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Friday, July 08, 2016

Ind. Decisions - 7th Circuit decides Indiana bankruptcy appeal

In Arlington Capital, LLC v. Bainton McCarthy, LLP and Smith, Gambrell & Russell, LLP (ND Ind., Springmann), a 6-page opinion, Judge Williams writes:

The appellees in this case, who we refer to as the “Law Firms,” performed legal services for a bankrupt estate and asked the bankruptcy court to approve their fees. The appellant, Arlington Capital, LLC, is a general unsecured creditor of the estate. Arlington objected to the fee petitions, arguing that the Law Firms should not be paid because their work never had a chance of benefiting the estate. The bankruptcy court approved the petitions and the district court affirmed. Arlington wants us to reverse but it has not shown that it stands to benefit if the Law Firms’ fees are denied. So we remand and instruct the district court to dismiss the case for lack of standing. * * *

Oral argument revealed that Arlington’s true goal has nothing to do with its general unsecured claim for $5,000. Arlington hopes to file a separate lawsuit against the Law Firms for their role in bringing the § 363(n) suit, and thinks it would be useful to have an opinion from us saying that the § 363(n) suit was pointless. Whatever the merits of its con-templated suit, Arlington is not entitled to—and indeed we lack the authority to offer—an advisory opinion to be used as a sword in independent litigation.

III. CONCLUSION. The judgment is VACATED and the case is REMANDED to the district court with instructions to dismiss for want of jurisdiction.

Posted by Marcia Oddi on July 8, 2016 05:18 PM
Posted to Ind. (7th Cir.) Decisions