Tennessee Wheel & Rubber v. American Exp. Travel, 75 B.R. 1 (M.D. Tenn. 1987)

Russell H. Hippe, Jr., Nashville, Tenn., for American Exp. et al.

Randal S. Mashburn, Nashville, Tenn., for Tennessee Wheel & Rubber Co.

MORTON, Senior District Judge.

This case is before the court upon defendants' motion for leave to appeal. For the reasons which follow, the defendants' motion shall be granted.

Title 28 United States Code, section 1292(b), which governs the appropriateness of an appeal of an interlocutory order provides a two-pronged test as follows:

1. Whether there exists a controlling question of law as to which there is substantial ground for difference of opinion, and

2. Whether an immediate appeal from the order may materially advance the ultimate termination of the litigation.

The issue sought to be addressed on appeal is whether the post-confirmation reorganized debtor should be allowed to pursue "avoidance" causes of action under 11 U.S.C. §§ 547 and 548. Fraudulent conveyances and preference causes of action under the Bankruptcy Code were created solely for the benefit of general unsecured creditors and can only be pursued if the recoveries inure to their benefit. The parties dispute whether the unsecured creditors would receive a "benefit" from the recoveries. This issue is common to some 15 defendants, and an early disposition of this question will be advantageous to the progression of the litigation. Since we also find that the issue of the type of "benefit" *2 to unsecured claimholders necessary to support a debtor's post-confirmation recovery powers to be a controlling question of law about which substantial disagreement exists, leave to appeal shall be granted. The parties having already fully briefed the questions raised by this appeal, oral argument shall be held on April 15th, 1987, at 10:00 AM, at the U.S. Postoffice and Courthouse, Cookeville, Tennessee.

An appropriate order shall be entered.

This case is before the court upon appeal from an order by the United States Bankruptcy Court for the Middle District of Tennessee, dated August 29, 1986, 64 B.R. 721, denying the defendants' motions to dismiss. This court heard oral arguments on April 15, 1987, with appearances by Russell H. Hippe, Jr., representing the defendants/appellants and Randal S. Mashburn for the plaintiffs/appellees.

This court is of the opinion that the bankruptcy judge was entirely correct in his factual findings and legal conclusions, as well as the rationale offered in his decision. We concur in Judge Lundin's refusal to elevate form over substance and hereby adopt his decision. An order shall be entered affirming the August 29, 1986, decision of the Bankruptcy Court.