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- Opportunity: Our clients were Kansas-based rural telecom companies that had invested in a wireless telephone enterprise that became a Chapter 11 debtor. The companies were sued by the liquidation plan administrator for allegedly facilitating $23 million in fraudulent asset transfers before the bankruptcy filing and abetting other claimed breaches of fiduciary duty.
- Solution: Defending our clients required an intricate knowledge of the limits of bankruptcy jurisdiction to remove the case from the bankruptcy court and estoppel-related doctrines that prohibited the plan administrator’s suit. In addition to the removal, we sought dismissal of the claims against our clients under unique equitable doctrines and bankruptcy-related doctrines that generally prohibit trustees from suing third parties on behalf of all bankruptcy unsecured creditors.
- Result: These strategies positioned our clients well for the litigation. The case was removed from bankruptcy and placed in district court. Although the matter was settled, the district court was poised and ready to rule on our dismissal motions.
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