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Full title: Objection to Claim Number by Claimant Second Omnibus Objection to Claims as Having Been Assumed by Destination Pet. Second Omnibus Objection to Claims as Having Been Assumed by Destination Pet. Hearing scheduled for 8/12/2021 at 10:00 AM at telephone and video conference. (Attachments: # 1 Declaration # 2 Proposed Order)(Vasek, Julian) (Entered: 06/29/2021)
Document posted on Jun 28, 2021 in the bankruptcy, 7 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
TO THE HONORABLE CHRISTOPHER M. LOPEZ, U. S. BANKRUPTCY JUDGE: COMES NOW John D. Cornwell, Trustee (“Trustee”) of the VitalPet Liquidating Trust (“Liquidating Trust”) in the above styled and numbered chapter 11 bankruptcy case (the “Bankruptcy Case”), and files this Second Omnibus Objection to Claims, as Having Been Assumed by Destination Pet (the “Objection”), respectfully stating as follows: I. JURISDICTION AND VENUE 1. On December 17, 2020, this Court held a hearing to consider confirmation of the Debtors’ First Amended Joint Combined Chapter 11 Plan and Disclosure Statement of Veterinary Care, Inc. and TVET Management, LLC [Docket No. 442] (the “Plan”).1 Pursuant thereto, on the same date, the Court confirmed the Plan by entry of its Order Confirming the First Amended Joint Combined Chapter 11 Following the trustee’s appointment, on June 4, 2021, the Court entered at the Trustee’s request its Order Regarding Trustee’s Motion for Order (I)Following the Effective Date and his appointment, the Trustee initiated his claims review process in order to formulate and identify potential objections, and has begun conferring with claimants in order to attempt to resolve objections where appropriate. To the extent that a response regarding any Objectionable Claim is not resolved as between the holder of such claim and the Trustee, each such claim and the Objection thereto will constitute a separate contested matter as contemplated by Bankruptcy Rule 9014.
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Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: § § Jointly Administered VETERINARY CARE, INC. d/b/a § VITALPET, et al., § Case No. 19-35736 § (Chapter 11) Debtors. § TRUSTEE’S SECOND OMNIBUS OBJECTION TO CLAIMS, AS HAVING BEEN ASSUMED BY DESTINATION PET This is an objection to your claim. This objection asks the Court to disallow the claim that you filed in this bankruptcy case. If you do not file a response within 30 days after the objection was served on you, your claim may be disallowed without a hearing. A hearing has been set on this matter on August 12, 2021 at 10:00 a.m. in Courtroom 401, 515 Rusk, Houston, TX 77002. Such hearing may be conducted remotely. Audio communication will be by use of the Court’s dial-in facility. You may access the facility at (832) 917-1510. You will be responsible for your own long-distance charges. Once connected, you will be asked to enter the conference room number. Judge Lopez conference room number is 590153. You may view video via GoToMeeting. To use GoToMeeting, the Court recommends that you download the free GoToMeeting application. To connect, you should enter the meeting code “JudgeLopez” in the GoToMeeting app or click the link on Judge Lopez’s home page on the Southern District of Texas website. Once connected, click the settings icon in the upper right corner and enter your name under the personal information setting. If you object to the relief requested, you must respond in writing. Unless otherwise directed by the Court, you must file your response electronically at https://ecf.txsb.uscourts.gov/ within thirty days from the date this objection was filed. Otherwise, the Court may treat the pleading as unopposed and grant the relief requested. Creditors receiving this objection should locate their names and claims below on Page 4.
1TO THE HONORABLE CHRISTOPHER M. LOPEZ, U. S. BANKRUPTCY JUDGE: COMES NOW John D. Cornwell, Trustee (“Trustee”) of the VitalPet Liquidating Trust (“Liquidating Trust”) in the above styled and numbered chapter 11 bankruptcy case (the “Bankruptcy Case”), and files this Second Omnibus Objection to Claims, as Having Been Assumed by Destination Pet (the “Objection”), respectfully stating as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction over the Bankruptcy Case and this Objection pursuant to 28 U.S.C. §§ 157 and 1334. This Objection constitutes a core proceeding pursuant to 28 U.S.C. § 157(b). 2. Venue of the Bankruptcy Case, and of this Objection, is appropriate before this Court in this district under 28 U.S.C. §§ 1408 and 1409. II. FACTS A. Background 4. On October 10, 2019 (the “Petition Date”), Warren Resell, D.V.M, James H. Kelly, D.V.M., and Larry D. Wood, D.V.M. filed an involuntary Chapter 11 petition against debtor Veterinary Care, Inc. d/b/a VitalPet (“VCI”), thereby initiating this Bankruptcy Case. 5. On November 8, 2019, this Court entered its Order Granting Involuntary Petition providing for its order for relief with respect to VCI. On November 18, 2019, TVET Management, LLC (“TVET” and, collectively with VCI, the “Debtors”) filed its voluntary Chapter 11 petition. The two cases are being jointly administered. 6. On January 31, 2020, the United States Trustee filed its Notice of Appointment of an official committee of unsecured creditors. Prior to plan confirmation in this Bankruptcy Case, the Debtors remained in possession of their assets and administered their bankruptcy estates as debtors-in-possession.
27. On March 14, 2020, the Court entered its Order (I) Approving Prevailing Bidder’s Asset Purchase Agreement and Authorizing the Sale of Assets Outside the Ordinary Course of Business, (II) Authorizing the Sale of Substantially All of the Debtors’ Assets Free and Clear of Liens, Claims, Encumbrances, and Interests, (III) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief [Docket No. 243] (the “Sale Order”). Pursuant to the Sale Order, the Debtors sold substantially all of their assets (the “Sale”) to Destination Pet LLC (“Destination Pet”). 8. On December 17, 2020, this Court held a hearing to consider confirmation of the Debtors’ First Amended Joint Combined Chapter 11 Plan and Disclosure Statement of Veterinary Care, Inc. and TVET Management, LLC [Docket No. 442] (the “Plan”).1 Pursuant thereto, on the same date, the Court confirmed the Plan by entry of its Order Confirming the First Amended Joint Combined Chapter 11 Plan and Disclosure Statement of Veterinary Care, Inc. and TVET Management, LLC [Docket No. 492] (the “Confirmation Order”). 9. Under the Plan, inter alia, the Liquidating Trust was established as the successor to the Debtors and their bankruptcy estates for all relevant purposes, and funded and vested with all assets of the estates. See, e.g., Plan, at Art. V, pp. 27-28. The Confirmation Order expressly approves of the appointment of the Trustee for the Liquidating Trust, as well as approving the Liquidating Trust Agreement (the “Trust Agreement”), incorporated into, and attached as Exhibit “C” to, the Plan. Confirmation Order, at ¶¶ 39-40, 42, 49-50. See also Notice of Filing of Plan Supplement [Docket No. 468]. 10. Pursuant to the Plan, the Confirmation Order, and the Trust Agreement, the Trustee is charged with, among other things, the administration of claims and making distributions of the 1 Capitalized terms used and not otherwise defined herein have the same definitions as are set forth in the Plan.
3net proceeds of all Liquidating Trust assets. See Plan, at Art. V, pp. 27-29; Confirmation Order, at ¶ 50; Trust Agreement, at §§ 4.01, 5.01. Under the Plan, “[f]ollowing the Effective Date, the Liquidating Trustee shall have the sole and exclusive right to object to the allowance of any Claims or Interests payable by the Liquidating Trust under the Plan.” Plan, at p. 32. 11. Following the trustee’s appointment, on June 4, 2021, the Court entered at the Trustee’s request its Order Regarding Trustee’s Motion for Order (I) Approving Omnibus Claim Objection Procedures and (II) Finally Resolving Interest Rate Applicable to Certain Claims [Docket No. 574] (the “Omnibus Procedures Order”). 12. Following the Effective Date and his appointment, the Trustee initiated his claims review process in order to formulate and identify potential objections, and has begun conferring with claimants in order to attempt to resolve objections where appropriate. B. The Claims 13. This Objection applies to the following claims (the “Objectionable Claims”): Claimant Claim No.2 Ref. No.3 Classification Amount Page(s)4 Lauridia, Dr. Daniel A. 89-1 127 Unsecured $ 573,579.75 4 - 6 Monroe Animal Health, Inc. / 93-1 132 Unsecured $ 796,000.00 4 - 6 White, Dr. Brent Rosen, DVM, Ronald 91-1 129 Unsecured $ 109,710.00 4 - 6 14. Each of the Objectionable Claims is based on a profit-sharing provision contained in an employment agreement. Drs. Lauridia and Rosen filed their claims in their own name. Dr. Brent White, on the other hand, filed his claim in the name of Monroe Animal Health, Inc. But 2 Each of these claims was filed in the Veterinary Care, Inc. Bankruptcy Case, No. 19-35736. 3 Ref. No. refers to the claim reference number assigned to each claim in the claims register maintained by the official claims agent, Donlin Recano & Company, Inc. Copies of claims listed by Ref. No. are available at https://www.donlinrecano.com/Clients/vci/ClaimsSearch. 4 This column provides a cross reference to the pages of the Objection setting forth the grounds for the objection. Fed. R. Bankr. P. 3007(e)(3).
4Dr. White is the contact person for Monroe’s claim, and Dr. White is the party to the employment agreement attached to the claim. As part of the Sale, Destination Pet, LLC initially assumed these employment agreements. Under the Asset Purchase Agreement [Docket No. 243 at p. 38 of 141 (the “APA”)], the “Purchased Assets” include the “Assumed Contracts,” and the “Assumed Contracts” include those listed on Schedule 3.2.1. These three employment contracts are listed on Schedule 3.2.1. See Sale Order, Docket No. 243, p. 90 of 141. However, Exhibit 3 to the Sale Order/APA removes these contracts from Schedule 3.2.1 because neither of the Debtors was the contract counterparty. See Sale Order, Docket No. 243 pp. 97 – 103 of 141. Nevertheless, upon information and belief, out of a desire to continue the employment of Drs. Lauridia, Rosen, and White, Destination Pet negotiated payment plans for these obligations. Indeed, Destination Pet’s chief Financial Officer confirmed that Destination Pet reached an agreement with these claimants to resolve their profit share buyouts. III. ARGUMENTS AND AUTHORITIES 15. Section 502 of the Bankruptcy Code provides, “A claim or interest, proof of which is filed under § 501 of this title, is deemed allowed, unless a party in interest … objects.” 11 U.S.C. § 502(a). However, a claim is objectionable to the extent that “such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured ….” 11 U.S.C. § 502(b)(1). The Omnibus Procedures Order supplements Bankruptcy Rule 3007, which together provide certain grounds upon which “objections to more than one claim may be joined in an omnibus objection,” Fed. R. Bankr. P. 3007(d), and those bases expressly include “claims that have been paid by or assumed by a third party, such as but not limited to Destination Pet, LLC, the purchaser of substantially all of the Debtor's operating assets ….” Omnibus Procedures Order p. 2.
516. The [one satisfaction] rule operates to prevent a plaintiff from recovering twice for the same wrong ….” Malvino v. Delluniversita, 840 F.3d 223, 234 (5th Cir. 2016) (citing, inter alia, Vickery v. Vickery, 999 S.W.2d 342, 373 (Tex. 1999) (“A plaintiff is entitled to one satisfaction for sustained injuries.”)). Though the one satisfaction rule usually arises in the context of an election of remedies, the same principal applies here. If the Objectionable Claims were allowed, the claimants would recover twice on their claims. The Trustee therefore requests that the Court sustain this Objection and enter an order disallowing the Objectionable Claims in full. IV. RESERVATION OF RIGHTS 17. This Objection is limited to the grounds stated herein. Accordingly, it is without prejudice to the rights of the Trustee to object to any of the Objectionable Claims, or any other claims, on any other grounds whatsoever, and the Trustee expressly reserves all further substantive or procedural objections the Trustee may have. 18. Nothing contained herein, nor any actions taken pursuant to the relief sought, is intended or should be construed as: (a) an admission as to the validity of any prepetition claim; (b) a waiver of the Trustee’s right to dispute any prepetition claim on any grounds; (c) a promise or requirement to pay any prepetition claim; or (d) a waiver of the Trustee’s rights under the Bankruptcy Code or any other applicable law. 19. To the extent that a response regarding any Objectionable Claim is not resolved as between the holder of such claim and the Trustee, each such claim and the Objection thereto will constitute a separate contested matter as contemplated by Bankruptcy Rule 9014. Further, the Trustee requests that any order by the Court regarding an Objection or other reply asserted in response to this Objection be deemed a separate order with respect to each such Claim.
6V. PRAYER WHEREFORE, PREMISES CONSIDERED, the Trustee respectfully requests entry of an order: (i) sustaining this Objection; (ii) disallowing the Objectionable Claims; and (iii) granting to the Trustee such other and further relief as is just. RESPECTFULLY SUBMITTED this 29th day of June, 2021. MUNSCH HARDT KOPF & HARR, P.C. By: /s/ Julian P. Vasek Jay H. Ong Texas State Bar No. 24028756 Julian P. Vasek Texas State Bar No. 24070790 1717 West 6th Street, Suite 250 Austin, Texas 78703 Telephone: (512) 391-6100 Facsimile: (512) 391-6149 firstname.lastname@example.org email@example.com COUNSEL FOR THE LIQUIDATING TRUSTEE CERTIFICATE OF SERVICE I hereby certify that on this 29th day of June, 2021, I personally caused to be served a true and correct copy of the above and foregoing objection, including all exhibits, if any, (A) by electronically filing it with the Court using the Court’s CM/ECF system, which sent notification to all parties of interest receiving notice in this case through the CM/ECF system; and (B) via first class U.S. mail, postage prepaid, on the following recipient(s): Dr. Daniel Lauridia Ronald Rosen 1234 Washington Drive 66 Oak Lane Centerport, NY 11721 Roslyn Heights, NY 11577 Monroe Animal Health, Inc. (c/o Brent White) 1555 Frenchman’s Bend Road Monroe, LA 71203 By: /s/ Julian P. Vasek Julian P. Vasek