Case pwb Doc 1097 Filed 11/26/14 Entered 11/26/14 10:26:12 Desc Main Document Page 1 of 9

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1 Document Page 1 of 9 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 KRISTI WILLIAMS MOTION 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 Motion for Relief from the Automatic Stay [Docket No. 1091] (the Motion filed by Kristi Williams (the Movant. In support of this Objection, the Debtors respectfully state as follows: Preliminary Statement 1. In February 2014, the Movant filed a complaint in the Circuit Court of DeKalb County, Alabama against CGLA asserting workers compensation claims arising from alleged injuries she suffered during the course of her employment with CGLA (the State Court Litigation. The filing of the complaint constituted a knowing and willful violation of both the automatic stay and the injunction provided for in this Court s order confirming the Debtors DMSLIBRARY01:

2 Document Page 2 of 9 chapter 11 plan (the Confirmation Order. 1 The complaint was never served, and the Debtors did not learn of the State Court Litigation until the Motion was filed. 2. The Movant now requests that this Court lift the automatic stay so that she 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 her alleged claims against CGLA because she has failed to timely file a proof of claim. The Movant admits to having notice of the Debtors bankruptcy cases and does not deny receiving notice of the applicable bar dates. 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 the State Court Litigation at this juncture would materially 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. only. 5. The Debtors chapter 11 cases have been consolidated for procedural purposes 1 Two months earlier, in December 2013, the Movant filed a complaint against CGLA in the United States District Court for the Northern District of Alabama (the District Court asserting claims arising under the Family Medical Leave Act. After the Debtors filed pleadings notifying the District Court and the Movant of the Plan Injunction (as defined below, the case was dismissed. See Williams v. Cagle s, Inc., Case No. 13-cv VEH, Docket No. 24 (N.D. Ala. Apr. 22,

3 Document Page 3 of 9 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. 9. Pursuant to the Order Establishing a Bar Date and Approving Bar Date Notice and Procedures, dated January 26, 2012 [Docket No. 265] (the Bar Date Order, the Court established April 2, 2012, as the bar date for filing proofs of claim against the Debtors estates. The Debtors claims agent served timely notice of the claims bar date on the Movant. (See Affidavit of Service, filed February 8, 2012 [Docket No. 277], Exhibit D, p 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. In connection with the closing of the sale, substantially all of the Debtors employees were terminated and rehired by 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 3

4 Document Page 4 of 9 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 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. 2 (Confirmation Order On the Effective Date, the Debtors filed and served a Notice of Confirmation of Plan, Permanent Injunction, Various Deadlines, Effective Date and Deadline for Filing 2 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 9 Administrative Expense Claims Arising from the Rejection of Executory Contracts and Unexpired Leases [Docket No. 990] (the Notice of Effective Date, which notified (prominently, in bold parties in interest of the Plan Injunction and the Administrative Expense Bar Date. The Debtors claims agent served a copy of the Notice of Effective Date on the Movant. (See Affidavit of Service, filed November 13, 2012 [Docket No. 997], Exhibit F, p On February 14, 2014, the Movant filed a complaint commencing the State Court Litigation asserting a claim for workers compensation against CGLA. The complaint has never been served on CGLA. In fact, the Debtors did not learn of the State Court Litigation until the filing of the Motion on November 12, 2014 nearly nine months after the filing of the complaint. 17. At the time of the alleged injury, CGLA maintained a self-insured workers compensation program. 3 Argument A. The Motion should be Denied because the State Court Litigation is Barred by the Plan Injunction. 18. The commencement of the State Court Litigation constituted a knowing and willful violation of the Plan Injunction and the Automatic Stay. 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 3 CGLA maintained an excess insurance policy to cover any claim in excess of $650,000. 5

6 Document Page 6 of 9 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. 19. 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 Motion states that, in the event that the Debtors are self-insured (which they are, Movant will seek enforcement of any judgment through filing an appropriate proof of claim. However, the applicable claims bar dates, which the Movant had prior notice of, have long expired. 20. The Bar Date Order and the Confirmation Order provided that any person who fails to timely file and serve a proof of claim or proof of administrative expense claim, respectively, shall be forever barred from seeking payment of such claims 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 Debtors served Movant with notice of the pre-petition claims bar date and the Administrative Expense Bar Date. However, the Movant never filed a proof of claim or proof of administrative expense claim in the Debtors bankruptcy cases. 6

7 Document Page 7 of The Movant does not deny that she had notice of the applicable bar dates and the Debtors bankruptcy cases. Rather, the Movant attempts to justify her failure to file a proof of claim by stating that, at the time of the Administrative Expense Bar Date, she: (a was unrepresented by counsel ; (b was unsure about what claims she had against the debtors ; and (c did not understand that the debtor s bankruptcy case would impact her claims. (See Motion 3. These are not valid excuses for failing to timely file a proof of claim. See In re Peninsular Oil Corp., 399 B.R. 532, 538 (Bankr. M.D. Fla (noting that failure to hire legal counsel has been rejected as a justification for not filing a timely claim ; In re Nat l Steel Corp., 316 B.R. 510, 513, 518 (Bankr. N.D. Ill (noting that creditor s failure to explore and identify claims prior to the bar date did not warrant allowance of an untimely proof of claim. Pursuant to the clear terms of the Bar Date Order and the Confirmation Order, the Movant is not entitled to any payment from the Debtors. See Weisheipl v. Sandstrom (In re Sandstrom, Case No. G REB, 2013 Bankr. LEXIS 4226 at *13 (Bankr. N.D. Ga. Sept. 6, 2013 (disallowing untimely filed proof of claim; 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. 22. In light of the foregoing, the Movant has failed to establish cause as to why the Automatic Stay should be lifted. Therefore, the Motion should be denied. Reservation of Rights 23. CGLA hereby reserves any and all defenses it may have with respect to the allegations set forth in the complaint filed in the State Court Litigation. Furthermore, the Debtors reserve any and all rights they may have with respect to the Movant s knowing and 7

8 Document Page 8 of 9 willful violation of the Plan Injunction and the Automatic Stay, including, without limitation, their right to seek damages, sanctions, and attorneys fees. Conclusion WHEREFORE, the Debtors respectfully request that the Court enter an order: (i (ii (iii denying the Motion; 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 26, 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 8

9 Document Page 9 of 9 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 26, 2014, I caused to be served a true and correct copy of the foregoing Debtors Objection to Kristi Williams Motion for Relief from the Automatic Stay by electronic mail on all parties receiving notice via the Court s ECF System. In addition, I served the objection on the following person by causing a true and correct copy of the objection to be deposited in the United States mail, first-class postage prepaid: Ralph K. Strawn Henslee, Robertson, Strawn & Sullivan, L.L.C. P.O. Box 246 Gadsden, AL Dated: Atlanta, Georgia November 26, 2014 KING & SPALDING LLP By: /s/ Jeffrey R. Dutson Jeffrey R. Dutson Georgia Bar No Peachtree Street, N.W. Atlanta, Georgia jdutson@kslaw.com