Case pwb Doc 1093 Filed 11/20/14 Entered 11/20/14 11:00:52 Desc Main Document Page 1 of 8

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1 Document Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In re: Chapter 11 CGLA LIQUIDATION, INC., f/k/a Cagle s, Case No PWB Inc., CF LIQUIDATION, INC., f/k/a Cagle s Farms, Inc. Debtors. Jointly Administered DEBTORS OBJECTION TO ARTHUR L. PETTWAY S REQUEST FOR RELIEF FROM THE AUTOMATIC STAY CGLA Liquidation, Inc. (f/k/a Cagle s, Inc. ( CGLA and CF Liquidation, Inc. (f/k/a Cagle s Farms, Inc. (together with CGLA, the Debtors file this objection (this Objection to the Request for Relief from the Automatic Stay [Docket No. 1088] (the Motion made by Arthur L. Pettway Jr. (the Movant. In support of this Objection, the Debtors respectfully state as follows: Preliminary Statement 1. In October 2013, the Movant filed a complaint in the State Court of Fulton County, Georgia against CGLA asserting claims arising from an alleged injury suffered in November 2011 while the Movant was making a commercial delivery to CGLA s facility in Pine Mountain, Georgia (the State Court Litigation. Shortly thereafter, CGLA filed a notice of bankruptcy in the State Court Litigation stating that the Movant s complaint constituted a violation of both the automatic stay and the injunction provided for in this Court s order confirming the Debtors chapter 11 plan (the Confirmation Order. No further action has been taken by the Movant in the State Court Litigation. DMSLIBRARY01:

2 Document Page 2 of 8 2. Now nearly one year after CGLA filed the notice of bankruptcy the Movant requests that this Court lift the automatic stay so that the Movant may pursue the State Court Litigation. This request should be denied. First, the State Court Litigation is expressly enjoined by the Confirmation Order. Second, even if the litigation is not enjoined, the Movant is barred from receiving any payment on account of his alleged claims against CGLA because he has failed to timely file a proof of claim. 3. Having confirmed their chapter 11 plan (the Plan over two years ago, the Debtors have completed the administration of all allowed claims and are in the final stages of winding down their affairs. Substantially all of the Debtors assets have been liquidated, and the proceeds have nearly all been distributed. Allowing the Movant to pursue litigation at this juncture would prejudice the Debtors and their estates. Background Facts 4. On October 19, 2011 (the Petition Date, each of the Debtors filed a voluntary petition with the Court under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101, et seq. (the Bankruptcy Code. 5. The Debtors chapter 11 cases have been consolidated for procedural purposes only. 6. The factual background relating to the Debtors commencement of these cases is set forth in detail in the Declaration of Mark M. Ham IV in Support of First Day Motions and Applications [Docket No. 14] filed on the Petition Date and incorporated herein by reference. 7. No request has been made for the appointment of a trustee or examiner. 8. An official committee of unsecured creditors was appointed in these cases on October 27, 2011, but the committee was dissolved upon the effective date of the Plan. 2

3 Document Page 3 of 8 9. Pursuant to the Order Establishing a Bar Date and Approving Bar Date Notice and Procedures, dated January 26, 2012 [Docket No. 265], the Court established April 2, 2012, as the bar date for filing proofs of claim against the Debtors estates. 10. On June 15, 2012, the Debtors closed the sale, pursuant to Section 363 of the Bankruptcy Code, of substantially all of their assets to an affiliate of Koch Foods, Inc. 11. On October 19, 2012, the Court entered the Confirmation Order [Docket No. 953], and the Plan became effective on November 6, 2012 (the Effective Date. 12. The Confirmation Order established January 5, 2013 (i.e., 60 days after the Effective Date as the deadline for filing administrative expense claims (the Administrative Expense Bar Date. Specifically, paragraph 10 of the Confirmation Order provided: Administrative Bar Date (General. Except as otherwise provided in the Plan, any Person holding an Administrative Expense Claim (other than a claim for Professional Compensation shall file a proof of such Administrative Expense Claim with the Claims Agent within sixty (60 days after the Effective Date.... Any Person who fails to timely file and serve a proof of such Administrative Expense Claim shall be forever barred from seeking payment of such Administrative Expense Claim by the Debtors and the Estates. (Confirmation Order 10 (emphasis in original. Injunction : 13. The Confirmation Order also provided for the following injunction (the Plan Injunction. This Confirmation Order shall operate as an injunction as follows: Except as otherwise expressly provided in the Plan, this Confirmation Order, or a separate Final Order of this Court, all Persons who have held, hold, or may hold Claims against or Interests in any of the Debtors are permanently enjoined, on and after the Effective Date, from (a commencing or continuing in any manner any action or other proceeding of any kind against the Debtors with respect to any such Claim or Interest; (b enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against the Debtors on account of any such Claim or Interest; (c creating, perfecting, or enforcing any Lien or encumbrance of any kind against the Debtors or against the property 3

4 Document Page 4 of 8 or interests in the property thereof on account of any such Claim or Interest; (d commencing or continuing in any manner any action or other proceeding of any kind with respect to any Claim which is treated or satisfied pursuant to the Plan; and (e taking any action to interfere with the implementation or consummation of the Plan; provided, however, the provisions of this paragraph and the provisions of Section 10.6 of the Plan shall not prevent any Person from taking action in this Court to enforce their rights under and in accordance with the Plan. (Confirmation Order 28 (emphasis in original. 14. Furthermore, the Confirmation Order expressly provided that the automatic stay arising out of Section 362(a of the Bankruptcy Code (the Automatic Stay shall continue in full force and effect until the Consummation Date. 1 (Confirmation Order On October 24, 2013, the Movant (who, at that time, was represented by the firms of Webb & Zagoria, LLC and Montlick & Associates, P.C. filed a complaint commencing the State Court Litigation. 16. On November 26, 2013, CGLA filed a Notice of Bankruptcy in the State Court Litigation (the Notice of Bankruptcy, which notified the Movant and his counsel that the State Court Litigation constituted a violation of the Plan Injunction and the Automatic Stay; a copy of the Confirmation Order was attached as an exhibit to the Notice of Bankruptcy. 17. In subsequent telephone conversations, the Movant s counsel represented to the Debtors counsel that the Movant would voluntarily dismiss the State Court Litigation. The State Court Litigation, however, was not dismissed. 1 The Consummation Date is the date on which the Liquidating Agent makes the Final Distribution of the Liquidation Proceeds and Retained Proceeds in accordance with this Plan. (Plan

5 Document Page 5 of On November 6, 2014, the Motion (which is simply a pro se letter was filed in the Debtors bankruptcy cases. The Movant requests that the Automatic Stay be lifted so that he may proceed with litigation against Liberty Mutual, and not Cagle s Farm. 2 Argument A. The Motion should be Denied because the State Court Litigation is Barred by the Plan Injunction. 19. The Plan Injunction provides that anyone that holds or may hold a claim against the Debtors is permanently enjoined from commencing or continuing in any manner any action or other proceeding of any kind against the Debtors with respect to any such claim. Because the State Court Litigation is prohibited by the Plan Injunction (as set forth in the Confirmation Order entered by this Court, the Motion should be denied and the Movant should be ordered to dismiss the State Court Litigation. See In re Residential Capital, LLC, 512 B.R. 179, 193 (Bankr. S.D.N.Y (ordering plaintiffs in a state court action to dismiss litigation brought against non-debtors in violation of plan injunction; In re Spiegel Inc., Case No , 2007 Bankr. LEXIS 234 at *15 (Bankr. S.D.N.Y. Jan. 23, 2007 (stating that actions taken in violation of a plan injunction are void ab initio; see also Alderwoods Group, Inc. v. Garcia, 682 F.3d 958, 966 (11th Cir ( A bankruptcy court thus has the additional power to enjoin litigants from prosecuting in state court claims against former debtors.. B. The Motion should be Denied because the Movant has Failed to Timely File a Proof of Claim Against the Debtors and is, therefore, not Entitled to any Payment. 20. Even if the State Court Litigation is not enjoined by the Plan Injunction, relief from the Automatic Stay would be improper because any recovery by the Movant is barred. The 2 Mr. Pettway s claim is covered by a Commercial Insurance Policy issued by Liberty Mutual Insurance Company. However, the policy is subject to a $10,000 deductible and certain other limitations. 5

6 Document Page 6 of 8 Confirmation Order expressly provides that any Person who fails to timely file and serve a proof of an administrative expense claim shall be forever barred from seeking payment of such administrative expense claim by the Debtors. Adherence to a court-ordered claims bar date is critical to any chapter 11 proceeding. See 9 Collier on Bankruptcy [4] (rev. 16th ed ( Without a bar date, it would be impossible to determine with any finality the obligations of the debtor The Movant and his former counsel had actual notice of these bankruptcy cases and the Administrative Expense Bar Date not later than November 26, 2013, when CGLA filed the Notice of Bankruptcy. However, the Movant has never filed a proof of administrative expense claim in the Debtors bankruptcy cases. The Movant, therefore, is not entitled to any payment from the Debtors. See In re Robinson Foundry, Inc., 347 B.R. 781, 785 (Bankr. N.D. Ala (holding that creditor was not permitted to file an untimely claim because, among other things, the creditor knew about the bankruptcy filing and did nothing for almost four months ; see also In re Alton, 837 F.2d 457, 460 (11th Cir ( [M]ere knowledge of a pending bankruptcy proceeding is sufficient to bar the claim of a creditor who took no action In light of the foregoing, the Movant is not entitled to any recovery from the Debtors 3 and has failed to establish cause as to why the Automatic Stay should be lifted. Therefore, the Motion should be denied. Conclusion WHEREFORE, the Debtors respectfully request that the Court enter an order: (i denying the Motion; 3 The Movant indicates that he only wants to pursue litigation against CGLA s insurer, Liberty Mutual Insurance Company. The applicable insurance policy is, however, subject to deductibles and other limitations. 6

7 Document Page 7 of 8 (ii (iii directing the Movant to dismiss the State Court Litigation; and granting such other and further relief to the Debtors as may be necessary or appropriate under the circumstances. Dated: November 20, 2014 Atlanta, Georgia Respectfully submitted, KING & SPALDING LLP /s/ Jeffrey R. Dutson Paul K. Ferdinands Georgia Bar No pferdinands@kslaw.com Jeffrey R. Dutson Georgia Bar No jdutson@kslaw.com 1180 Peachtree Street, N.W. Atlanta, Georgia Telephone: ( Facsimile: ( COUNSEL FOR THE DEBTORS IN POSSESSION 7

8 Document Page 8 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In re: Chapter 11 CGLA LIQUIDATION, INC., f/k/a Cagle s, Case No PWB Inc., CF LIQUIDATION, INC., f/k/a Cagle s Farms, Inc. Debtors. Jointly Administered CERTIFICATE OF SERVICE This is to certify that on November 20, 2014, I caused to be served a true and correct copy of the foregoing Debtors Objection to Arthur L. Pettway s Request for Relief from the Automatic Stay by electronic mail on all parties receiving notice via the Court s ECF System. In addition, I served a true and correct copy of the objection on the following individual by causing a true and correct copy of the objection to be deposited in the United States mail, first-class postage prepaid: Arthur L. Pettway Jr Cross Ridge Rd Montgomery, AL Dated: Atlanta, Georgia November 20, 2014 KING & SPALDING LLP By: /s/ Jeffrey R. Dutson Jeffrey R. Dutson Georgia Bar No Peachtree Street, N.W. Atlanta, Georgia jdutson@kslaw.com