The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.
Minnesota Bankruptcy Case:
Polaroid Corp. v. Acorn Capital Group (In re Polaroid Corp.), 420 B.R. 484 (Bankr. D. Minn. 11/23/09) (Kishel, J.).
Bankruptcy Jurisdiction over Counterclaims Limited for Lack of Standing
The Polaroid plaintiffs, as chapter 11 debtors-in-possession, commenced an adversary proceeding against Acorn, a prepetition secured lender. They sought, among other relief, to avoid or otherwise nullify Acorn’s liens, on the theory that the taking of the security interests constituted fraudulent transfers as to the Polaroid plaintiffs’ creditors. Acorn asserted a counterclaim for declaratory judgment that it had a valid and enforceable lien in the Polaroid plaintiffs’ assets, derived from Acorn’s direct and indirect interests in those assets. The plaintiffs later converted to chapter 7. The Polaroid plaintiffs moved to dismiss the counterclaim. After rejecting most of the Polaroid plaintiffs’ arguments, the court found that Acorn’s counterclaim could not proceed because Acorn lacked standing on one of the two components of the second prong of its counterclaim, and therefore failed to state a claim on which relief might be granted. The bankruptcy court ordered the dismissal of Acorn’s counterclaim for declaratory judgment that it has a valid and enforceable lien in the Polaroid plaintiffs’ assets, but denied the Polaroid plaintiffs’ motion in all other respects.
Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.