In a 9-page opinion issued in the Syntax-Brillian case on July 20, 2016, Judge Kevin J. Carey denied the motion of equity holders in Syntax-Brillian seeking to terminate the Liquidation Trustee (the “Trustee”). A copy of the Opinion is available on the Court’s website: Here.
The Movants seek to terminate the Trustee, arguing that he should be dismissed due to “lack of standing” and “lack of due process”. Opinion at *4. The Movants are, in essence, rearguing issues they raise in prior pleadings; that first day affidavits were based on fraud, and as such, all events in the chapter 11 case must be vacated. Id. We discussed the opinion that Judge Shannon issued in response to these arguments in a prior blog post: Here. Quoting Judge Shannon’s opinion, Judge Carey similarly dismisses the Movants’ arguments as to lack of standing. Opinion at *4-6.
The Movants’ lack of due process argument is, in essence, an argument that the Trustee’s settlement with certain former equity holders was unfair because it did not treat all equity holders the same. Opinion at *7. Again, Judge Carey holds that Judge Shannon’s prior opinion addressed this issue, and “the Movants have failed to provide any reason to re-visit that decision.” Id.
“A party seeking removal of a trustee must prove actual injury or fraud.” Opinion at *8. In concluding his Opinion, Judge Carey states:
… the Movants have not proved that they have been harmed by the actions of the Trustee or his professionals. They have not provided any evidence that the Trustee has failed to perform his duties under the Plan and the Liquidation Trust Agreement. There is no evidence of gross negligence, breach of fiduciary duty, breach of trust, and reckless or willful mishandling of the Liquidation Trust Assets by the Trustee.
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