In re PTI Holding Corp. (Homestead Holdings, Inc. v. Broome & Wellington)
United States Bankruptcy Court for the District of Nevada
346 B.R. 820 (2006)
In a 2004 acquisition, Steven and David Greenstein obtained control of Homestead Holdings, Inc. (Homestead) (plaintiff) and ownership of the assets of London Fog Industries (London Fog). As part of the acquisition, Homestead purchased assets from Broome & Wellington (B&W) (defendant). The Greensteins, along with Greenco Enterprises Company, Inc. (Greenco), guaranteed the price paid to B&W. The agreement governing the acquisition designated English law under choice-of-law rules. Homestead later filed for bankruptcy. B&W filed a proof of claim in the bankruptcy proceeding, seeking approximately $7 million still owed on the acquisition debt. Shortly thereafter, B&W notified the Greensteins and Greenco that B&W would file suit in England to enforce the guarantees. Homestead sought a preliminary injunction against B&W’s England suit in the United States Bankruptcy Court for the District of Nevada. Homestead argued that the England suit would damage its reorganization efforts by distracting the Greensteins from their significant responsibilities at Homestead. The Greensteins testified that they essentially “[were] Homestead,” and that they spent the majority of their time on Homestead’s and London Fog’s reorganization efforts. The Greensteins further testified that Homestead had recently become profitable and was growing, and that because the Greensteins’ personal wealth was largely consumed by London Fog, they could not pay any judgment obtained by B&W in England unless Homestead had the opportunity to reorganize.
Rule of Law
Holding and Reasoning (Markell, J.)
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