United States District Court, D. Utah
In re COMMUNITY TRANSLATOR NETWORK LLC, Debtor.
UNITED STATES TRUSTEE, POWELL MEREDITH COMMUNICATIONS COMPANY, and AMY MEREDITH, Appellees. COMMUNITY TRANSLATOR NETWORK LLC, Appellant,
MEMORANDUM DECISION AND ORDER GRANTING MOTION TO
N. PARRISH UNITED STATES DISTRICT COURT JUDGE
Translator Network LLC purports to appeal from a bankruptcy
court order that converted its bankruptcy case from Chapter
11 to Chapter 7. Appellees Powell Meredith Communications
Company and Amy Meredith move to dismiss the appeal. [Docket
24]. The court GRANTS the motion and dismisses the appeal.
Translator Network filed a voluntary bankruptcy petition
under Chapter 11 of the Bankruptcy Code. The bankruptcy court
authorized the retention of attorney Knute Rife to represent
Community Translator Network. Powell Meredith Communications
Company and Amy Meredith (collectively, Powell Meredith)
appeared as creditors in the bankruptcy proceedings.
United States Trustee moved to convert the case to a Chapter
7 liquidation proceeding or, alternatively, to dismiss the
case. Rife opposed the portion of the motion requesting
conversion to Chapter 7 liquidation on behalf of Community
Translator Network. On June 19, 2017, the bankruptcy court
ordered that the case be converted to a Chapter 7 proceeding.
On June 20, 2017, the court appointed a trustee to take
possession of Community Translator Network.
the trustee took possession of Community Translator Network,
attorney John Barlow was its managing member. On July 1,
2017, Barlow purported to represent Community Translator
Network when it filed a notice of appeal from the June 19,
2017 bankruptcy court order on behalf of the company.
Meredith filed a motion to dismiss the appeal in this court.
It argued that the bankruptcy court ousted Barlow from his
management position and that he had no authority to appeal on
behalf of Community Translator Network. The court held oral
argument on the motion. At the hearing, the trustee for
Community Translator Network indicated that he took no
position on the motion to dismiss.
Tenth Circuit's opinion in C.W. Mining Co. v. Aquila,
Inc. (In re C.W. Mining Co.), 636 F.3d 1257
(10th Cir. 2011) is dispositive of Powell Meredith's
motion to dismiss. In that case, the bankruptcy court granted
a creditor's motion to convert an involuntary Chapter 11
bankruptcy case to Chapter 7. Id. at 1259. Six days
later, the court appointed a trustee to take possession of
the debtor, C.W. Mining Company. Former counsel for C.W.
Mining subsequently appealed from the bankruptcy court's
ruling that the entities that initiated the involuntary
Chapter 11 proceedings were bona fide creditors with standing
to file the involuntary petition. Id. The trustee
appointed by the bankruptcy court moved to dismiss the
appeal, arguing that the ousted managers of C.W. Mining had
no authority to file the notice of appeal. Id. The
Bankruptcy Appellate Panel (BAP) denied the motion to
Tenth Circuit reversed the BAP. It reasoned that, as a
corporation, C.W. Mining could “act only through its
authorized agents.” Id. at 1261. It further
held that once the bankruptcy court ousts a corporation's
management by appointing a trustee, “[t]he
only person with standing or legal capacity to
represent [the Debtor] in any litigation, including
these appeals, is its Trustee.”
Id. at 1263 (second alteration in original)
(citation omitted). Thus, former management “may not
usurp the corporation's right to appeal, which
may be exercised by the trustee alone.” Id.
Accordingly, the Tenth Circuit held that
following the appointment of a trustee in a corporate Chapter
7 bankruptcy, the corporation's former managers are not
authorized to bring the corporation's appeal-even if that
appeal contests the very initiation of the bankruptcy itself.
There is no equitable exception to this rule, nor is there a
distinction between voluntary and involuntary debtors.
Id. at 1265.
holding of C.W. Mining requires this court to
dismiss the appeal filed by Barlow. As was the case in
C.W. Mining, the bankruptcy court converted the
bankruptcy proceeding in this case to a Chapter 7 bankruptcy
and appointed a trustee to take control of the debtor,
Community Translator Network. Later, Community Translator
Network's former manager, Barlow, filed a notice of
appeal, purporting to act on behalf of the company. But
former managers have no authority to take official actions on
behalf of the corporation or limited liability company they
formerly controlled. Because artificial business entities may
only act through their proper legal representatives, and
because “there is no ‘separate interest' for
the [former managers] to represent, ” id. at
1264, a bankruptcy appeal filed by former managers on behalf
of a business entity must be dismissed.
attempts to distinguish C.W. Mining. First he argues
that the debtor in that case did not oppose the motion to
convert Chapter 11 proceedings to Chapter 7. But the Tenth
Circuit did not reference this fact in its analysis of
whether the former managers of C.W. Mining had the authority
to appeal. The Tenth Circuit's analysis was based solely
upon the fact that the former managers had no authority to
act on behalf of the debtor at the point in time when they
filed the notice of appeal. Whether the Chapter 7 trustee was
voluntarily or involuntarily appointed ...