Virginia Broadband, LLC v. Manuel, No. 3:2014cv00052 - Document 22 (W.D. Va. 2015)
Court Description: MEMORANDUM OPINION. Signed by District Judge Glen E. Conrad on 9/15/15. (jcj)
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clEe : OFFI u. DI coUR' CE s. ST. r ATR- OKE,V A FI LED I THE UN I N TED STATES D I STRI CO URT CT FO R TH E W ESTERN D I STRI OF V I N I CT RGI A CH ARLO TTESV I LLE DI ISI V ON sE? 15 2 1 05 JL . UIC , L ERK s x DE / * L ERK V I GI I BR OA DBA N D , R NA LLC, A ppela , l nt Ci lAc i N o.3: 4- vi ton 1 CV 00052 M EM O M ND UM O PI I N N O W A RREN M AN U EL, By:Hon. l E . G en Conr d a ChifUnie St t Diti tJ e t d aes src udge Appe l lee. l t sa n hi ppea f om t U nied St t Ba upt y Cour f rt W es e n D i ti tof l r he t a es nkr c t o he t r s rc Vigi a,AppelntVigi aBr dba LLC (û r ni la r ni oa nd, S VABB'or(heCompa ',aCha e 11de or ' d t ny' ) ptr bt , s ksr vi oft ba upt y c tsme or ndum opi o a or ral ng t eecai s ee e ew he nkr c our' m a ni n nd de lowi hr l m fl by Appele W a r n M a l VABB' f me CEO a boa d m e ied le re nue , S or r nd r mber a de ng , nd nyi VA BB ' r ques f r ha ac e i a i or i t a t r tve e t bl s di i n oft e Se t or ec r t r z ton , n he le na i , quia e ubor nato hos c ai s Fo t f l ng r as , he co t ila tr t ba u c c tsdec s on i f l l m . r he olowi e ons t ur w l fi m he nkr pt y our ' i i n ul. B avkzround Hitr o heCo n soy ft mpa y I 2003, ber Suli n a Hun e Cha n Ro t lva nd t r pman f m e VABB, m a ernina d or d a nag - a ge Vig ni lmie la lt c r i a i td ibiiy ompa t tpr d wiels i e ne s r c i a a ound Cul r ny ha ovi es r e s nt r t e vies n nd r pepe a dRa p ha n c c u te a dao gVigna s rh r Ne k l lt 20 4, a u l on dt e n p a n o k o n is n ln r i i' No ten c . n ae 0 M n e j ie h Com pa sboa d ofm a ge s Suli a Cha a a M a le c m a ca t lc rbutons ny' r na r . lv n, pm n, nd nue a h de pia onti i Virginia Broadband, LLC v. Manuel Doc. 22 a s r d on t Co pa s boa d i isea l ye r . a lal o wor a VA BB ' Chi f nd e ve he m ny' r n t ry a s M nue s ked s S e Exe utveOfier(; ' d i t perods- fom 200 untlOcobe 201 a ag nfom c i fc C CEO' urng wo i ) r 4 i t r 0 nd ai r Febr uary 2011untlAugust2012.M anuelw asal o V ABB ' l i s S arges s t harehol ow ni der, ng 28. 994% equiy i t Com pany. t n he Dockets.Justia.com l z VABB' hit y i fa S sor s r ughtwih t nson a fna iltoubl l 2006,Cha a and t e i nd i nca r e. n pm n Ma nuelm a l nst VA BB;M i ebur Bank a s l ned m one t t Com pany,gua a e d de oa o ddl g l o oa y o he r nt e b Cha a a M a l The e f e ,Suli n r duc d hi m em be s p i e es i t Com pa y pm n nd nue . r a t r lva e e s r hi nt r t n he ny f o 26% t 1 , r uli i hi r m o fom t boa d. Fr 2007 t 2011, e be s p on rm o 0% es tng n s e val r he r 1 om o m m r hi t boa d vare D urng t s pe i t Com pa obt i d l nsf om M a ,Cha a M ar he r i d. i hi rod, he ny a ne oa r nuel pm n, k Davi, heHuggi Fa iy Tr t Tom Huggi ,a EVB Ba VABB is d not sf e c st ns m l us, ns nd nk. s ue e or a h l n, nd a 1oft s l ,s ve EV B' ,w e e uns c e The Com pa al o s ug a l n f o oa a l he e oans a s r e ur d. ny s o ht oa r m t U. De rme tofAgrc t eRurlDe l ntf RualUtlt Sewie ( ,aswel he S. pat n iulur a veopme or r iiy l c s RUS) l a as pa a el n t pay f raudi s r ce .RUS de lne VABB' a i a i cii an i biiy s e r t oa o o t e vi s ci d S pplc ton, tng na lt t d tr n tetn n ilfa iii o tep oe td et t Co a y' fiu et p o i e o eemi e h i a ca e sb ly f h rj c u o he mp n s al r o r v d t a t d tna ilsaeme s l Oc obe 201 t boa d vot t r moveM anue asCEO. n udie i nca t t nt . n t r 0, he r ed o e l l Fe ua y 2011 howe r M a lwasr t edt t boa d a r ppoi e CEO. br r , ve , nue esor o he r nd ea nt d VABB s e nty borowe a tonalmone fom Tom Huggi ;i a s r i nc t EVB l n, ubs que l r d ddii y r ns t lo efna ed he oa r uli i i s es tng n s uanc ofa ne no e e w t. I J nua y 20l t boa ddic s d a ovalofanot t M anue i t a ountof n a r 2, he r s us e ppr eo l n he m $1 1 6 00 f unpai s lr bon e ,a e ns s; , 94,49. or d aa y, us s nd xpe e howe r t boa d di nota ovet ve ,he r d ppr he no et tM a lpr s nt a t tmeei l Fe ua y 201 t boar a ove t mi t of t ha nue e e ed t ha tng. n br r 2, he d ppr d he nu es t J nua y m e tng,whih ha au horze f m a ii t i bt dne st M a l Tha m on h, he a r ei c d t i d or lzng he nde e s o nue . t t La r Cha c im a oft boa d a t ttm e,i s d a not t M a l l A prl201 t ry ng, ha r n he r t ha i s ue e o nue . n i 2, he boa d r vi w e t Fe ua y no e pa bl t M a la de i d t m a no c nge t t no e. r e e d he br r t ya e o nue nd c de o ke ha s o he t I A ugus 201 t boa d r m o d M a lf om t bo d a a CEO . r a t r Suli n w as n t 2, he r e ve nue r he ar nd s The e f e , lva r eappoi ed t t boar nt o he d. lSuli n fl d s tagai tVA BB i M a ch 2007. Thepa te agr d t Suli n woul bepai $525, lva ie ui ns n r ris ee hat lva d d 000, wi $1 00 0p y bl i daeya dtermanigb ln epado e teflo n s v ny asp ru n t an t. t 0 ,0 a a e mme itl n h e i n aa c i v r h olwig e e e r us a to oe h l J l 2 0 S lla s u h j d me t n e ti n t. sdip t wa stldb an w a re n, d i n uy 01 , ul n o g tu g n u d r hs oe Thi s ue s et y e ge me tma e n v e No vembe 201l whih p ovi t tSuli n woul bepai $5, mont y, usa$1 000pe ly. r , c r ded ha lva d d 000 bl pl 0, nat I. I Hit r o heBa r pty soy ft nk u c l N ove be 201 VA BB fl d isCha e 11pe ii i t Unied St t Ba upt y n m r 2, ie t pt r tton n he t a es nkr c Cour f r t W e t r D i ti tofV igi a Lync t o he s e n s r c r ni , hbur Di s on. tf l d a pr pos d Cha e 1l g vi i I ie o e pt r pl n,unde whi uns ur d c edior hol ng cli sup t $50, ar t bepad c h eq lt a r ch ec e r t s di am o 000 e o i as ua o 5 oft a l e a ountoft e c a m sw ihi t ve m o hsoft di ti ton dat % he low d m hos l i t n wel nt he srbu i e. Uns c ed c ed t sove $50, wilr ceve a e t m e r hi i t ne r ga ze e ur r ior r 000 l e i n quiy mbe s p n he w, eor ni d e iy i pr tont t a ntt n opori o he mounto t i c am . f her l i Unde t ste t e t m a oft f r e r hi r am n , ny he o m r m a e swilpa tcpae i ma ge ntoft ne e iy,a t y a euns c ed c e t s nag r l ri i t n na me he w ntt s he r e ur r dior . VABB h pr ce howe r t i d a ts vi a anopeai c as editd, ve ,hattd nno ur ve s c rtng ompa i ( Ma i ny f 1 nuels i ve i t m a ge e . Doc tN o.2,Ex. l M a c 201 VA BB tl d is Se ond nvol d n he na m nt' ' ke 8. n r h 4, ie t c Ame d Pln ofRe ga zai n underCha e 11i whih Cl s 8c am sconsse ofa l nde a or ni to ptr n c a s l i it d l cl i s ofM a l The pl n sa e t tM a li ha lr ce ve no paym e o hi c ai s ore t am nue . a t t d ha nue ' l e i s nt n s l m quiy i e c a g f r scams'Do k t 2 Ex. M a u lo j ce t ti te t n a d i J n n x h n e o hi li . c e No. , 9. n e b e td o h s rame t n ,n u e ' 2 4 VABB fldo j cin t Ma u lstrep o f o cam. 01 , ie b e to s o n e' h e r o s f li M a l st e pr s ofc a m s we e a f l s nue ' hr e oof li r s olow : Cl i 24, or$51 645. wa ba e on anum be ofpr s o y no e pur ua t am f 6, 44, s s d r omis r t s s nt o whih M a c nuell ne m one t VABB.M a oa d y o nuela tch llpr is y not st t scli ,alng ta ed om s or e o hi am o wi r s lto sfo t eVABB b ada t rznge c la VABB obe td, se t gta ti t e o uin r m h h o r uhoii a h o n. jce a s ri h t hs n c am s dbes r na e t t cli sofot runs ur d c edior ,be us M a l l i houl ubo di t d o he am he ec e r t s ca e nue c r l d VA BB a t tm e t not w e e t ha be n pai a s el m a nt i d t r c ds ontole t he i he es r o ve e d nd ol y i a ne he e or r ga di s sdue u rt no e . e r ng um nde he t s Cli 25, or$1248, 00,wasbas d on t Feb uay 201 pr m is r no esgne by am f , 830. e he r r 2 o soy t i d La r Cha pur r e y f tm one l ne ' M a l D oc tN o.2,Ex. M a la s ry ng, po t dl or t y oa d' by nue . ke 57. nue l o pr vi d a copy oft J nuar 201 bo r m e tng m i e r tec i t tt boa d r ol t o de he a y 2 a d ei nut s el tng ha he r es ved o f m a ie û gr eme sf t l nsgr nt t t co pa by.. a li t amountof or lz t e nt or he oa a a ed o he m ny .M nue n he $119 6 00, a welasa ie z tonf t cli ( i i lpl i ees fom t not s , 4,49. ' s l n tmiai or he am prncpa us ntr t r he e' ' mau iyd t) Doc e No. , 5 .VABB o j ce t t i cam, se t gta tecam wa trt ae . k t 2 Ex. 8 b e td o h s li a sri h t h li s n bas on anot is d whe t c ed e s ue n he ompa sopertonsd r nots t na e'Doc tNo, Ex. ny' ai d e we usai bl .' ke 2, 23. VABB a s a s redt tt ba i f t not wasnota l n,butwas(de e r d s l r lo s e t ha he s s or he e oa t f re a a y, bo es a ot ra unt. LlVABB cai t tt s s weenota hoiedbyt f l nus , nd he mo s' ts ' l med ha he e ums r ut rz he ul boa d,a t tM a lic r ts w t tt not t ti t bassofg ai 25 wa i r nl r nd ha nue damo ho ha he e ha s he i cl m ) s nhe e ty f rore e e i t i g f t ' I ai nt r d n o n ood aih. d. ' Cli 26,orgi l f $8 8l 87,wasba e oni i se am i naly or 3, 8. s d d nes xpens gnc rdjf t bus es i ure or he de or'a i e de e by s ve alpag sofe ns r por ldge sc ani handwrte bt y' nd s vi nc d e r e xpe e e t e r ont i ng it n n tto se i n t etg r sc n an dteen Doc e No 2 Ex. 9 VABB o j ce t ti o ain dt g h i u e o tie h r i. k t . , 5 . i be td o h s cli ,notngt tM a els el mant i t r cor a l c k ope a co plt am i ha nu ol y i aned he e ds nd a ked ' pr r nd m e e doc e a i 'f rt e s um ntton' o hes uppos d l nst VABB. ke No. Ex. VABB as a gue e oa o Doc t 2, 24. lo r d t tpori oft c am we eba r d by t saut oflm ia i .Afe VABB fld is ha tons he l i r re he t t e i ttons l r ie t o j ci n M a ue a n e h scam t c . is h rd e t ecam t $ 9 1 8.6 Th n, e b e to , n l me d d i li wie Frt e e uc d h li o 4 , 1 1 . e h i e s d t c am by $48, 31 brng ngt t a t $97,06. The i e s pur t y ner a e he l i 668. , i i he ot l o 8 47. ncr a e poredl pe ti t unpad s a y a r d whe VABB pl c d sop pa raned o i alr cc ue n ae t ymentor r on s ve al de s e r outtndi s lr c c t Ma .VABB obece t t i r a e a g ngt tt cam wa sa ng aa y he ks o nuel j td o he nc e s , r ui ha he li s untme yt t e e t ti a d cai unr lt t t orgi lc am ,a wa a nde a t i l o he xtnt ha t dde l ms ea ed o he i na l i nd s me d fer t ba dae f flngpr so cli . he r t or ii oof f am VABB' ds l u esae n f rh ro j ce t M a u lste t n a a u e u e S icos r ttme t u te b e td o n e' r ame t s n ns c rd c e t .VA BB a gued t ta 1ofM a r dior r ha 1 nuels c ai s s d be e t bl s ' l m houl quia y ubor na e t t c a m s di t d o he l i ofo he uns e ed c e t s be a e M a t r e ur r dior , c us nuelc us d S i r ngi da a ' o V ABB , nc udi a e t de a ng m ge't w i l ng ( hi f l et pa peronalpr rytxe f f ryeas ( hi pa 1) s aiur o y s ope t a s or ou r; 2) s ymen ofhe t i urnce t alh ns a 4 f a f r rVABB e oye f fveyea sa trt te pl e lf t compa c tng or o me mpl e or i r fe ha m oye e t he ny, osi $ 000;( hi fiur t pr des fce i or tont pemi a tngofVABB' booksa 60, 3) s al e o ovi ufiint nf mai o r t udii S nd r or ;( hi e c i ofalas wihoutt bo r sa oval( )hi a horzain of ec ds 4) s xe uton e e t he a d' ppr ' 5 s ut i to , $1 000i bonuspa nt t hi efwihou t boad' a ova;( hi a hoiai ofa 20, n yme s o ms l t t he r s ppr l 6) s ut rz ton slr f rhms l la i e e s' f h a u t u tfa l b tec mp n ' f n il o d to aay o i ef i r n xc s 'o t e mo n j siibe y h o a y s i ca c n iin; f na a ( hi a e a eoft Fe uay201 not sgne byChungwihoutt f lboad' nd 7) s cc ptnc he br r 2 e i d t he ul r s a ova . ke No. Ex.8. ppr l Doc t 2, VABB c e t ta lt e a o co tt e abr c of ont nds ha 1 hes di ns nsiut d ea h M a ' tduc a y dut t t e pa Ale na i l VABB s gesst tt ba upt cour nuels i i r y o he om ny. t r tve y, ug t ha he nkr cy t s d ha r cha a t r z d M a ' cl i s a equiy i t c pany. houl ve e r c e i e nuels a m s t n he om Theba upt y c t a d e de eon t s is . r her onN o mbe 5, 4, nkr c our he r vi nc he e s ues The ea , ve r 201 t eb n r p c c u tsu da o iin i wh c tec u t v rue VABB' o j ci n wih h a k u ty o r is e n pno n ih h o r o e r ld S b e to s t r s c t Cli 2 a d Cli 2 , v r ldi p r a ds tie i pa t e pe t o am 4 n am 5 o enl n a t n usan d n r VABB' o j cin t e S b e to s o Cli 2 , n rj ce VABB' ag me t fre ui bl s b r i ain a drc a a trz to o am 6 a d ee td S r u n s o q t e u o d n to n e h rceiai n f a M a ' c a m s Se Ba .Doc tN o.5 V ABB tm e y a a e t ba upt c ts nuels l i , e nkr ke 93. i l ppe l d he nkr cy our ' dec son r r ng t al nc ofCl i s25 a 26,a isdeeson t no s d nac o ii ega di he lowa e am nd nd t ii o t ubor i t r r ha a e i e alt r ecl ms VABB di no a ec r ctrz l h e ai . d t ppea t ba up c eo tsde i r r ng l he nkr t y ur ' dson ega di t a l nc ofCli 24.Furhe mor M a he lowa e am t r e, nueldi nota d ppea t ba upty cour' r i t t l he nkr c ts ulng ha t $48, 31i r a ef Cl i 26 wa tm eba r d. m at rha be n bre ed a t cou t he 688. nc e s or am si re The te s e if nd he r he d a gum en on J 24,201 The m a t ri now rpe f rr vi w . ar r t une 5. te s i o e e St andard ofR evi ew Thec u t sa pelt j rs ito o e t smatr ru n t 2 U. C. 1 8 a. e o r ha p lae u idcin v r hi te pu s a t o 8 S. j 5 () Th di t ctcour r ew st bankr cy cour' tndi off f cl r er or.l r M er v-G o-l sri t evi he upt ts ' ngs act or ea r n e i r kound Entr ies 1 F. 1 1 ( hCi.1 ;Ba upt Rul 8 3.$ fndi i 'l ry eprs , 80 3d 49, 54 4t r 999) nkr cy e 01 ; i ng s ceal A er r oneous w he alhoug t r i e de e t s ' n, t h he e s vi nc o uppor i,t r vi w i co ton t entr evi nc t t he e e ng ur he ie de e 5 i lf wih t defniea fr c c i t tam it kehasbe c s e4 t he i t nd im onviton ha sa en omm it d.' te 'Ande s n v. ro Bese rCiv, 0U. 564,573( 985 .fdheeaet pemisbl viwsoft e de ,t s me t 47 S. 1 ) I c r r wo r si e e t he vi nce he f ti erschoi bewee t m c nnotbece l er ous l a 57 ( tngUnie Sttsv. acfnd ' ce t n he a lary rone . d. t 4 cii td ae Yel Ca Co.338U. 33, ( 949).C rgads l begi nt t opporuniyoft low b , S. 342 1 ) k e r hal ve o he Due t t he b n r ptyc u toj d tece iii o win se . Faoli Emiae Ba kl t Lt , 4F.d a k u c o r t u ge h rdb ly f t e ss' r t v. rts n n' d.1 3 t ' k l 244, 0 ( h Ci.l . pa t s e ngrveraloft ba uptye tsf lfndi beas 25 4t r 994) The ry e ki e s he nkr c our' adua i ngs r t bur n ofpr ng t tt e fndi a e cl a l e r ne . n r Ra , 1 4 B . ,7 ,747 he de ovi ha hos i ngs r e r y r o ous l e pe 0 R 41 ( . N. 1 . t ot rha aba u cyc tsc l i of1 aerviwe de W D. C. 989) On he he nd, nkr pt our' oncusons aw r e e d no l r Haror Sa l ,37 F. 637,639( hCi.2004) l a is pr e sami vo.n e f d nds nc. 2 3d 4t r . f n s ue esnt xed q ton ofl w a f c , he co ta i t c e ry e r ouss a r t t f dua por i oft ues i a nd a t t ur pples he l a l r one t nda d o he a l ton he i r a deno rvi t lga co l i de i d fom t e f c s Giba Bl Co. Fe nquiy nd vo e ew o e l ncusons rve r hos a t . l ne dc. v. d. Ree v Ba k, 0F.d8 5 9 5( t Ci. 9 6 .s e ii n ma ei t ee rieo ab l r p c sr e n 8 3 9 , 0 4h r 1 9 ) çDlcso s d n h xecs f al u ty g k c tsdic ei n wilnotbes tasdeu e st r i pl i e r ora ab e ofdic e i 'I r our ' s r to l e i nls he e s an ror n us s r ton.' n e Lawls ,79B. 85 85 ( . M o.1 ) es R. 0, 2 W D. 987 . Di cuss on s i V ABB a a s s ve a f e soft ba r pt y c tsN ove be 5, 4 dec s o The ppe l e r l ac t he nk u c our ' m r 201 i i n. c tw ila tr t ba upt y c ts de i i i ise ie y f t r as outi d bel . our l fi m he nkr c our ' c s on n t ntr t or he e ons lne ow 1 . Alowanc o ams25a 26 l e fcli nd V AB B a gue t tt ba r pt y c t r ed i a l w i bo h Cl m 25 a Cl i 26.The r s ha he nk u c our e r n lo ng t ai nd a m courtdi ees. sagr TheBa upty Co pr dest tatme yfld c am i al d unls apa t i i e e t nkr c de ovi ha i l ie l i s lowe e s ry n ntr s obecs 11U. C.j5 a . fs hob e to i ma t c tmus deemi t a j t. S. 02() I uc j cin s de,he our t tr ne he moun a t nd vai t oft cli j502( .TheUnie Stt Cour ofAppe l f t FourhCic thashed ldiy he am. b) td aes t as or he t rui l t t Bankr cy Code est ihesa bur s fi f am ew or f pr ng t am ountand hat he upt abls den- hitng r k or ovi he 6 valdiyofacam.l r Haf dSa ,l ,37 F, 637,640( hCi. it li n e ror nds nc. 2 3d 4t r 2004)( tngFed. cii R. Ba . 30019) Fis,hece t ' flngofapr ofcli e tt esû i fci e de nkr P. 4 . rt t rdiors ii oof am onsiut û ma a e vi nce pr oft a oun a va i t oft cl i .' n r H a f d Sa ,l ,37 F. a 6409l r H it he m t nd ldiy he a m ' I e r or nds nc. 2 3d t n e lon, No.1 611 201 W L 62291 a * t nkr W . Va. c.2,201 ) Oncet crdiorme t 2- 02, 3 00, t 5 Ba . D. De 3. he e t es t i b r e ,hebu d nte s it t t ed b o t o jc t tecam wi e ie c t û e u te h s u d n t r e h n h fs o h e t r o be t o h li t vd n e o t b th h r cl m ' pr s ptveva i t 'l r Ha f d Sa . ne. 3 F. a 640. se de mus ai s e um i ldiy. n e ror nds 1 , 72 3d t ' Thi vi nce t nega e a l a tone f tne es a y f t pr ofc a m ' l ls fc e y and t us be s fci nt t tes ac c s r or he oof l i s ega uf i i nc s t uf i e m t de o taet e se e ofatuediput a mus ha pr tve f cee o m nsr t he xit nc r s e nd t ve oba i or qualt t c e sof o he ont nt t cam. l r Hit 201 W L 62291 a *5(ii I r Fal l,43 B. 779,78 t n . he li ' n e lon, 3 ' 00 t ctng n e wel 4 R. 4 Ba kT W . Va. D. 2009) ( ) emphassi orgna) Onl i t c s wheet cediorfist fl t r quiie i n ii l. y n he a e r he r t al o ie he e st docu e a i u rt fr ts e oft bur n- hi tng f n e or i i s fc e f t de ort m nt ton nde he is t p he de s fi r m w k s t ufi i nt or he bt o o j c wih u p o u igrb ta e ie c i s p r o iso jcin. e F l l, 4B. a 7 3 b e t to t r d cn e utl vd n e n u po t f t be to S e awel43 R. t 8 8 (tft pr ofcam % nots 4 k he oof li l uppore byt r uiiedocu ntto ii notpr ume t be td he eq st me ain,t s es d o p i fcevai .ft p e u to d e n taie ted bo n e o yt o j c t t ecam rma a i ld l he rs mpi n o s o rs ,h e t r e d nl o b e t o h li purua t t a i bl r es' (mpha i i o i na) s as I r Hit 201 W L 62291 a s nt o he pplca e ul .' e ) ss n rgi l; ee lo n e lon, 3 00 t * (cEl e wih u p i fcev ldt teo j cigp rymu th v s meoh rlg lys fiin 5 d v n t o t rma a i aii h be t a t s a e o t e e al u fce t g y, n g o n sf rc aln igtecam b sd s u t al gt fl ted c me tto ' Therq iie r u d o h l gn h li e ie j s fii o ie h o u n ain. e n ). e u st doc e ai whe t cli i ba ed o awrtng,i aco oft wrtng.Fed. Ba .P. um ntton, n he am s s n ii s py he ii R. nkr 3001c ;Fal l,434B. a 78 Fi ly,i t de ormeesisbur n,t nt ce t ha t () wel R. t 3. nal f he bt t t de he he rdior s he uli a e bur ofpr ng t a ounta valdiy oft cl i by a pr ponder nc oft e de e. tm t den ovi he m nd i t he a m e a e he vi nc l r H a f d Sa -l ,37 F. a 640. n e r or nds nc. 2 3d t Thi uli at bur i hei ened w hen t credior i an i deroft com pa 1 at s tm e den s ght he t s nsi he ny. d. 640- ;s ePe rv,Lit 308U. 295,306( 939) W he t de ori aco po ain,a 41 e ppe ton, S. 1 . n he bt s r r to n 'nsde'i l adie t ,ofierorperoni c r oft c porton.1lU. C.j û i r'ncudes rcor tc , i s n ontol he or ai S. 1 ( 1( . i sde ' d aig wi ab n r p c mp n aeo dn rl s be t osrc s ntn 013 )B)An n i rs e ln s t a k u t o a y r r ia i u j c t tit c ziy. h y I r Ha f d Sa ,l ç.372 F.d a 641 Thi src s r tny r quie t tt i i rs w n e ror nds n , 3 t . s tit c u i e r s ha he nsde ho i r tf r s andgoodfihoft c lng ta aci J . nheen aine s at he hale ed rns ton.. ê. a Cl m 25 . ai VABB o j de t tealwa e o Cli 2 o an mb rofgo n ,n ldngt a te be d o h lo n e f am 5 n u e r u ds icu i h th not w asm a a a tm e w he V A BB ' o r tonsw e e d ts t i bl ';t ba i oft not was e de t i n S pe a i r k us a na e ' he s s he e no f de e r d s a y,bonus , nd ot r a ount ale dl ow e t M an l M a or f r e al r es a he m s l ge y d o ue ; nuels el ol y m ai ai d t r c dsr ar ng s m sdue undert not pa t oft c ai w e e tm e ba r d;a nt ne he e or eg di u he e; r s he l m r i r e nd t no e w a no una m ous y a ove by t boa d.Ba .M em . a 9- 0. n a he t s t ni l ppr d he r nkr Op. t 1 O ppea , A BB lV a guest tt ba upty c tf ie t a y src s r i t M a ' cai ,a i i r ha he nkr c our a ld o ppl tit cutny o nuels l ms s t s undi put t the i a i i r o t c pany. s ed ha s n ns de f he om Re ewi t ba r pt y c tsco uso ofl w denovo,t c ti c tai d t vi ng he nk u c our' ncl in a he our s onsr ne o di a e wih V ABB ' a s ri n t tt ba u c c te r d w he i f ie t a y s rc s gr e t S s e to ha he nkr pt y our r e n t a l d o ppl t i t s r tny t M a lsc am s TheFourh Cic ti Ha f d Sa ma i cla t tt src c u i o nue ' l i . t r ui n ror nds de t e r ha he ti t s utny bur n f i i r a i so y a t t de o hasr bute apr ofcai ' pr sl d cr i de or nsde s pple nl fer he bt r e td oof l m s e tme valdiy. n t ca e,a yi t bur n- hi t f a e or t Coul fr the d t tt i i r i t I hat s ppl ng he de s f i r m w k, he ng ' is l ha he nsde s t ha a pr um ptve y va i c a m w he t y fl d t i pr ofc a m . n r H a f d Sa , nc. 37 d es i l ld l i n he ie he r oof l i l e r or nds l , 2 F. a 641 The t Cour hel t tt de o c or ton r ute t pr umptve y vai cai 3d t . n, he t d ha he bt r op ai eb td he es i l ld l m by oferng e de e s f i vi nc howi t t a ng hat he mounto t c am wa a ved a ar ta iy wihouta f he l i s ni t bir rl t ny s uppor i doc e a i t i i r we eno t r g f ow ne s oft de ,a t c ai w as tng um nt ton, he ns de s r t he i ht ul r he bt nd he l m tmebard.#. Cour hedt tt ss tsidt de o ' bur na t tt bur n s fe i - re J=The t l ha hi aife he btrs de nd ha he de hitd ba t t i i r t pr t valdiyoft i cli byaprpondeanc oft e de e...The ck o he nsde s o ove he i t her am e r e he vi nc JJ I Cour he d t tt i i r f l t m e tt i uli a e b den u rs rc s r i y r e . d. ti t l ha he nsde s aied o e he r tm t ur nde t i t c utn evi w 1 l s c e rt tt Cour i H ar or Sa di nota y s rc s r i r vi w un i a t rt de ortr t l a ha he tn f d nds d ppl ti t c utny e e t l f e he bt i s 8 m e isbur n ofi r i evi nc t r butt i i r 'pr s t t de ntoducng de e o e he nsde s e umptve yvai ca ms The ef r i l ld li . r o e, t i c u t ee t VABB' c n e to t t tits nln rv e a pisa tefrt tpi t e hs o r rjcs S o tnin ha src c t y e iw p l t h is se n h i e bur n-hitngf a wor whe t cr dio flsispr ofcai . de s fi r me k n he e t r ie t oof l m l t i t tc e t ba r c c tf n he nsan as , he nk upt y our ound t tM a ltm el fl d Cl m 25, nd ha nue i y ie ai a pr vi d s o de uppori d tng ocume ai wih apr s or not a m i esfom t boa d meei on nt ton t omis y e nd nut r he r tngs J anua y 11 201 a on Fe ua y 1 201 Ba .M em.Op. t29. ba upty c t r , 2 nd br r 5, 2. nkr a The nkr c our concude t tt se de , w a s f i asprm af ee e de eoft va i t ofCl i 25.I l d ha hi vi nc e s ufk ent i a i vi nc he ldiy am d. at29- 0. 3 Thus t ba upt y c tr ed t tt bur n s fe t VA BB t r utt pr um e , he nkr c our ul ha he de hit d o o eb he es d vai i o tecam. eb n r pe c u t edta no eo VABB' o j din t Cli 2 me ldt f h li Th a k u ty o r h l h t n f y S b e o s o am 5 t t sbur n. r t t ba upt ycou tf hi de Fis ,he nkr c r ound t tVABB' a g e t tt not wasis d whe ha S r um nt ha he e s ue n V A BB a r a had uns t i bl o r to t beunpe s i t r butCl i 255 pr s e l e dy us a na e pe a i ns o r uasve o e am s e um d va i t Spe i i ly, he ba upt y c t ound t tt not di notCc e t an ne de but ldiy. c fca l t nkr c our f ha he e d i r a e y w bt meeys v dt e de t vai t a a untofapre si de . l a 30(mpha i i rl er e o vi nce he ldiy nd mo e xitng bt' d. t e ' ss n orgi l.I t ba uptyc tsviw, ve wihoutt noe, i na) n he nkr c our' e e n t he t VABB woul siloweM a hi d tl nuel s defre slr a ot re erd aay nd he xpens .i Sec t ba ptyc tfundt tVABB' a gu nt es L ond,he nknl c our o ha S r me t tCli 25wasnotfrade wa unpes svet r ut t pr s dvai t ofCli 25. i ha am o bt s rua i o ef e he eume ldiy am L a 30.Spe iialy,heba u c c tf t c fc l t nkr pt y our ound t tVABB di note an why de e r d s lr ha d xpl i f r e aa y, bonus ,a expe e s dbete tddifr nl t a ot rco nydebs J.Alo,he es nd ns s houl rae fe e ty han ny he mpa t.#z s t ba t u c co tf rkr pt y ur ound no e de e f V ABB ' a s r i t tM a l sa l ge s l r w a i l t d vi nc or S s e ton ha nue ' le d a a y s nt a e e e f one boa d m e be ' ge r be i ft S xc pt or r m r s ne al le hat S CEO c pe aton ofei t t n pe c ntgr s om ns i ght o e r e os r ve ofa c pa i k i c o .' I at31 Thid, he ba u c c r f e nue om ny s r di ul us '' d. . r t nkr pt y ou t ound t VA BB ' hat S argum entt M anuelal m ai ai t r dst cont ned t sum st w er due t hi hat one nt ned he ecor hat ai he hat e o m wa i ufi e t r f e t pr umed vai t ofCli 25. tsVABB pr de no ot re de e s ns fcint o e ut he es ldiy am Lt ovi d he vi nc t sugges s t M anuels sol cont olovert si or aton 1 t any f i ed ori hat t hat ' e r hi nf m i ed o abrcat naccur e at a unt ofwha wasowe t hi ./=Fourh,heba upt c tr e t tt noewa not mo s t d o m J . t t nkr cy our uld ha he t s ba r d by t saut oflm ia i bec us t a i a etmepe i i sx yea sf l ng t d re he t t e i ttons a e he pplc bl i rod s i r olowi he ue daeoronc a eeai hasbeg JJ Ac or ngt t ba u cyc tsncet snot i net r t e cc lrton un.-. c di o he nkr pt our, i hi e s ihe l, duenora eeae t sat eoflmiai ne rbe nt rm.- Fit t ba u c co t cc lrtd,he t ut i ttons ve ga o t J fh,he nkrpty ur Z f ound t tt e de e de o t a e t tt V ABB boa d una m ousy ag e t ti o e ha he vi ne m nsr t s ha he r ni l r ed ha t w d Ma lt a nue he mountcame a rduce t sde t anot Lua 32.Theba u c cour notd li d nd e d hi bt o e.ds t nkrpty t e t tLa ' Cha st s i on w a t tt boa d una m ous y a hor z d t e ea i n oft not ha l y r ng' e tm y s ha he r ni l ut i e he r to he e, a t ba upt cour f nd he nkr cy t oundnoe de et tco rditdhi t tmony.#-Fi ly,t vi nc ha nta ce s esi J . nal he ba upt y c thel t tVA BB' a g e t tM a lw a tyi t i e t a o i ton t nkr c our d ha S r um nt ha nue s r ng o û a e n blga i o cr hi a a tm e VA BB w a i ol nta undersgnii a pr s ur fom c e t s ' o be m t i s ns ve nd i fc nt e s e r r dior ' t unpes svebec us Cli 25meeyme raie pre si a unt o t M a lJ . rua i a e am rl moilz d e xitng mo s wed o nue.#Ove al t ba u c co tf r l, he nkr pt y ur oundt tno o VABB' a gum e sr bute t pr s d va i t ha ne f Sr nt e t d he e ume ldiy ofM a ' Cli 25 a t rf ehel t tVABB di notcar isbur n.- a 32- The nuels am , nd heeor d ha d ry t de J. t 33. I L cou tfndsno cl a e r r a t a oft ba u c c tsf c ua de e m i tons unde Cl i 25. r i e r r o s o ny he nkr pt y our ' a t l t r na i r am b. Cl m 26 ai VABB o j ce t t ealwa c of am 2 o an mb ro g o n s icudn ta be td o h lo n e Cli 6 n u e f r u d ,n l ig h t M a ls e y ma n a ne t r c dsr ga di s dueunde t not pa t oft ca m s d nue oll i t i d he e or e r ng ums r he e; rs he li houl ha be n i l d i ot rc ai s t c ai l c d pr ra c pl t d um e a i n;pa t of ve e nc ude n he l m ; he l m a ke ope nd om e e oc nt to rs t c a m wer tm e ba r d; M a lc r l d V ABB a t tm e s salege y due s d he l i ei r e and nue ontole t he i um l dl houl have been pai Banlr.M em .Op.at 11.On appeal V AB B agai ar d. t , n guest t bankr cy court hat he upt e r d by nota yi src s r i t M anue ' c am sa i i undiput d t thei a i i rof re ppl ng ti t c utny o ls l i s t s s e ha s n nsde t com pany. he 10 Theba r c c tus t s me Haror Sa bu den-hitngfame k f Cl m 26. nk upt y our ed he a f d nds r s fi r wor or ai Agai f t r a o sae a ve t sc 'diag ee wih VABB' a s to t tt ba upt y n, or he e s ns t td bo , hi oul s r s t t S s eri n ha he nkr c cour er whenfie t s j tM a lspr ofcam t src sr i rviw. t red ald o ubec nue' oof li o tit cutny e e M anue tm el fl Cl i 26 f bus ne se ns he i r d,a a t he s ve a pag l i y ied a m or i s xpe es ncur e nd tac d e r l es o e ns r por l dg sw ih ha f xpe e e t e er t ndwrte no a i e tng t fgur s on t l dge s. d.1 l1 it n t tons dii he i e he e r I 0- . VABB rie sv rlo j cin t Cli 2 Th b n r p c c u t edal u o t b asd e e a b e to s o am 6. e a k u ty o r h l l b t ne o e u pes sv . rtt b n r pc e u t ee dVABB' a g me tt a M a u l st eo l n rua ie Fis,he a k u ty o r rj de S r u n ,h t n e wa h ny pe s n who m ant i d t r cor ,i m uc a VABB di no c e t tt a ro i ane he e ds nas h s d t ont nd ha he mount we ef s s r ale o f b iae J-a 3 Ne tt eb n r pc c u t ue t a VABB' s c ndo j dinr g r i g r a rc td... t 3. x ,h a k u ty o r r ld h t I J S e o b e o e a dn t sa ut oflm ia i waswihoutme i be us VABB di noti ntf t a ia esa ut of he tt e i ttons t rt ca e d de iy he pplc bl tt e lmiai orwhe t cai a os Jl a 33- Theba upty c tnotd,howe r t tt i ttons n he l m r e..s t 34. t nkr c our e ve,ha he a i a e s a ut oflm ia i pe i woul ha t ha be n l s t n a ye rt be a de e e t pplc bl t t e i t tons r od d ve o ve e e s ha a o f ns o la lt gi n t tt e i biiy ve ha he xpens sw e e i u r d i 201 l a 3 n. 66. r t ba H up c c ur e r nc r e n 2. d. t 4 l Thi d, he n ty o t hel t tVABB' a gum e t tM a lC ontole de o a t tm es sal ge y due s d d ha Sr nt ha nue û r ld bt r t he i um le dl c houl havebe pad't beunperuasvebe a eVABB di no a tc aewhe t s ss d ha en i ' o s i c us d t riult n he um houl ve bee pa d a di notde la lt f t s e ns s J a 3 Fi ly,heba uptyc t n i nd d ny i biiy or he e xpe e . i t 4. nal t nkr c our . f ound t tt a e ha he m ndme t Cl i 26,nc e i t t a a nt o am i r asng he otl mountt $97, 47,wa untmel 1 o 806. s i y. d. a 37. et rpa t a al t spa toft ba upt y c tsde son. r l,wih t e e i t N ihe ry ppe s hi r he nkr c our' cii Ove a l t he xc pton oft untmei so j ci t ba uptyco t l t tVABB di no me tisbur n of he i lnes b e ton,he nkr c ur hed ha d t e t de r buti t pr um ed va i t ofCl i 26. d. t34. e tng he es ldiy am 1 a The c ' fndsno cl re r i t ba kr pt y c tsc i r ton oft e f t li s . oul i t ea r or n he n u c our ' ons de a i hes ac ua s ues l t c ts vi , he ba n he our ' ew t nknl cy c tca e uly c i r d t r c d a r a ona y f und t t pt our r f l ons de e he e or nd e s bl o ha V ABB off ed no evi er dence t s o how t M anuel st ee cl m s w er i i The courtbelevest hat ' hr ai e nvald. i hat t ba upt c t sc us ons ofl w w e e c r c i t tVA BB f ie t r bu t pr s e he nkr cy our ' oncl i a r or e t n ha a l d o e t he e um d va i t ofM a lsc am s The e or ,t c t i no r ve sbl e r i t ba upt y c ts ldiy nue ' l i . r f e he our fnds e r i e ror n he nkr c our' d cso t o rueVABB' o j cinst Cli 25a dCli 2 . c r ig y t ec u t ph ls e iin o ver l S b e to o am n am 6 Ac o dn l ,h o r u od t ba upt c tsde son i a l ngbot Cli 25 a Cl m 26. he nkr cy our' cii n lowi h am nd ai I L Eq t beSu r i to o ams2 , 5 a 2 uia l bo dnain fcli 4 2 , nd 6 On a al VABB alo a gue t t e n i t ba nz c cou tpr pe l al wedbo h ppe , s r s ha , ve f he nk pt y r o ry lo t Cl m s25 a 26, he ba upt c tne t l s e r d i f ii t s ai nd t nkz cy our verhe e s r e n a lng o ubor na e a lt ee c ai s di t 1 hr l m t t c am sofot runs c ed c e t s The c tdia e . o he l i he e ur r dior . our s gr es Ba u c c t ha a hort t e t bl s di t al orpa tofa a l nkr pt y ours ve ut iy o quia y ubor na e l r n lowed c am .11 li U. C.j51 c.Howe ,e t es di toni aze r di r rme whih s dbe S. 0() ver quiabl ubor nai s l xtaor nay e dy, c houl a i s rngl l r Dor e Avi to ( . e i a l .N o.0 8199- ,2005 W L 4781 ppled pa i y. n e ni r ai n N Am rc ) nc, 2SSM 236, a *1 t nkr E. Va. b.8, t 7 Ba . D. Fe 2005)afds453F.d 225( hCi.2006) Thet tf e tbl f 3 4t r . es or quia e s di ton i t Fourh Cicui i wele t bls Foraco t o e tbl s di t acai ubor na i n he t r t s l- sa ihed. ur t quia y ubor nae l m, tr eee nsmu t eme:t1 tecama t n a e i i q tb ec nd t ()t t o u t h e lme t s b t k ) h li n e g g d n ne ui l o uc;2 ha c nd c ( a ij e ot ce t s a ( s dnain i c itntwih ohe ba uptylw. l r S. n urd her rdior; nd 3) ubori to s onsse t t r nkr c a ' n e ' TexieKnitr,65F. x426,439( hCi. tl tes App' 4t r 2003) Thebur nofs ngt te tbl . de howi ha quia e s ubor na i i a opr a e i o t pa t r q s i i.See l r A SIRe tva i n,I ,934 F. di ton s ppr i t s n he ry e ue tng t n e ac i to nc. 2d l 5,1 1 ( hCi,1 )(i ngt ta la sdi notesa iht ts di tonwa 31 320- 321 4t r 991 fndi ha ppelnt d tbls ha ubor nai s warntda a e de ir he rng) ra e t n vi ntay a i . a. Inequiabl Conduct t e VA BB a gue t tM a r s ha nuele ngag i i quia e c ed n ne t bl onduc a t tt bankr pt y co t t nd ha he u c ur er i nots di tnghi cams Sne tbl co t'i ude .:()faud,ilgaiy,a red n ubor nai s li .l quia e nduc' ncl s t1 r le lt nd l bra offducaydute ;( undec t iain'or()cli ntsus oft de orasamee e ch i ir is 2) rapialz to , 3 ama ' e he bt r i tu nt iy o atre 'l r Fa iaor,l ,9 F. 1 1 (t Ci.1 ) The nsr me alt r le go. n e brc t s nc. 26 2d 458, 467 5h r 991 . ' sa r f s i i t nda d or how ng nequia e c nd ti notashi h whe t c e t i a i i roft t bl o uc s g n he r dior s n ns de he c mp n S eI r La d rc Fi Gp.l c, 7 B. 7 9 8 6( nk . D. . 01 o a y. e n e n Ame ia n. , n .4 0 R. 5 , 0 Ba r E. Va 2 2) (k heet cediori ani i rorfducir howeve,hesa r i notassrct.' .nt s ' r he r t s nsde i ay, W rt tndad s ti kl' l hi ) c e, he e wasno di put t tM a lw a a i i rofV ABB ; w e r dsm pl be aus a as t r s e ha nue s n ns de ho ve , si y c e c e t ri a i i rdoesnotwa r nts r nai ofa o he wieva i c am . l r Do nir r dio s n nsde r a ubo di ton n t r s ld l i ' n e r e ' Aviton( Ameia l , ai N. rc ) nc.2005W L 4781236, t*1 (ii I r ASlRea tvai l ,934F. a 6 ctng n e ci ton,nc. 2d a 1 1 ) Fis,hepalys ki e tbl s bor nainmus s t tt r wa is t 320- 321. rtt ' ee ng quia e u di to t t how ha hee s 'ome unf rc ai onduc ,a ade e ofcul biiy,on t pa4oft i i r'I ,s l r Syse sl t nd gr e pa lt he l he nsde . d. ee n e t m mpac . ' . t l , B. 363,37 l nkr E. Va,1 (ihei ta bur n i on ag ry se nge tbl nc.229 R. 2 Ba . D. 998) Cf niil de s pa t e ki quia e s di tonlt pr e d tra e de eofunfi c uc'bya i i r whe t si do t ubor nai o es nt maeil vi nc ar ond t n nsde ; n hi s ne he i i rmus pr 'hegoodfiha fine sofisde i wiht de or'' ( tngl r nsde t ove t at nd ar s t alngs t he bt .' quoi n e ) Lemc Gvps I , 1F. 1 1 (11h Ci.1 )Tot e e t tVABB ague on o um. nc.91 2d 553, 557 t r 990). he xtnt ha r s a ppea t tM a l ha nuels c a m ss d be s bo di t bec us he f ied t s w good f ih a f r ' l i houl u r na ed a e a l o ho a t nd ai de i w ih V A BB,t c tag ee w ih t ba u c c ts fndi t tV AB B f ied t alng t he our r s t he nkr pt y our ' i ng ha al o pr s nta e d nc o unf rc e e ny vi e e f ai onduc t s t i isi ta bur n. r f e, he c ' beleve t t t o us a n t nii l de The e or t oul i s ha t t ba r c c twa c r c i hol ngt tt bur n di nots f t M a lt s w good he nk upty our s ore t n di ha he de d hit o nue o ho f ih a f i de i untlV ABB m etisbur n, hi h i f ie t do. a t nd a r alng i t de w c t a l d o l t ba u c c r pr e ngs VABB a g d t t a yi t sl rsa r of n he nkr pty ou t oc edi , r ue ha , ppl ng hi owe tnda d sr i M a c utny, nuele ngage i i quia eco uc by br a hi hi fduc a' dute o l ly a d n ne t bl nd t e c ng s i i l y i s f oyat nd e r Eve as um i t tM a uelha a d y ofl ly a a m a a e. n s ng ha n d ut oya t s nage ofa V igi a lm ie la lt r r ni i t d i biiy c pa ,2t e bankr pt y c tf om ny h u c our ound t tM a ha nuelha notbr ac d t tdut ba e on VA BB ' d e he ha y s d S s c f c a l ato . nkr M e .Op.a 41. r t t ba kr t y coul not t tM a ' pe i i leg i ns Ba . m t Fis , he n up c ' ed ha t nuels present i oft not ati ue i Cl m 25 di notbr aton he e ss n ai d each hi dut t r r n i sel - i s y o ef ai n f dealng 2Theba upt y c tf nkr c our ound t tneihe t Vigi a Li ied Li biiy Com pan Ac norc m o l w ha t r he r ni m t a lt y t om n a i mpos adut ofl ly on m e r ormana r ofaV igi alm ie la lt compa Bankr M e . at40. es y oyat mbe s ge s r ni i td ibiiy ny. . m Op. Thus i h dt tno s dut e sed.l ,t el ha uch y xit d. be aus t boa dunani c e he r mousy a o i i J nuar 201 a t n di note e tt ma a l ppr ved t n a y 2, nd he d l c o ke ny he cy d ha c ngest t not whe i me i Aprl201 L ,s Second,t bankrupt courthel t tM anuel ha o he e n t t n i 2. d . di note gei s fde i whe a o d ngt VABB,hes thi çe s i s lr wiho boa d d nga n el- alng n, cc r i o e s txce sve aa y t ut r a ova . J. Theba upty c tf ndt tVABB' ope a i a ee e tgr nt t boa d ppr l' ., ' ds nkr c our ou ha S r tng gr m n a s he r a hort t esabls t c ut iy o t ih he ompe a i ofisofi r ,a VABB pr s nt no e denc t tt ns ton t fce s nd e e ed vi e ha he boa d dia ove ofM a lsc r s ppr d nue ' ompe a i t tM a ls thi s l r uniae aly, t thi ns ton, ha nue e s a a y l tr l or ha s s a y w a e s i .I a 41 42. al r s xce s ve d. t R e r ng hi d y ofc r V A BB a l ge t tM an lbr ac d hi f d i r d y t ough ga di s ut a e, le d ha ue e he s i uc a y ut hr m uli e i t nce ofi c i i udi û sf iur t pay per o pr r y t xes hi f l e t tpl ns a s na ton, ncl ng d a l e o hi s nal ope t a , s aiur o obt i a pr ra toft c pa a hi f l e t e n r pond t bus nes m ai di e t t t an ope udi he om ny nd s aiur o ve es o i s l r c ed o he c ompa 'J a 42. ny,'. t Howe r t ba upt c tf i ve ,he nkr cy our ound,ba e ont t tmonyofs rl s d he esi evea wineses t tMa wa nots eyr ponsbl frt s s tomi ando si ..sa 43. t s ,ha nuel s oll es i e o he e horc ngs misons J. t d , M or ove ,a yi t s a r s tf r h i t V igi a Li ie Li biiy Co pa A c , he e r ppl ng he t nda d e o t n he r ni m t d a lt m ny t t ba u c co tc l d t te n i M a lha t s r s nkr pt y ur onc ude ha ve f nue d he e e ponsbiii ,V A BB di no s i ltes d t how t t ha M a u l aldt a ti a c r a c wihh s' o dfi b sn s j d me to teb s itrss' f n e fie o c n c o d n e t i t o at u ie s u g n f h et n ee t'o g h VABB,a t r or di no me tisbur nofpr ngavi ai ofhi dut ofc r .J a 44; nd heef e d t e t de ovi olton s y ae Z t Va Codejl3.- 024.( . . 1 1 1c) Ona ppea ,V ABB al o a gue t tV A BB wasunde ca t i d a t tM a l s r s ha r pialze nd ha nuelte e r at d V ABB ashi alere w hi h m i tpe m i a f ndi ofi quia e c s t go, c gh r t i ng ne t bl onduc .How e r t t ve , he ba upt y c 'f nkr c oul ound no e de ofunde c t i ton a ti . nkr M e .Op. t39 n. 70, t vi nce r apialzai t ral Ba . m a l The ba upt c t d t t e n i VABB ha pr de e d east t c nkr cy our hel ha , ve f d ovi d vi enc o he ompa s ny' undec pialzai t tfc aonewoul notbes fce t j tf e t es di ton.d, ra t i ton,ha a t l d ufiint o usiy quiabl ubor nai L. u St ed si pl t courtm ustagree t t bankr cy cour r at m y, he hat he upt t easona y f bl ound t t re w asno hat he evi dence t M anuelteat VA BB as an alerego. hat r ed t b. Jao/:y t Cr di s ' lr o e t or Se ond, c VABB ague t tManue' c r s ha ls onduc ij e t c nya iscr t sbe us t nurd he ompa nd t edior ca e he l ne m one t t c pa de e r d hi s l r a pad f t c oa d y o he om ny, f re s a a y, nd i or he ompa se ns s, ny' xpe e The ba r c c t howe r f nk upt y our, ve , ound no e de et ta oft eac inshar d VABB oris vi nc ha ny hes to me t c e t r . Ba l . e .Op. t45- Aga n, he ba upt y c t ed t tVA BB f ie t m e t r dio s rkr M m a 46. i t nkr c our not ha a ld o e isbur nofrbuti t prs me vai t o M a lscams J Alo,t ba u cycour t de e tng he e u d ldiy f nue' li .. s he nkr pt i t f ound t tVABB di notpr e a a tona evi nc t tcr dior we epu a a unf i ha d es nt ny ddii l de e ha e t s r t t n ar a nt e ba e on M a ' aci I a 44.s l r Syse sl pa l ,229 B. a 373 dva ag s d nuels tons. d. t , ee n e tm m d nc. R. t (oo nga whehe t cediora is ha a u ara ntgeo rot rc e tr) Tot e e l ki t t r he r t t sue d n nfi dva a ve he r dio s. he xtnt t tV AB B ar s t tM a l sa tonsca e ha m t o he c edior be us ofVA BB ' ha gue ha nue ' c i us d r o t r r t s ca e S Cde pe ng i ol nc ' t ba upt y cou tf ç e ni ns ve y,' he nkr c r ound t tt s doc r ne w a no r cog z d i ha hi ti s t e ni e n V igi a, nd w asnotlkel t be r ogni ed.Ba r M e .Op. t44 n. 81 l t co tsvi w ,t r ni a i yo ec z nk . m a 1 . n he ur ' e he ba upt y c tsdecson i t sr ga d i co it ntwiht eofot rVig ni c rs Se nkr c our' ii n hi e r s ns se t hos he r i a ou t. e A nde s Gusaf s A dvoka byr K B v.esc ub Sys l ,N o.1 1 c 632, 1W L 677053,a r on t s on t a. r . nc. : 0- v201 t *4( D.Va. b.1 2011 (61ti unlkeyVigi awoul rc zeacli f S e ni E. Fe 5, ) $(q s i l r ni d e ogni am or de pe ng i ol y'';s as l r Ja sRi rCoa Co.36 B. 1 1 ( nkr E. Va 2007) ns venc ' ee lo n e me ve l , 0 R. 39, 79 Ba . D. . ) (i ngt ta i t t or ofde pe ngi ol nc woul tunda nt l tansor Vigi a fndi ha doptng he he y e ni ns ve y d i me aly r f m r ni f l' .'. avg)' $ ) Subor naton i Cons s e wih Bankr pt y Law di i s i t nt t u c Fi ly,VA BB a g t ts na l r ues ha ubor na i i c it ntw ih s di ton s ons s e t ound prnci esofba i pl nknz c pt y 1 w be us i i a e t bl r m e t ti a horze t t e a ca e t s n quia e e dy ha s ut i d o t ventco s s ofc pr ur e onduc ot w i e t her s fa en,a i oru ar'I t M atrofMuli cs l ,622F. 709,721( hCi.1 ) rudul t busve nfi. n he te ' tponi .nc. 2d 5t r 980 . H ow ever as not above,t bankrupt courtf , ed he cy ound t V A BB di notpr de any evi hat d ovi dence t hat M a l sa tons c tt ed i quia e c nue ' c i ons iut ne t bl onduc , nd t r f e ce t nl di notfnd f a ul nt t a he e or rai y d i r ud e , a i orunf i conduc .Ba . e .Op. t47.Alho h t ba upt y c t d not busve, ar t nkr M m a t ug he nkr c our di e i ty r e on t sel m e ,i i c e rt ts di ton w oul notbe a o i t w ihouta xplcil ul hi e nt t s l a ha ubor na i d ppr pra e t tndi offa e ,a i orunf rc i ng r udulnt busve, ai onduc by t pe s whos i e es i t bes r na e t he r on e nt r t s o ubo di t d. M os i po t nty, he goalofe t e s di ton i t r m e s e i quiy or t m ra l t quiabl ubor na i s o e dy om ne t unf ine spe per t d by onecr diora i tot r .I r Dor e Avi to ( Am .,l , ar s r t ae e t gans he s n e nir ai n N. ) ne.453 F. a 23 A ga n, hi i a ex r or na y r m e t be a i d s i y asi c e t unc t i t 3d t 2. i t s s n t a di r e dy o pple parngl t r a es era n y a unprditbiiyf c e tr . tEmece y Sews. W ila ,371B. 1 1 0 ( . Va. nd e ca lt or r dio s Na. r nc l v. lims R. 66, 7 W D. 2007) Thec 'beleve t tt c t ow wasmi uloft epr e s l t c tsvi . oul i s ha he our bel t ndf hes ec pt.n he our' ew, t ba u c c tca e uly c i r t r co da t t tmony a ti lwhe i f undt t he nkr pty our r f l onsde ed he e r nd he esi t ra n to ha V ABB di notpr e s f c e e denc t s d es nt uf i i nt vi e o how t e em e snec s a y f e t bl he l nt e s r or quia e s di ton. c tbeive t tt ba pty c ur c r ty hel t tVABB di no ubor na i The our le s ha he nknz c o t orecl d ha d t s t i isbur n ofs usa n t de howi t te uia es r na i waswa r nt d f M a lst e c am s ng ha q tbl ubo di ton ra e or nue ' hr e l i . M or ove ,t c t le st tt ba upt c tsde ii i consse wih t pur eof e r he our bei ve ha he nkr cy our' c son s it nt t he pos t sequiabl r m e A c or ngl t c tuphol t ba hi t e e dy. c di y, he our ds he nknl cy c t sde s on t te t bl pt our ' cii ha quia e s bor na i i nota opr a e i t sc e. u di ton s ppr i t n hi as 1 1 Re har t iaton o C'5p1, 25 and26 1. c acerz i f / 524, , / Fi ly,VA BB a g st tt ba na l r ue ha he nknl cy c r e r d i no r c a t rzi M a l st ee pt ou t r e n t e har c e i ng nue ' hr c a m saseq t A ga n, he c td s gr e . li uiy. i t our i a e s The Fourh Cic tha r c ze t tt ba upt y c t s a t iy t r c r c e i a t r ui s e ogni d ha he nkr c our ha u hort o e ha a t rze de cli ase t a s t outelve f t si or rt d t r i whehe r c a t rzai n i bt a m quiy, nd e s e n acor n de o e e m ne t r e har c e i to s appr i e' oprat . ( )t na s gi n t t i tume t,i a e de ng t 1 he me ve o he nsr ns f ny, vi nci he i btdne s ( t pr e o a e eofafxe maurt dae nde e s ; 2) he esnce r bsnc i d t iy t a s he eofpa nt;( t prs e o a e e ofa fxed nd c dul yme s 3) he eenc r bs nc i r t ofitr ta i ee tpa ae nees nd ntrs ymens ( t s tc ofr pa t' 4) he otr, e yment' , e s, ( t a quac ori qua y ofc piaiai ,( t i ntt of 5) he de y nade c a tlz ton' 6) he de iy i e etbewe t cediora t soc de ;( t s c iy, ntr s t en he r t nd he t khol r 7) he e urt i a y,fr t a v n e ;( ) te c r o ains a ii t o ti f n o he d a c s 8 h op rto ' blt o b an y fn ncn fo o ti ln igi ttto s ( )t ee tn t whc ia ig r m u sde e dn nsiui n ; 9 h xe t o ih t a nc w e e s r na ed t t c ai s of ou s de c edior ; he dva es r ubo di t o he l m ti r t s ( 0)t e e tt whiht a nce weeus t ac r ca tl 1 he xtn o c he dva s r ed o quie pia a st;a ( 1 t pr s nc or a enc of a snki f t s es nd 1 ) he e e e bs e i ng und o pr der pa nt . ovi e yme s I r Dor e Avi i ( Am ..l ,453F. 225, ( h Ci. )( ii Aut yl Pl tc , n e nir aton N. ) nc. 3d 233 4t r 2006 ctng ost e asis I c, 6 F.d7 6 7 9 5 ( t Ci. 0 ). eFo rhCic t o e ta tn o eo t e efdo si n .2 9 3 2 , 4 - 0 6h r 2 01) Th u t ruin td h t t l n f h s a r s g di pos tve a t rs gni i a m a va y de ndi upon t cic s a es ' 1 a 234. n s ii nd hei i fc nce y r pe ng he r um t nc . d. t ' l a ton,d c aman ' i i rsausa ade o ' unde ca t i to aonewilnor al be ddii ta l i ts nsde t t nd bt r s r pialzai n l l m ly i ufi e t s ppo tt r c r trz ton ofac am 'be aus i m a ca e ,a i i rm a be ns fcint o u r he e ha ace i a i l i ' c e n ny s s n nsde y t i y pa t wilngt m a al nt asr gglngbusnes 'a r ha a trzai n s dnotbe he ' onl ry li o ke oa o t u i i s' nd ec r c e i to houl us d t ûdic a g f t l ns'l e o û s our ge ood-aih oa . d. ' l t sca e,t cour be ivest tt b r pt y c t n hi s he t le ha he ank u c our consde eda1 oft a ve f c o s i r l he bo a t r i a yzngt ta ac insb we n M a land VABB a is i Cl i s24,25,a 26.The n nal i he r ns to et e nue t s ue n am nd ba upt y c tno e t tm os oft f c or w e ghe ag ns r c r c e i a i Ba . e . nkr c our t d ha t he a t s i d ai t e ha a t r z ton. nkr M m Op. t50- l f a 53. t ound t tt onl f c ort tw ei d i f vorofr ha a e i a i w a t ha he y a t ha ghe n a ec r ct r z ton s he a e e ofa s nki f t pr de r pa e s be aus t c ea i n ofa s nki f t ndst bs nc i ng und o ovi e ym nt c e he r to i ng und e o s t ta a ncei al n.-sHowe r i t c tsviw,t ba kr cycour pr ry how ha n dva s oa Jp ve,n he our' e he n upt t opel de em i dt tt r ma ni f c or we e et rne r lo we ghe a ns r c r c e i ton. t r ne ha he e i ng a t s r ihe uta r i d gai t e ha a t rzai On appe ,VABB a g t tt ba r t y c te r d be us i di nota y rgor al r ues ha he nk up c our re ca e t d ppl i ous s r i t Cl i 25.S c fc l VA BB a g t tCl m 25 s d ha be n r ha a t r z d as c utny o a m pe ii aly, r ues ha ai houl ve e ec r c e i e e t s nc t ta ac i unde l ng t s c a m wasnota a m ' l ng h ta a i A s no e quiy i e he r ns ton ryi hi l i n r s e t r ns cton. td above,V A BB di notm eetisbur ofr tng t pr um ed valdiy ofC l m 25,and t ef d t den ebuti he es i t ai her ore ri ous s utny ofCl m 25 i notappr i e.M or i port l t courtdoesnotfnd t s gor cr i ai s oprat em anty, he i hi ar entt be per gum o suasi because t el ve he even f or t s vesûal speak t whet t act s hem el i l o her he ta s cin' a tec a a trsiso am' ln t n g tai n I r Do n e Avito I . ) r n a to 'h s h h r ce itc f r s e gh e oito .n e r ir ai n ' Am., N l , nc. 453 F. a 234. 3d t N e , A BB a gue t tt el ve f c or do i e w e g i f vorofr eha a t r z ton. xt V r s ha he e n a t s nde d i h n a e r c e i ai V AB B co e t tt ba nt nds ha he nknl c co tdi notco i rt tV A BB c d notha obt i d pt y ur d ns de ha oul ve a ne fnanc ng f om o he fna i li tt i a t tM a lag e d t be s di t t V ABB ' i i r t r i nc a nsiutons nd ha nue r e o ubor na ed o S ot cr t s.Thes ar ent are unper uas ve,Fis ,t Coul i Dor erA vi i not t her edior e gum s s i r t he 'n t ni aton ed hat i i r m a be t onl pa te w ilng t m ake a l n t a s r i bus ne s 45 F. a 23 nsde s y he y r i s li o oa o tugglng i s . 3 3d t 4. The e or V A BB' i biiy t obt i a l n a a fna a i tt i w ih t s m e cha ac e i te r f e, S na lt o a n oa t i nei l ns iuton t he a r t rsis asM a l sl ns a o s ul notbe di pos tve Sec nue ' oa l ne ho d s ii . ond, he f c s do no s t at t ugge tt tM anue s ha l a ee t s gr d o ubor nat hi cl i st o he cr t s M a ls de i i n t f e a s a y a di e s a m o t r edior . nue ' c s o o or go al r nd r m bur e e f e ns w asbe or hi de t t com pa w a e rm e or a i e i o a not ei s m nt or xpe es f e s bt o he ny s ve m i lz d nt e. l f t hi de s on t f ego i m e a e pa e f t s de sl d t t ne d t c e e t s n ac , s ci i o or m di t ym nt or he e bt e o he e o r at he e not i t fr tpl c Unlke t f d si Dor e Avi ton, e M a ldi ha hi de s es n he i s a e. i he a n ni r a i onc nue d ve s bt m e oralze a pr i s y no e ,no hi i t r c d s m i i d s om s or t s t ng n he e or ugge t t the unde s o he w oul be s s ha r t od d pa donl a trVABB s ife isot rc e t s Eve i t cou twe et a e wih VABB t t i y fe atsi d t hc r dior . n f he r r o gr e t ha t ba up c coul s d ha c ns de e t e a pec s oft r or a e de e i f vorof he nkr t y ' houl ve o i r d hes s t t he ec d s vi nc n a r c r c e i ng M a l scl i sase t t e s t m i a one do no w a e ha a t rzi nue ' a m quiy, hes horco ngs l t nunta fndi t t i ng ha t bank upt y co tsd ii n i aS l re r ' a no f t a o i dipostvc. he r c ur ' ee so s t ea ror' s acor l ne s s ii c Alhough r c r c e i a i a e t bl s t e ha a t r z ton nd quia e ubor na i r ac s m ia r ulsw ih r s c t di ton e h i l r es t t e pe t o t pro iyofpay nt f l ngaba upt t yt ddr sditnctc ens' ndtsr el a he irt me s olowi nkr cy,he l es si onc r 'a de v l a difrntpur e. l r Dor e Aviton( Am..l .453F. a 232.Spe iial fee pos ' n e nir ai N. ) nc, ' 3d t cfc ly, rechar erzaton f eson t subs ance oft t ansacton t det m i whet a debtact l act i i ocus he t he r i o er ne her ualy exit.nr FrnklnEqui Co.41 B. 483,508- ( D. 2009) W hende i ngt ss l e a i p. , 6 R. 09 E. Va. . edi o r c r t rz t co ti ' r quie t ac e t l be ofS bt or( quiy'' nd m us l e ha ac e i e, he ur s ç e r d o c pt he a l de ' e t ' a not t ook 18 Si o t a t naur oft ta aci t deenui how be tt cha a t rz i.'l r Col Habo snt he c ual t e he r ns ton o t ne s o r c e i e t' n e d r r Asoc .204B. 904,91 ( nkr E. Va.1 ) Agan,hec t i st tt bal upty s s, R. 5 Ba . D. 997 . i t our beleve ha he r kr c c t sde s on i c i t n w ih t go oft sdoc rne i ac e ng prort f tue c e t s our ' ci i s ons s e t t he al hi t i n hi vi i iy or r r dior a ns e t i s or . gai t quiy nve t s l s , he cou tbe i vest tt bank upt y c t r f ly c i r d t r or a t n um t r le ha he r c our ca e u l ons de e he ec d nd he t tm ony a ti w he i a l e t Dor e Avi ton f c or .The co tc ude t tt es i t ral n t na yz d he ni r a i a t s ur oncl s ha he ba kupt c t r e y a i d t Dor e Avi to t s i de e mi ng nott r c r cerz nlr cy our eo r dl pple he ni r ai n c t n t r ni o e ha a t ie M a lsc am sa equiy. co di y,t c ta fr st bal pt c tsde son de lni nue ' l i s t Ac r ngl he our fim he rknl cy our' cii c i ng to rechar er ze M anuels cl m s as equiy. act i ' ai t C oncl on usi Fo t r s nssa e t c r wila fr t ba upty c ur ' de ii n i isen ie y, r he ea o t t d, he ou t l fim he nkr c o ts c so n t tr t fndi no r ve s bl e r i isde i i n. i ng e r i e r or n t c s o The Cl r i diecedt s nd c ri ed c pisoft sme or ndt opi on a t e k s r t o e e tt o e q hi m a un ni nd he accom panyi ordert al couns ofr d. ng o l el ecor a f pe r 01 . ENTER:Ths / & d yo se tmbe, 2 5 i S Chi Unie St t sD i ti tJ ef t d a e s r c udge 19
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