Hal Luftig Company, Inc. v. United States Trustee
- Denise Cote
- 1:24-cv-00166
- U.S. District Court · Southern District of New York
- 5
Hal Luftig Company v. United States Trustee: Judge Cote denied permission for an immediate appeal of an earlier bankruptcy ruling.
Hal Luftig Company, Inc., FCP Entertainment Partners, LLC, the United States Trustee, and the bankruptcy proceedings concerning the proposed release of claims against Hal Luftig.
What happened
In Hal Luftig Company, Inc. v. United States Trustee, the debtor asked the district court to certify an immediate appeal of an earlier ruling about a reorganization plan’s release of claims against Hal Luftig, the debtor’s president and sole shareholder.
The debtor argued that the earlier ruling involved whether a creditor-support factor from the Purdue case should control in this type of bankruptcy reorganization. The United States Trustee and FCP Entertainment Partners, LLC opposed certification.
Judge Denise Cote denied the motion. She concluded that the issue depended heavily on the facts, that there was no substantial disagreement among courts about the issue, and that an immediate appeal would not materially advance the case.
The detailed version
- Hal Luftig Company, Inc. v. United States Trustee · No. 1:24-cv-00166
- Denise Cote
- Apr. 30, 2024
Background
Hal Luftig Company, Inc. asked the district court to certify an immediate appeal under 28 U.S.C. § 1292(b). The request concerned the court’s March 19, 2024 Opinion, which rejected bankruptcy-court findings recommending confirmation of a Chapter 11 small-business reorganization plan. The plan included a nonconsensual release of claims by investor FCP Entertainment Partners, LLC against Hal Luftig, the debtor’s president and sole shareholder.
The earlier Opinion questioned whether nonconsensual releases are available in small-business reorganizations and concluded that the release should not be permitted in this case. It also held that the bankruptcy court gave too little weight to the sixth factor identified in In re Purdue Pharma L.P.—whether the affected creditor class overwhelmingly supported the plan and the releases.
The requested appeal
The debtor identified as the proposed controlling legal issue whether the sixth Purdue factor applies and controls in Subchapter V reorganizations. Section 1292(b) allows a district judge to certify an immediate appeal of an otherwise nonappealable order only when the order presents a controlling legal question, there is substantial ground for disagreement about that question, and an immediate appeal may materially advance the end of the litigation.
Ruling
Judge Denise Cote denied the debtor’s March 28, 2024 motion to certify an appeal. She explained that determining the proper weight of the sixth Purdue factor requires careful, fact-specific analysis rather than a legal answer alone. The Court of Appeals had required specific and detailed findings for the factors governing nonconsensual third-party releases, and had recognized that a release might still be inappropriate even when all factors are present.
Judge Cote also found that the debtor had not shown a substantial ground for disagreement because no other court had directly addressed the identified issue. Finally, she concluded that an immediate appeal would not materially advance the litigation because, even if the March 19 Opinion were vacated, the likely result would be a remand for further proceedings addressing objections to the release. The opinion states that the debtor had separately filed an appeal as of right with the Second Circuit.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.