In re Biolitec, Inc.
United States Bankruptcy Court for the District of New Jersey
2013 WL 1352302 (2013)
Biolitec, Inc. (Biolitec) (defendant) was the United States affiliate of a multinational group of companies called Biolitec Group, all of which were substantially controlled by Wolfgang Neuberger. Biolitec entered a supply-and-distribution contract with AngioDynamics, Inc. (AngioDynamics) (plaintiff). AngioDynamics sued Biolitec in New York for breach of the contract and was awarded $23 million. After the New York lawsuit began, Biolitec showed a drastic diminution in assets and an increase in debt. Biolitec appealed the New York judgment and also filed for chapter 11 bankruptcy. AngioDynamics sued Biolitec in Massachusetts for fraudulently funneling $18 million worth of assets to related entities in an effort to render themselves judgment proof. The Massachusetts court entered a preliminary injunction to prevent further asset transfer and to prevent a merger with Biolitec Austria. Biolitec appealed the Massachusetts injunction, and the United States Court of Appeals for the First Circuit affirmed the injunction. Nevertheless, Biolitec completed the merger before the First Circuit’s decision was given. AngioDynamics filed a motion in the bankruptcy court for the appointment of a chapter 11 trustee, arguing that the appointment of a trustee was required to protect the interests of Biolitec’s creditors, due to systematic looting of Biolitec by the debtor-in-possession.
Rule of Law
Holding and Reasoning (Steckroth, J.)
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