10/03/2007 256 Motion in Limine to Prohibit Testimony Concerning Alleged Wrongful Acts by James N. Turek, Sr., filed by Plasticon International, Inc.. (Kennedy, Ellen) (Entered: 10/03/2007)
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Doc 256
IN RE:
PLASTICON INTERNATIONAL, INC.
DEBTOR.
CASE NO. 07-50934
CHAPTER 11
HON. WILLIAM S. HOWARD
MOTION IN LIMINE TO PROHIBIT TESTIMONY CONCERNING ALLEGED
WRONGFUL ACTS BY JAMES N. TUREK, SR.
Comes the Debtor and Debtor-in-Possession, Plasticon International, Inc. (“Debtor” or “Plasticon”), by counsel, and hereby moves this Court for an Order prohibiting the admission into evidence at the October 3, 2007 hearing on the United States Trustee’s Motion to Appoint a Chapter 11 Trustee (DE #156) (“Trustee Motion”) and the Debtor’s Application for Authorization to Employ a Chief Restructuring Officer (DE #237) (“Application”), of the following:
A. Any statements by any witness, direct or rebuttal or documents, concerning any alleged acts or omissions performed by James N. Turek, Sr. in the course and scope of his management of Debtor
1. The United States Trustee (“U.S. Trustee”) has moved for the appointment of a Chapter 11 Trustee based on the provisions of 11 U.S.C. § 1104(1). Said statute states, in relevant part, that:
(a) At any time after the commencement of the case but before confirmation of a plan, on request of a party in interest or the United States trustee, and after notice and a hearing, the court shall order the appointment of a trustee--
(1) for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause, but not including the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor;
(2) if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate, without regard to the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor; or
(3) if grounds exist to convert or dismiss the case under section 1112, but the court determines that the appointment of a trustee or an examiner is in the best interests of creditors and the estate . . . . (emphasis added)
2. It is clear from the Motion that the U.S. Trustee’s grounds for requesting the appointment of a Chapter 11 Trustee are based exclusively on the alleged misfeasance of Mr. Turek, rather than the grounds set forth in subsections (2) and (3).
3. Therefore, in order to succeed on the Motion, the U.S. Trustee must demonstrate that the Debtor’s current management has engaged in “fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor … or similar cause.” As is more clearly set forth in the Debtor’s Objection to the Motion of the U.S. Trustee and Motion of the Murphy Entities to Appoint a Chapter 11 Trustee (DE # 255) (“Objection”), the actions of prior management are neither proper nor sufficient grounds for either granting the Motion, or denying the Application.
4. In the Application and again in the Objection, the Debtor has made it abundantly clear that James N. Turek, Sr. (“Turek”) has resigned from all management positions he reviously held with the Debtor, effective September 26, 2007. His letter of resignation is attached as an exhibit thereto.
6. Furthermore, William D. Bishop (“Bishop”) has agreed to serve as the Debtor’s Chief Restructuring Officer (“CRO”), also effective September 26, 2007.
7. As set forth in the Application and the Supplement to Debtor’s Application for Authorization to Employ a Chief Restructuring Officer (“Supplement”), Bishop has assumed all of the management duties previous held by Turek and will act independently of and without reporting to Turek.
8. In light of Turek’s resignation and Bishop’s assumption of his former duties, effective September 26, 2007, Bishop – not Turek – is the “current management” as referenced by 11 U.S.C. § 1104(a)(1).
9. Turek’s alleged acts or omissions are therefore irrelevant to this Court’s consideration of the Motion as Bishop is now the Debtor’s “current management.”
10. Under Rule 9017 of the Federal Rules of Bankruptcy Procedure, the Federal Rules of Evidence apply in all cases under the Bankruptcy Code.
11. Rule 401 of the Federal Rules of Evidence state that evidence is relevant if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Rule 402 of the Federal Rules of Evidence states, in part, that “[e]vidence which is not relevant is not admissible.”
12. The facts that are of consequence to the determination of the Motion are whether “current management” engaged in fraud, dishonesty, incompetence, or gross mismanagement.
13. Bishop is the current management of the Debtor.
14. The acts of prior management are of no consequence. See, In re The 1031 Tax Group, LLC, 2007 WL 2298245 (Bankr.S.D.N.Y. 2007) (cause did not exist for appointment of Chapter 11 trustee based on allegedly fraudulent or dishonest acts of corporate debtor’s principal prior to appointing new management).
15. Therefore, based on the plain language of 11 U.S.C. 1104(a)(1) and In re The 1031 Tax Group, LLC, Turek’s alleged misdeeds will do nothing to assist this Court in its consideration of the Motion and all such testimony should be excluded.
WHEREFORE, Debtor respectfully requests that the Court enter an Order prohibiting any questioning of Turek regarding acts or omissions that occurred while he was acting as President of the Debtor and Debtor-in-Possession.
FOWLER MEASLE & BELL PLLC
/s/ _Ellen Arvin Kennedy
Ellen Arvin Kennedy, Esq.
Timothy A. West, Esq.
300 West Vine Street, Suite 600
Lexington, KY 40507-1660
(859) 252-6700
(859) 255-3735 fax
Email:EAKennedy@FowlerLaw.com
TWest@FowlerLaw.com
ATTORNEYS FOR DEBTOR,
PLASTICON INTERNATIONAL, INC.
CERTIFICATE OF SERVICE
I hereby certify that the foregoing was served this the 3rd day of October, 2007, electronically in accordance with the method established under this Court’s CM/ECF Administrative Procedures and Standing Order dated July 25, 2002 upon all parties in the electronic filing system in this case and to those listed on the Master Service List by first class postage paid mail.
/s/ Ellen Arvin Kennedy
ATTORNEY FOR DEBTOR |
