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MARIN O. PEREL SBN: 457748

5425 AEGEAN WAY
LAS VEGAS, NV. 89149
(702) 327-7323
Attorney for African Community Resource Center,
A California Non-Profit Corporation

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UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA-LOS ANGELES

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I.

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) Case No.14R11836
)
) MEMORANDUM OF POINTS AND
) AUTHORITIES IN SUPPORT OF
)
) DEBTORS OPPOSITIION TO MOTION
) FOR RELIEF FROM THE AUOTMATICE
) STAY
)
)
)
)
)
PRELIMINARY STATEMENT

The Motion should be denied both because it is premature and is at odds with the
fundamental purpose of the automatic stay that gives debtors a breathing spell at the
outset of a bankruptcy case and preserves estate assets for the benefit of all
creditors. A mere six weeks into these Chapter 13 Cases, the movants seek to revive
their lawsuits against the Company and its affiliated dental centers, at a time when
the

Debtors

limited

resources

need

to

be

devoted

to

the

immediate

tasks

of

facilitating the proposed sale of substantially all of their assets, formulating a

Chapter 13 plan and working to achieve a comprehensive resolution of all potential
creditor claims, not just those of the movants, but also the claims of any other
creditors. As a result, the movants cannot establish cause sufficient to terminate

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY

the stay at this juncture, nor have they articulated any special facts or circumstances warranting

such relief.

Moreover, permitting the movants to go forward at present could jeopardize the

Debtors efforts to achieve a resolution of the litigations that helped precipitate this bankruptcy

case.

Further, should the movants be permitted to proceed with their litigation at this

juncture, such an action could undermine the Bankruptcy Codes principle of ratable

distribution among similarly situated creditors.

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In sum, the burden imposed on the Debtors in terms of time, financial resources and
attention necessary to gain relief under chapter 13. Accordingly, the Motion should be denied.
II ARGUMENT
A. Lifting the Automatic Stay Would Interfere With the Debtors Efforts to Achieve

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the Primary Purposes of These Chapter 13 Cases.

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Section 362(a)(1) of the Bankruptcy Code provides that

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. . . [A] petition filed under section 301, 302 or 303 of this title . . . operates
as a stay, applicable to all entities, of (1) the commencement or
continuation, including the issuance or employment of process, of a
judicial, administrative, or other action or proceeding against the debtor that
was or could have been commenced before the commencement of the case
under this title, or to recover a claim against the debtor that arose before the
commencement of the case under this title.
11 U.S.C. 362(a)(1).

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The automatic stay is among the most important protections for a debtor under the

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Bankruptcy Code, if not the single most important one. See, e.g., Midatlantic Natl Bank v.

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New Jersey Dept of Envtl Protection, 474 U.S. 494, 503 (1986) (The automatic stay

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provision of the Bankruptcy Code . . . has been described as one of the fundamental debtor

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protections provided by the bankruptcy laws.) (citing H.R. Rep. No. 95-595, at 340 (1977),

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reprinted in 1978 U.S.C.C.A.N. 5963, 6297) (internal quotations omitted). The automatic stay

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provides the debtor with a breathing spell after the commencement of a Chapter 13case,
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY

shielding it from creditor harassment at a time when the debtors personnel should be focusing

on restructuring efforts. In re Johns-Manville Corp., 801 F.2d 60, 64 (2d Cir. 1986); see also In

re Laguna Assocs. Ltd. Pship, 30 F.3d 734, 737 (6th Cir. 1994) (the purpose the automatic stay

is to assist financially distressed business enterprises by providing them with breathing space

in which to return to a viable state.) (quoting In re Winshall Settlors Trust, 758 F.2d 1136,

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1137 (6th Cir.1985)).

By moving to lift the stay at the moment when the Debtors are working assiduously to

complete a reorganizing plan the and just weeks after commencing the this action, the movants

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seek relief that would be incompatible with this concept. Dissolving or modifying the stay

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would force the Debtors to redirect their efforts toward producing substantial numbers of

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documents, responding to other written discovery, taking and defending numerous depositions,

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and preparing for individual trials in cases that likely would not be trial ready for many

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months, if not years. Far from providing the Debtors breathing space in which to return to a

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viable state, id., the relief the movants seek would jeopardize the key purposes of these
Chapter 13 Cases. For this reason alone, the Motion should be denied.
B. Lifting the Automatic Stay Could Deplete Essential Estate Assets to the Detriment
of Other Patient Litigation Claimants.

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In addition to shielding the debtor from unwarranted interference, the automatic stay also

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protects and preserves estate assets for the benefit of all creditors. See 11 U.S.C. 362(a)(3)

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(automatically staying any act to obtain possession of property of the estate or of property

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from the estate or to exercise control over property of the estate); A H. Robins Co., Inc. v.

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Piccinin, 788 F.2d 994, 998 (4th Cir.1986) (While section 362(a)(1) stays any proceeding

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commenced or [that] could have been commenced against the debtor . . . [section 362(a)(3)]

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY

provides similar relief against suits involving the possessions or custody of property of the

debtor, irrespective of whether the suits are against the debtor alone or others.); see also In re

Republic Techs. Intl, LLC, 275 B.R. 508, 512 (N.D. Ohio 2002); Scrima v. The DeVries

Agency, Inc., 103 B.R. 132 (W.D. Mich. 1989). The automatic stay thus protect[s] the debtor

from an uncontrollable scramble for its assets in a number of uncoordinated proceedings in

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different courts, to preclude one creditor from pursuing a remedy to the disadvantage of other

creditors, and to provide the debtor and its executives with a reasonable respite from protracted

litigation, during which they may have an opportunity to formulate a plan of reorganization for

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the debtor. A.H. Robins Co., Inc., 788 F.2d at 998 (citing Matter of Holtkamp, 669 F.2d 505,

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508 (7th Cir.1982)); see also In re AP Indus. Inc., 117 B.R. 789, 798 (Bankr. S.D.N.Y. 1990)

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(The automatic stay prevents creditors from reaching the assets of the debtors estate

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piecemeal and preserves the debtors estate so that all creditors and their claims can be

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assembled in the bankruptcy court for a single organized proceeding.).

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The movant must acknowledge that the automatic stay is intended to prevent a

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prejudicial dissipation of a debtors assets. They contend, however, that because they

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debtor has filed several Chapter 13 petitions that he is acting in bad faithin bring this instant

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chapter 13 petition

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This is not a correct application of the law since the National Union Policies and the
proceeds of those policies are assets of the estate entitled to protection under Section 362(a)
(3). Section 541(a) of the Bankruptcy Code defines property of a bankruptcy estate as all

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legal or equitable interests of the debtor in property as of the commencement of the case.

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11 U.S.C. 541(a). The scope of that definition is intended to be broad, In re Republic

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Techs. Intl, LLC, 275 B.R. at 512 (citing United States v. Whiting Pools, Inc., 462 U.S. 198,

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY

205 n. 9 (1983)); see also In re Graham Square, Inc., 126 F.3d 823, 831 (6th Cir. 1997)), and

an overwhelming majority of courts have concluded that liability insurance policies fall

within 541(a)(1)s definition of estate property. In re Vitek, Inc., 51 F.3d 530, 533 (5th

Cir. 1995); see also, e.g., In re Minoco Group of Cos., Ltd., 799 F.2d 517, 519 (9th Cir.

1986) (debtors insurance policies met the fundamental test of whether they are property of

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the estate because the debtors estate is worth more with them than without them); In re St.

Clares Hosp. & Health Ctr., 934 F2d 15 (2d Cir. 1991); In re Titan Energy, Inc., 837 F.2d

325 (8th Cir. 1988); Tringali v. Hathaway Mach. Co., Inc., 796 F.2d 553 (1st Cir. 1986).

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This is particularly true here, where the Debtors various insurance policies are one of the

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few assets potentially available to pay those unsecured creditors who have claims arising out

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of the Patient Litigation. Indeed, as the Committee noted in its recently filed Rule 2004

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motion seeking discovery from the Debtors, the National Union Policies may be the only

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asset available for recovery by the largest constituency of creditors represented by the

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Committee. See Docket No. 273, 5.

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Because the debtor has an interest in the property at issue he conmtends that is is an

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asset of a debtor any proceeding which could result in a judgment minimizing such assets

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should be stayed under section 362(a)(3). As the Court of Appeals for the Fourth Circuit

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reasoned:

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Under the weight of authority, insurance contracts have been said to be

embraced in [Section 541(a)s] definition of property. . . . . [A liability
insurance policy] is a valuable property of a debtor, particularly if the
debtor is confronted with substantial liability claims within the coverage
of the policy in which case the policy may well be . . . the most
important asset . . . of the debtors estate. Any action in which the
judgment may diminish this important asset is unquestionably subject
to a stay under [11 U.S.C. 362(a)(3)].

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY

A.H. Robins Co., Inc., 788 F.2d at 1001 (quoting In re Johns Manville Corp., 40 B.R. 219, 229

(S.D.N.Y. 1984) and In re Johns Manville Corp., 33 B.R. 254, 261 (S.D.N.Y. 1983)); see also

ACandS, Inc. v. Travelers Cas. & Sur. Co., 435 F.3d 252, 261 (3d Cir. 2006) (Alito, J.) (The

possession or control language of Section 362(a)(3) has consistently been interpreted to

prevent acts that diminish future recoveries from a debtors insurance policies.) (citations

omitted); In re Youngstown Osteopathic Hosp. Assn, 271 B.R. 544, 547-48 (Bankr. N.D. Ohio

2002) (The prevailing view is that an all debtors assets is property pursuant to 11 U.S.C.

541(a)(1) and protected by the automatic stay provision in 11 U.S.C. 362(a)(3).); 3 Collier

on Bankruptcy 362.07[3][a] (Alan N. Resnick & Henry J. Sommer eds., 16th ed.)
CONCLUSION

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For the foregoing reasons this court should denied movants motion for relief from

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the automatic stay.

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Date: _______________

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_____________________________________
Tony Maurice Davis/Debtor in pro per

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEBTORS OPPOSITIION TO

MOTION FOR RELIEF FROM THE AUOTMATICE STAY