Full title: Motion for Relief from Stay (FEE) Motion of Fay Ball For Relief From Automatic Stay. Fee Amount $188. Filed by Fay Ball. Hearing scheduled for 3/3/2021 at 11:30 AM at US Bankruptcy Court, 824 Market St., 5th Fl., Courtroom #4, Wilmington, Delaware. Objections due by 2/10/2021. (Attachments: # 1 Exhibit A # 2 Exhibit B # 3 Notice # 4 Certificate of Service) (Busenkell, Michael) (Entered: 01/27/2021)
Document posted on Jan 26, 2021 in the bankruptcy, 7 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
Hearing Date: March 3, 2021 at 11:30 am (ET)
MOTION OF FAY BALL FOR RELIEF FROM AUTOMATIC STAY
Fay Ball (the “Movant”), by and through her undersigned counsel, hereby move this Honorable Court (the “Motion”), pursuant to section 362(d) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), Federal Rule of Bankruptcy Procedure 4001, and Local Rule 4001-1 for an order lifting the automatic stay imposed by section 362(a) of the Bankruptcy Code for the purpose of (i) pursuing their claims against YouFit Health Clubs, LLC, one of the above-captioned debtors (the “Debtor”), and (ii) to proceed to collect any award against any available insurance proceeds under any applicable policy.The statutory predicate for the relief requested herein is 11 U.S.C. §§ 362(d)(1) and 362(d)(2) and Bankruptcy Rule 4001.Through this Motion, Movant seeks the entry of an order pursuant to section 362(d) of the Bankruptcy Code and 4001 of the Federal Rules of Bankruptcy Procedure, granting so that she may prosecute her claims against the Debtor to judgment and satisfy any award or other resolution she may obtain against the Debtor from the proceeds of any applicable insurance policies.If a creditor seeking relief from the automatic stay makes a prima facie case of "cause" for listing the stay, the burden of going forward shifts to the trustee pursuant to Bankruptcy Code Section 362(g).In re Tribune Co., 418 B.R. 116, 126 (Bankr. D. Del. 2009) (quoting legislative history of § 362(d))
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: Chapter 11
Case No. 20-12841 (MFW)
YOUFIT HEALTH CLUBS, LLC, et al.,1 (Jointly Administered)
Objection Deadline: February 10, 2021 at 4:00 pm (ET) Debtors. Hearing Date: March 3, 2021 at 11:30 am (ET)
MOTION OF FAY BALL FOR RELIEF FROM AUTOMATIC STAY
Fay Ball (the “Movant”), by and through her undersigned counsel, hereby move this Honorable Court (the “Motion”), pursuant to section 362(d) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), Federal Rule of Bankruptcy Procedure 4001, and Local Rule 4001-1 for an order lifting the automatic stay imposed by section 362(a) of the Bankruptcy Code for the purpose of (i) pursuing their claims against YouFit Health Clubs, LLC, one of the above-captioned debtors (the “Debtor”), and (ii) to proceed to collect any award against any available insurance proceeds under any applicable policy. In support of this Motion, the Movant respectfully shows the Court as follows:
JURISDICTION AND VENUE
1. This Court has jurisdiction of this Motion pursuant to 28 U.S.C. §§ 157 and 1334. Venue in this judicial district is proper under 28 U.S.C. §§ 1408 and 1409.
2. This is a core proceeding within the meaning of 28 U.S.C. § 157(b).
1 The last four digits of YouFit Health Clubs, LLC’s tax identification number are 6607. Due to the large number of debtor entities in these chapter 11 cases, for which joint administration has been requested, a complete list of the debtor entities and the last four digits of their federal tax identification numbers is not provided herein. A complete list of such information may be obtained on the website of the proposed claims and noticing agent at www.donlinrecano.com/yfhc. The mailing address for the debtor entities for purposes of these chapter 11 cases is: 1350 E. Newport Center Dr., Suite 110, Deerfield Beach, FL 33442.
3. The statutory predicate for the relief requested herein is 11 U.S.C. §§ 362(d)(1) and 362(d)(2) and Bankruptcy Rule 4001.
I. Chapter 11 Background
4. On November 9, 2020 (the “Petition Date”), the above-captioned debtors and debtors-in-possession each commenced with this Court a voluntary case under chapter 11 of the Bankruptcy Code (collectively, the “Chapter 11 Cases”). On November 10, 2020, the Court entered an order for the joint administration of the Chapter 11 Cases.
5. The above-captioned debtors and debtors-in-possession are authorized to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
6. A creditors’ committee has been appointed by the Office of the United States Trustee for the District of Delaware.
II. Movant’s Claims
7. On December 28, 2017, Movant suffered injuries when a step climbing machine Movant was on malfunctioned and caused Movant to be thrown off and injure both of her knees and other body parts. On or about October 8, 2019, Movant filed a complaint (the “Complaint”) in the Circuit Court for the 17th Judicial Circuit in and for Broward County, Florida (the “State Court”) against the Debtor Defendant asserting claims for negligence styled Fay F. Ball v. YouFit Health Clubs, LLC, Case No. CACE 19-020950 (08) (the “State Court Action”). A copy of the Complaint is attached hereto as Exhibit A and incorporated herein by reference.
8. Upon information and belief, the Debtor has available insurance coverage for any liability due to the claims referenced above through Great American Insurance Company of New York, Policy Number PAC 073-81-86. The Movant herein seeks to prosecute the State Court Action to establish and liquidate her claim and/or to recover against assets of third parties, including but not limited to any available insurance coverage.
9. The prosecution and liquidation of Movant’s claim in a state court forum has been stayed with respect to the Debtor as a consequence of the automatic stay provisions set forth in 11 U.S.C. § 362(a).
10. Through this Motion, Movant seeks the entry of an order pursuant to section 362(d) of the Bankruptcy Code and 4001 of the Federal Rules of Bankruptcy Procedure, granting so that she may prosecute her claims against the Debtor to judgment and satisfy any award or other resolution she may obtain against the Debtor from the proceeds of any applicable insurance policies.
BASIS FOR RELIEF REQUESTED
11. Movant are entitled to relief from the automatic stay and/or discharge injunction pursuant to 11 U.S.C. § 362(d)(1).
12. The Bankruptcy Code provides:
On request of a party in interest and after notice and a
hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay . . . (1) for cause, including the lack of adequate protection of an interesting property for such party interest
11 U.S.C. § 362(d)(1). The term “cause” is not defined in the Code, but rather must be determined on a case-by-case basis. In re Rexene Prods. Co., 141 B.R. 574, 576 (Bankr.
D. Del. 1992) (internal citations and quotations omitted). “Cause is a flexible concept and courts often . . . examin[e] the totality of the circumstances to determine whether sufficient cause exists to lift the stay.” In re SCO Group, Inc., 395 B.R. 852, 856 (Bankr. D. Del.
13. At a hearing for relief from automatic stay under Section 362(d), the party opposing stay relief bears the burden of proof on all issues with the exception of the debtor's equity in property. See In re Domestic Fuel Corp., 70 B.R. 455, 462-463 (Bankr. S.D.N.Y.
1987); 11 U.S.C. § 362(g). If a creditor seeking relief from the automatic stay makes a prima facie case of "cause" for listing the stay, the burden of going forward shifts to the trustee pursuant to Bankruptcy Code Section 362(g). See In Re 234-6 West 22nd Street Corp., 214 B.R. 751, 756 (Bankr. S.D.N.Y. 1997).
14. Courts often follow the logic of the intent behind § 362(d) which is that it is often appropriate to allow litigation to proceed in a non-bankruptcy forum, if there is no prejudice to the estate, “in order to leave the parties to their chosen forum and to relieve the bankruptcy court from duties that may be handled elsewhere.” In re Tribune Co., 418 B.R. 116, 126 (Bankr. D. Del. 2009) (quoting legislative history of § 362(d)) (internal citations omitted).
15. Courts in this District rely upon a three-pronged balancing test in determining whether “cause” exists for granting relief from the automatic stay to continue litigation:
(1) Whether prejudice to either the bankrupt estate or the
debtor will result from continuation of the civil suit;
(2) Whether the hardship to the non-bankrupt party by
maintenance of the stay outweighs the debtor’s hardship;
(3) the creditor’s probability of success on the merits.
See In re Tribune Co., 418 B.R. at 126.
16. Here, the facts weigh in Movant’s favor on each of these three prongs. First, the Debtor will not suffer prejudice should the stay be lifted because the Movant’s claims must eventually be liquidated before Movant can recover from the bankruptcy estate. To the extent Movant’ claims involve personal injury, they must be liquidated in a forum outside the Bankruptcy Court. U.S.C. § 157(b)(5) (“personal injury tort . . . claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claims arose . . . .”).
17. Furthermore, to the extent that the Debtor’s liability to the Movant is covered by insurance policies, any recovery by Movant will not affect the Debtor’s estate.
See In re 15375 Memorial Corp., 382 B.R. 652, 687 (Bankr. D. Del. 2008), rev’d on other grounds, 400 B.R. 420 (D. Del. 2009) (“when a payment by an insurer cannot inure to the debtor’s pecuniary interest, then that payment should neither enhance nor decrease the bankruptcy estate” (quoting In re Edgeworth, 993 F.2d 51, 55-56 (5th Cir. 1993)); see also In re Allied Digital Tech Corp., 306 B.R. 505, 510 (Bankr. D. Del. 2004) (ownership by a bankruptcy estate is not necessarily determinative of the ownership of the proceeds of that policy). “[W]hen the debtor has no legally cognizable claim to the insurance proceeds, those proceeds are not property of the estate.” In re Edgeworth, 993 F.2d 51, 55-56 (5th Cir. 1993).
18. Second, the Movant will face substantial hardship if the stay is not lifted.
The Movant is a resident of Florida and the events which form the basis of Movant’s claims occurred exclusively in Florida. If the Movant is forced to litigate her claims in Delaware,
she would incur the increased expense of bringing attorneys, witnesses, and physical evidence to Delaware. “[O]ne of the primary purposes in granting relief from the stay to permit claim liquidation is to economize judicial resources.” In re Peterson, 116 B.R. 247, 250 (D. Colo. 1990). Here judicial economy would be served by lifting the automatic stay and allowing Movant’s claims to be liquidated in the forum where they are presently postured to be adjudicated quickly.
19. The Debtor will not suffer any hardship if the Movant’s claims are allowed to proceed. Movant’s claims are garden variety personal injury claims which do not present any factual or legal issues which will impact or distract the Debtor from its reorganization process.
20. Lastly, the likelihood of success on the merits prong is satisfied by “even a slight probability of success on the merits may be sufficient to support lifting an automatic stay.” In re Continental Airlines, Inc., 152 B.R. 420, 426 (D. Del. 1993). This prong also weighs in Movant’ favor. No defenses, much less strong defenses, appear to exist here.
“Only strong defenses to state court proceedings can prevent a bankruptcy court from granting relief from the stay in cases where ... the decision-making process should be relegated to bodies other than [the bankruptcy] court.” In re Fonseca v. Philadelphia Housing Authority, 110 B.R. 191, 196 (Bankr. E.D. Pa. 1990).
21. When weighing the above factors, the Court should lift the automatic stay to permit Movant to prosecute her claims against the Debtor to judgment in the State Court Action and satisfy any award or other resolution she may obtain against the Debtor from the proceeds of any applicable insurance policies.
WHEREFORE, Fay Ball respectfully requests that the Court enter an Order, substantially in the form attached hereto as Exhibit B, and for such further additional relief as may be just and proper under the circumstances.
Dated: January 27, 2021 GELLERT SCALI BUSENKELL & BROWN LLC
/s/ Michael Busenkell
Michael Busenkell (DE 3933)
1201 North Orange Street, 3rd Floor
Wilmington, DE 19801
Attorneys for Fay Ball