The Honorable Kevin Gross

On January 22, 2018, in an adversary proceeding arising within the Haggen bankruptcy (Adv. No. 16-51204), Judge Gross of the Delaware Bankruptcy Court issued a ruling against the Plaintiff, denying the relief requested in the complaint and dismissing the adversary proceeding. Judge Gross’s opinion is available here (the “Opinion”).

The Committee filed an adversary proceeding with a 78 count, 145 page Complaint making numerous allegations including, but not limited to, fraudulent transfers, breach of fiduciary duties, and unjust enrichment.  The Defendants’ answer spanned 184 pages, denying the numerous allegations and laying out the groundwork for the intense legal battle that followed.  Accordingly, it came as no surprise that the trial lasted five days and Judge Gross’s Opinion was 162 pages.

This Opinion follows on the heels of motions for summary judgment, which were previously discussed in this blog post:  In Fact Intensive Issues, You Need a Trial to Provide the Court With the Facts.

As one could presume based on Judge Gross’s affable nature, both in the courtroom, in the public sphere, and in his rulings, Judge Gross has crafted this Opinion in a manner that clearly guides the reader through each issue and includes an easily understood summary.  Judge Gross held that the Defendants were not so cavalier in planning and effecting the Project that they were grossly negligent nor that there was anything inherently wrong with the OpCo-PropCo structure.

“The Project failed but not because the Defendants did not care if it succeeded. Moreover, it is not uncommon for parties who are planning a transaction to make certain that they are protected in the event the transaction fails. Such protection from adverse results is one of the reasons for forming a corporation or other entity – to limit personal liability.

It is unnerving that the Project failed in a matter of months and certainly the Court had questions about how it happened. It turns out that the people in charge, the Individual Defendants, to some degree were not prepared. They were not, however, grossly negligent and they certainly meant for Haggen, Holdings and the OpCo to succeed. The Committee made a strong case but, at the end of the day failed to establish gross negligence or self-dealing or the existence of any fraudulent transfers. The Committee did establish that the leases between Spirit and GIG, and the OpCo’s, were above the market rate, but there is no liability. The Committee failed however, to establish the remaining counts of the Complaint.”

Opinion at *3.  Judge Gross then cites to the Delaware Chancery Court for the proposition that “to allege that a corporation has suffered a loss as a result of a lawful transaction, within the corporation’s powers, authorized by a corporate fiduciary acting in a good faith pursuit of corporate purposes, does not state a claim for relief against that fiduciary no matter how foolish the investment may appear in retrospect.”  Opinion at *4 (quoting Gagliardi v. TriFoods Int’l, Inc., 683 A. 2d 1049, 1052 (Del. Ch. 1996)).

This case arose from a buyout that was structured with separate entities having separate roles.  The property owning entities have been successful – real estate is, after all, booming.  The operating entities, however, have struggled like a large number of other retailers.  Retail bankruptcy cases are at an all-time high and rents are higher than ever.  As Judge Gross recognized in the Opinion, the corporate structure is meant to provide down-side protection to equity holders.  In this instance (pending any possible appeals), the corporate form appears to have operated precisely as intended.

In a 32 page opinion entered December 5, 2017 Judge Gross of the Delaware Bankruptcy Court ruled on cross motions for summary judgment concerning an avoidance action in the Simplexity bankruptcy. Judge Gross’s opinion is available here (the “Opinion”).  This Opinion arises from a complaint brought by Charles A. Stanziale, Jr., as the Chapter 7 Trustee of Simplexity, LLC against the Sprint Corporation alleging that payments made by the debtor to Sprint of $3,842,951.86 were avoidable transfers.  Two issues were the subject of the joint motions for summary judgment,  (1) did the Trustee satisfy his burden of demonstrating that Sprint received more by the Transfers than it was entitled to under Chapter 7, and (2) is Sprint entitled to a new value defense for two transfers (of $505,151.53 and $125,000.00 respectively) made to Simplexity?

First, the analysis of Sprint’s recovery.  The primary issue of contention is whether the Trustee’s use of the “Add-Back” method was appropriate.

The Trustee performed a liquidation analysis using the add-back of analyzing a defendant’s position on the petition date given a hypothetical liquidating by 1) accounting for the debt that was still owed by the Debtors to the defendant on the petition date; 2) adding back in the transfers paid in the preference period to the outstanding debt (i.e., complying with Section 547(b)(5)(B)’s requirement of analyzing the situation as if ‘the transfer had not been made’); and 3) comparing that debt to the collateral [as] of petition date.

Opinion at *22.  Judge Gross held that the Trustee’s methods were appropriate, and that it was able to trace what Sprint’s recovery would have been in the chapter 7 bankruptcy both with, and without these payments as a result of Sprint’s liens.  Accordingly, he granted the Trustee’s summary judgment motion on this point.  He did, however, differentiate a few cases, so if you are in a similar situation, please read the entirety of this portion of the Opinion.  It’s a quality lesson in distinguishing case law.

Second, Sprint’s New Value.

In this portion of the Opinion, Judge Gross looks to the spirit of the new value defense provided by 11 U.S.C. 547, describing “the overarching principle of Section 547(c)(4)” as the provision by a creditor of “a beacon of light in a dark time.”  Opinion at *29.  Sprint made a mid-month payment (the $505,151.53 payment), which was not contractually required.  The Court determined that because this payment was not contractually required, it constituted new value, and was not a payment made on account of amounts due and owing by Sprint.  Opinion at *28.

The second allegedly new value payment, however, was related to a “Loyalty Trial Program”.  Opinion at *30.  Since neither party provided any evidence as to the Loyalty Trial Program and whether Simplexity was entitled to the $125,000 payment, Judge Gross denied both motions for summary judgment as to this payment.

This is a compelling Opinion if you are on either side of a new value defense.  This Opinion analyzes both the receipt of more than a creditor is entitled to under chapter 7, and how new value is treated in a situation when a creditor is also obligated to make a payment to the debtor.

In a short opinion entered November 14, 2017 Judge Gross of the Delaware Bankruptcy Court denied a motion of an interested party to “Attend and Participate in the Rule 2004 Examinations to be Conducted by the Trustee”. Judge Gross’s opinion is available here (the “Opinion”).

This is a very short Opinion and resolves a very straight-forward issue.  Can a party in separate litigation take advantage of Bankruptcy Rule 2004 to obtain discovery from the opposing party?

The answer: No.

Citing multiple cases, Judge Gross explains that the “pending proceeding rule” provides that once an adversary proceeding or contested matter has been commenced, discovery must proceed under the federal discovery rules.  The cited opinions were: In re SunEdison, Inc., 572 B.R. 482 (Bankr. S.D.N.Y. 2017);  In re Wash. Mut., Inc., 408 B.R. 45 (Bankr. D. Del. 2009); In re Enron Corp., 281 B.R. 836 (Bankr. S.D.N.Y. 2002); 2435 Plainsfield Ave. v. Township of Scotch Plains (In re 2435 Plainsfield Ave.), 223 B.R. 440 (Bankr. D.N.J. 1998); In re Coffee Cupboard, Inc., 128 B.R. 509 (Bankr. E.D.N.Y. 1991).

As discussed in a previous post on this blog, 2004 discovery is most akin to fishing expeditions meant to determine whether or not litigation should be commenced.  You can read that post here: What are the Scope and Limitations of a Rule 2004 Examination?

In a 10-page decision signed November 6, 2017 in an adversary proceeding arising within the Physiotherapy Holdings bankruptcy (PAH Litigation Trust, case 15-51238), Judge Gross of the Delaware Bankruptcy Court denied a motion of the Litigation Trust (the “Trust”) to file an amended complaint, providing guidance on a number of different issues. Judge Gross’s opinion is available here (the “Opinion”).

The Defendants opposing the motion to amend had an uphill battle in this issue.  Judge Gross begins his discussion by stating, “Motions for leave to amend the complaint are granted liberally.”  Opinion at *2.  Judge Gross then provided a foreshadowing of the Defendants’ way out, stating, “The Court may, however, deny leave to amend if the proposed amendment is futile or untimely.”  Id.

The Court had established a deadline of September 30, 2016 for the amending of the complaint.  The Trust filed its motion approximately ten months after that deadline.  The Trust was thus required to satisfy the ‘good cause’ standard of FRCP 16(b)(4) in order to obtain approval of its motion.  Opinion at *2.

The  Trust argued that it satisfied the good cause requirement because the proposed defendants had “deeper pockets”.  Opinion at *3.  The Trust expressed concern that the current defendants have made distributions to their limited partners, the proposed defendants.  The Court held that “the Litigation Trust has not satisfied the ‘good cause’ requirement…  The fact that Defendants may not have sufficient assets to satisfy any judgments is not good cause to add the Proposed Defendants.”  Opinion at *4-5.

Judge Gross then turned to the motion’s request to amend the complaint to seek punitive damages.  There was an initial dispute as to whether the defendant should have raised choice of law arguments in their motion to dismiss.  Judge Gross opined that “there must be an actual conflict between the laws of different jurisdictions to engage in a choice of law determination.”  Opinion at *6 (quoting Rice v. Dow Chem. Co., 875 P. 2d 1213, 1216 (1994)).  Judge Gross held that the answer to which law controls depends on which state has the most significant relationship to the claim and the parties.  Opinion at *6-7 (following the precedent of Emerald Capital Advisors Corp. v. Bayerische Motoren Aktiengesellschaft (In re FAH Liquidating Corp.), 2017 WL 2559892, at *9 (Bankr. D. Del. June 13, 2017)).  Finding that Delaware law controls, and Delaware courts of equity do not allow for punitive damages to be awarded.  Opinion at *9 (“under Delaware law punitive damages are not available under principles of equity which Delaware courts apply.”)

And with that, Judge Gross denies the motion to amend the complaint.  The primary takeaway – if the Court sets a deadline to amend the complaint, make sure you hit the deadline.  Because the Court grants motions to amend “liberally”, had this motion been timely I imagine the result would have been very different.

In a decision signed October 4, 2017 in an adversary proceeding arising within the Haggens bankruptcy (HH Liquidation, LLC, et al., case 16-51204), Judge Gross of the Delaware Bankruptcy Court denied a motion for summary judgment, holding that he Court and needs to see evidence at trial of why and how the Debtor failed while a related entity was flush with cash. Judge Gross’s opinion is available here (the “Opinion”).

By way of history, the Haggen family started operating a grocery in 1933, growing to operate thirty stores and a pharmacy by 2011.  In late 2014, the Safeway / Albertsons merger occurred, which required them to sell 146 stores.  In February 2015, Haggen (thanks in large part to the direction of Comvest Partners, a private equity firm who had purchased 80% of Haggen’s equity) purchased the 146 former Albertsons locations.  With a signature, Haggens grew to a size that was approximately 600% larger than it had ever been.  It is my opinion that growth at this pace either succeeds fantastically, or fails fantastically.  Unfortunately, this is a bankruptcy court opinion – so it’s clear this wasn’t a fantastic success.

Haggens split the acquisition into multiple pieces, segregating the operating and real property assets in different entities.  Those which held real property I will refer to collectively as PropCos, and those which operated stores and leased the real property for such a purpose I will refer to collectively as OpCos.  For those who have not followed the Haggens bankruptcy, it is important to recognize that OpCos were placed into bankruptcy and the PropCos were not.

The plaintiff in the adversary proceeding argued that the debtor and non-debtor related entities should be substantively consolidated and that the OpCos and PropCos were liable for fraudulent transfer.  Without consolidation or a fraudulent transfer ruling, the PropCos creditors will receive 100% of their claims while OpCos unsecured creditors will receive 0%.  If the plaintiffs are successful in their claims, the PropCos creditors and the OpCos creditors would all receive approximately 20% of their claims.  Opinion at *7.

Judge Gross was not sympathetic to the Debtors’ opining that:

Comvest created Holdings, the OpCo Entities and the PropCo Entities and formed them to hold separate assets. The OpCo Entities held operational assets and leased property from the PropCo  Entities which held the real property. Then, in a matter of a few months the OpCo Entities were bankrupt and are unable to pay unsecured creditors anything while the PropCo Entities are flush with money.  The Court and the OpCo Entities’ creditors need to see evidence at trial of why and how this happened.

Opinion at *7-8.  Of particular note, Judge Gross made repeated references to the Mervyn’s decision,  In re Mervyn’s Holdings, LLC, 426 B.R. 488 (Bankr. D. Del. 2010).  “In Mervyn’s, like here, the owner of real property (Target Corporation) sold its interest in Mervyn’s, LLC to a group of private equity firms who spun off real estate leaving the operational portion of Mervyn’s, LLC undercapitalized and paying rent to the real estate holding entity.”  Opinion at *9.  I have found that when a judge on the Bankruptcy Court makes repeated reference to another decision, particularly when it is a decision of that very judge, litigants should make every effort to differentiate, or analogize, the instant case.  The repeated reference to Mervyn’s by Judge Gross provides a clear picture of the issues he will need answered by the litigants here.  It’s his opinion, I’d expect it to be the first and last thing out of both litigants’ mouths.

In a decision signed July 26, 2017 in the Nephrogenex bankruptcy (case 16-11074), Judge Gross of the Delaware Bankruptcy Court approved of the application of the Debtor’s investment banker for a success fee over the objection of, among others, the Debtor and the purchaser of all the reorganized debtor’s equity. Judge Gross’s opinion is available here (the “Opinion”).

In this case, the Debtor hired an investment banker (“CS”), which was duly approved by the Court.  Part of CS’s compensation included a “Sale Transaction” fee which would be earned in the event of a Sale Transaction.  The term Sale Transaction was broadly defined, Opinion at *4, and included:

“any transaction or series of transactions involving (a) an acquisition, merger, consolidation, or other business combination pursuant to which all or substantially all of the business assets, subsidiaries, divisions, business segments, operations, securities, or equity interests of the Company are, directly or indirectly, combined with another company; (b) the acquisition, directly or indirectly, by a buyer or buyers. . . of equity interests or options, or any combination thereof constituting a majority of the then outstanding economic interests in the Company. . .”  Opinion at *4.

As part of the Plan of liquidation, the equity of the reorganized debtor would be transferred to one of its creditors as satisfaction of that creditor’s claim.  After the transfer of equity, CS filed its fee application alleging that the release of the claim, with a post-distribution value of approximately $2 million (the claim was for $4,312,698.51 and the estimated distribution was 49.5%, Opinion at *2-3), was a Sale Transaction, triggering its success fee.

After reviewing all the relevant documents and hearing the testimony of the principle of CS, Mr. Cassel, Judge Gross agreed with CS, holding that the equity transfer satisfied the definition in CS’s engagement documents.  The one wrinkle that the objecting parties tried to use to oppose the the payment, is that CS’s retention agreement provided that the success fee would be paid out of the proceeds of the Sale Transaction, and there were no proceeds from this transaction.  Judge Gross determined that this was not a necessary requirement of compensation on the basis of two parts of the engagement agreement.  First, “the Engagement Agreement does not provide that the Sales Transaction Fee can only be paid if the Sales Transaction generates cash.”  Second, “the Engagement Agreement defines ‘Sale Consideration’ to include ‘(y) the principal amount of all indebtedness for borrowed money or other liabilities of the [Debtor] or [Debtor] related entity as applicable, as set forth on the most recent balance sheet, or in the case of a sale of assets, all indebtedness for borrowed money or other liabilities assumed, cancelled, exchanged, or forgiven by a third party. . . .'”  Opinion at *8.

Because people constantly try to find ways to get around definitions to maximize their profit, attorneys, like those representing CS, often draft language as broad (or narrow) as possible to best protect their client.  In this case, was the recipient of the reorganized debtor truly intending to buy the company?  Probably not.  However, CS’s attorney’s careful drafting of their retention agreement helped ensure that even if the acquiring company was trying to avoid the success fee, CS still received it.  The takeaway in this Opinion is, if you represent the retained professional, to make sure there is no language disallowing a fee for some reason, like a lack of cash in the consideration received.

In a decision signed July 17, 2017 in the Our Alchemy, LLC bankruptcy (case 16-11596), Judge Gross of the Delaware Bankruptcy Court granted a trustee’s partial motion to dismiss a complaint, holding that a creditor cannot assert general claims against a Chapter 7 Trustee in his official capacity (essentially a derivative action meant to enrich the creditor body) . Judge Gross’s opinion is available here (the “Opinion”).  In the adversary proceeding in which this Opinion was issued, Nu Image, Inc (“NI”) sought to recover from the chapter 7 trustee, George L. Miller (the “Trustee”), alleging that he breached his fiduciary duty by “(i) failing to exploit the Agreements, (ii) delaying the request for permission to sell the estate’s interests and assets, (iii) letting the time to assume or reject the Agreements lapse, and (iv) establishing an utter indifference to the effect of his actions on the estate’s creditors, particularly Nu Image.”  Opinion at *6.

The Debtor’s business model involved distributing, or “exploiting”, movies for filmmakers.  The Debtor entered into agreements to distribute 163 films owned by NI.  Opinion at *2.  In its agreement with NI, as with other film owners, the Debtor contracted to share the profits of film distribution.  The first claim of the Complaint  asserts that the Trustee failed to take action for the benefit of all the Debtor’s creditors. Opinion at *9

Unfortunately for NI, suing a trustee in its professional capacity is, by definition, a general claim that would be paid out of the estate’s corpus.  “In the Third Circuit individual creditors may not assert general claims because they belong to all creditors.”    Opinion at *7 (quoting PHP Liquidating, LLC v. Robbins (In re PHP Healthcare Corp.), 128 Fed. Appx. 839, 844-45 (3d Cir. 2005)).  Further, in the Third Circuit, a creditor does not have standing to assert claims for damages alleged to have been caused to the creditor body at large without prior permission of the bankruptcy court.  Opinion at *9.  In the instant case, NI had not requested court approval to assert a claim against the Trustee for breach of his duty, and accordingly had no standing to assert the first cause of action contained in its complaint.

With no further ado, the Court granted the motion to dismiss the fiduciary duties claim of the complaint.  Judge Gross then extended the Trustee’s deadline to respond to the other counts in the complaint and to assert any compulsory counterclaims.

We have previously posted about a couple major milestones for Green Field Energy – here Green Field Energy Files for Bankruptcy Protection in Delaware and here: Green Field Energy Services – Preference Actions Filed.  In this Opinion, published June 23, 2017, the Court denied the defendants Motion to Abate (or stay the action).  A copy of the Opinion is available here.

Alan Halperin, the Trustee of the GFES Liquidation Trust (the “Trustee”), filed a complaint alleging that the defendant, Moreno, received a fraudulent transfer, and that its subsidiary breached two contracts requiring the purchase of preferred stock to fund GFES.  The Court denied a motion to dismiss and “considerable” discovery has taken place. A trial on the Trustee’s motion for partial summary judgment is scheduled to begin on December 11, 2017.

One year after the Trustee commenced the adversary proceeding, defendants sought leave to file a third-party complaint against GE, alleging that it was liable for contribution. The Court denied the Third Party Motion, holding that it did not have subject matter jurisdiction. On July 25, 2016, defendants filed with the District Court an appeal motion and notice of interlocutory appeal to enable them to take an interlocutory appeal from the Court’s denial of the Third-Party Motion. The Appeal Motion has been fully briefed and remains pending.  On November 22, 2016, defendants filed the Withdrawal Motion so they can add GE as a party and avoid the Court’s jurisdiction limitation. The Withdrawal Motion is pending in the District Court.  Now, the defendants have moved for the Bankruptcy Court to “Abate”, or stay, the adversary proceeding pending the District Court’s decisions.

Judge Gross cited Am. Classic Voyages Co. v. Westaff (In re Am. Classic Voyages Co.), 337 B.R. 509, 511 (D. Del. 2006), in holding that courts must consider four other factors on a motion to withdraw the reference, which the Court is weighing on the issue of the likelihood of success. They are (1) promoting uniformity of bankruptcy administration, (2) reducing forum shopping and confusion, (3) fostering economical use of debtor-creditor resources and (4) expediting the bankruptcy process.

While Judge Gross examines each factor in turn, holding that defendants failed to carry their burden for each, it appears that the greatest weight arises from the significant time that defendants allowed to pass prior to moving to join GE and the ability to sue for contribution outside of the Bankruptcy Court.

On June 13, 2017, Judge Kevin Gross of the Delaware Bankruptcy Court issued an opinion granting in part and denying in part BMW’s motion to dismiss a complaint filed by Emerald Capital Advisors Corp., in its capacity as trustee for FAH Liquidating Trust – established in the Fisker bankruptcy proceedings.  A copy of the Opinion is available here.

Judge Gross addresses a large number of issues in the Opinion, including extraterritorial transfers, the findings necessary to support a motion to dismiss, and the relevant statute of limitations.  The primary holding in the Opinion, was that for the majority of the causes of action alleged by the plaintiff, the statute of limitations has expired – resulting in granting the motion to dismiss as to $31,786,216.13 and denied to the remaining $793,761.87.  The one major caveat and the most interesting aspect of the decision involves the plaintiff’s claim for unjust enrichment.

Judge Gross spent less than two pages of the 26-page Opinion in denying the motion to dismiss as to the count of unjust enrichment in the complaint.  Judge Gross cited to Halperin v. Moreno, (In re Green Field Energy Svcs., Inc.), 2015 WL 5146161 at *10 (Bankr. D. Del. Aug. 31, 2015) in holding that a claim for unjust enrichment can survive a motion to dismiss where it is plausible that the plaintiff’s other claims may fail and leave the plaintiff without a remedy at law.

It is clear however, that at the pleading stage it is entirely acceptable to pursue alternative theories.  Lass v. Bank of Am., N.A., 695 F. 3d 129, 140 (1st Cir. 2012).  It is also well established that a plaintiff may plead alternative claims for relief even where the pleading contains claims for breach of contract and unjust enrichment.  Pedrick v. Roten, 70 F. Supp. 3d 638, 653 (D. Del. 2014) (citing Corbin on Contracts § 66.10 (2014) for the proposition that “[e]xpectancy damages and restitution will not ordinarily be given as concurrent remedies for the same injury, although they may be pleaded as alternatives”).   The unjust enrichment claim in Count V is significant because it keeps alive the claim for the entire amount which the Trustee has placed at issue, namely, $32,579,798.87.

Opinion at *25.  Clearly, the fact that the Bankruptcy Court is a court of equity is clearly on display in allowing the unjust enrichment count survive, specifically for the purpose of ensuring that a plaintiff has a remedy at law in the failure of its other claims.  In this case, claims totaling $31 million that would otherwise have been dismissed survive to be disputed another day.  I have little doubt that trustees who had not been including unjust enrichment counts in their preference complaints will quickly make an adjustment.

On May 8, 2017, Judge Gross ruled on a Motion to Compel Production of Documents in the Haggen bankruptcy.  Judge Gross’ opinion (the “Opinion”) addresses the conflict when a party is acting on another’s behalf and that entity claims “the oldest of the common law privileges”.  Opinion at *5.  A copy of the Opinion is available here.

In the Haggen bankruptcy, the Committee, the Debtors and the Defendants entered into stipulations granting the Committee derivative standing to bring an adversary proceeding against Defendants.  The Committee served discovery on the Debtors and the Debtors withheld nearly 1,000 documents on the basis of attorney-client privilege and attorney work-product doctrine.  The issue is as stated by Judge Gross: “[T]he Committee is acting on behalf of the Debtors. Yet it does not have access to all of Debtors’ documents which are or may be relevant to the matters it raises in the Complaint.”  Opinion at *5.

In the Opinion, Judge Gross analyzed three key precedents related to the issue of whether the Committee, acting in place of the conflicted Debtors, could obtain discovery from the Debtors:  Teleglobe Communications v. BCE, Inc. (In re Teleglobe Communications Corp.), 493 F. 3d 345 (3d Cir. 2007); Garner v. Wolfinbarger, 403 F. 2d 1093 (5th Cir. 1970) (“Garner”); and Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343 (1985) (“Weintraub”).

Judge Gross’s analysis under Weintraub begins on page 6.  He concludes that “the Committee, suing on behalf of the Debtors, does not have access to privileged documents. The foregoing is true even though the Debtors are not operating and the Committee’s recovery, if any, may be on behalf of the estate as a whole. Weintraub therefore applies to chapter 7 trustees but not to Committees.”  Opinion at *8-9.

The discussion of Garner begins on page 9.  Judge Gross determined that if the Committee could show “cause” as to why the attorney-client privilege should be breached.  However, the finding of Garner was limited by Teleglobe.  The Teleglobe discussion begins on page 10.  In Teleglobe, the Third Circuit “added to the joint representation issue this: were the debtors insolvent or in the zone of insolvency when the privileged communication occurred?”  Opinion at *11.  Judge Gross ends his discussion of piercing the attorney-client privilege by denying the relief sought and stating that “If Debtors were insolvent at the time of the communications, the Committee must prove that they were. Perhaps the Committee will be able to prove insolvency at a later date but for now the Committee raises only conjecture and no proof.”  Opinion at *12.

To summarize, Judge Gross concludes that “Weintraub does not apply to the Committee but only to chapter 7 trustees; that Garner affords relief but only on a finding of insolvency; and that it is Teleglobe which requires insolvency without which there is no fiduciary duty owed to creditors.”  Opinion at *13

Judge Gross very quickly reviewed the arguments on the work-product doctrine, finding that as described by the Debtors and Defendants, documents withheld on the basis of the work product doctrine shall be produced, subject to the Debtors proving that they prepared the withheld documents in anticipation of litigation.  Opinion at *13.