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Company can’t prevail in appeal on claims of collusion

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The 7th Circuit Court of Appeals affirmed the confirmation of a sale of an ethanol plant in South Bend to a joint venture, rejecting a nonbidder’s claim that the establishment of the joint venture amounted to collusion that spoiled the auction.

Natural Chem Holdings opposed confirmation of the sale of New Energy Corp.’s ethanol plant, which it sold after entering bankruptcy. Maynards Industries Inc. and Biditup Auctions Worldwide Inc. entered a joint venture and won with a $2.5 million bid.

The bankruptcy judge denied Natural Chem’s motion to reconsider because the company hadn’t participated in the auction and thus could not have been harmed. The sale closed and later was confirmed by a District judge.

In In the matter of: New Energy Corporation; Appeal of: Natural Chem Holdings LLC, 13-2501, Judge Frank Easterbrook pointed out that Natural Chem didn’t post the bond to participate, so it wouldn’t prevail no matter what the other bidders did. It couldn’t have been injured as a creditor that stood to receive a reduced payout because Natural Chem is not among New Energy’s creditors.

“… bankruptcy courts are entitled to require cash bids, rather than complex and hard-to-value bids including leases and options. Cash bids are comparable; the sort of bid Natural Chem wanted to make could not easily have been compared against others. Natural Chem chose not to play by the auction’s rules. That was its right — but, because it did not bid, it also was not harmed by the outcome.”

“Natural Chem lacks standing for two independent reasons: it did not bid at the auction, and had it done so it would have been helped rather than harmed if the conduct of which it complains were indeed collusive,” Easterbrook wrote.

 

 

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  1. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  2. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  3. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  4. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  5. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

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