee's supplemental June 7 memorandum, is stricken as untimely filed. See In re Levitt, 137 B.R. 881, 882 (Bankr. D. Mass. 1992); In re Smith, 179 B.R. 437, 447 (Bankr. E.D. Penn. 1995).
The language quoted in the transfer order was intended to provide the maximum latitude to the Delaware court, as this court recognized that the Delaware court would be the only forum that could assess the necessity and reasonable value of any administrative expenses arising out of that adversary proceeding.
Accordingly, the government's objections to the cash collateral application are OVERRULED, the application is GRANTED, the motion to convert is DENIED, the motion for the appointment of a trustee is DENIED, and it is
The application's proposed 2002 total budget of $829,400 seeks to set aside $10,000 for the payment of bankruptcy court costs, $800,000 for legal fees, $6,000 for indenture trustee fees, $10,000 for record keeping, $1,000 for tax return preparation and $2,400 for long term storage costs. Scott withdrew its application with respect to bank charges. See transcript of June 5 hearing at 43-44.
SO ORDERED.