2015 Chief Judge Burns - Opinions
Chief Judge Gloria Burns -- Opinions signed in 2015
In re Zhejiang Topoint Photovoltaic Co., Ltd., Case No. 14-24549 5/12/2015
Foreign debtors created and almost entirely owned two domestic special purpose vehicles, to which the debtors sold and shipped solar panels in order to obtain certain tax credits here in the United States. Two third parties that were engaged in litigation against the special purpose vehicles sought a determination in this Court that the solar panels belonged to the special purpose vehicles. The debtors argued that the third parties, as mere creditors of the debtors’ creditors, lacked standing, and also that there had not been a completed transfer of title to the special purpose vehicles under the Uniform Commercial Code.
The Court determined that the third parties had standing predominantly because their interests would otherwise not be adequately represented as a result of the special purpose vehicles being entirely controlled by the debtors. This Court further concluded that, because the solar panels were fungible goods and the debtors had completed their performance with respect to physical delivery of the panels, the assets were identified to the contract of sale in question and the special purpose vehicles obtained title to the assets.
This case was converted from Chapter 11 to Chapter 7 following the debtor’s failure to fulfill its obligations under its confirmed plan. As a result of the Chapter 7 trustee and the disbursing agent having conflicting interpretations as to how payments should be distributed to certain creditors under the plan, the Chapter 7 trustee filed an adversary complaint against the disbursing agent, the creditors, and their principals, ultimately asserting counts of conspiracy, breach of fiduciary duties, fraudulent conveyance, common law fraud, breach of contract, and negligence. Four of the defendants filed motions to dismiss under Rule 12(b)(6).
This Court held that, because the trustee had only pled facts regarding a conflicting interpretation of the plan and had not alleged any facts that gave rise to plausible conspiracy or fraud-based claims, the conspiracy, fraudulent conveyance, and common law fraud counts should be dismissed. However, the Court reasoned that the facts pled by the trustee gave rise to plausible breach of fiduciary duty, negligence, and breach of contract claims. The Court granted the motions in part and denied the motions in part accordingly.
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