ANR Ltd. Inc. v. Chattin [Utex Oil Co., debtor]
RELATED CASE
89 B.R. 898 (D.Utah)
After settling its adversary proceeding against a chapter 11 debtor in bankruptcy court, plaintiff filed an action in district court against debtor's former officers and directors. Plaintiff alleged that defendants assisted debtor's mismanagement of funds for which debtor owed plaintiff a fiduciary duty. The district court defined the issue before it as whether plaintiff had standing to bring the causes of action in the complaint, which would depend on whether the claims were personal to plaintiff or belonged to the debtor's bankruptcy estate. The court determined that, under Utah law, the corporation is the proper party to assert claims against its insiders for corporate management and, therefore, such claims belonged to the debtor corporation's estate. However, claims by creditors that they were specifically harmed by insider conduct are personal to the creditor, and are not part of the corporation's bankruptcy estate. A personal claim is one in which no one else has an interest. Plaintiff's claim sought an alter ego remedy against defendants, seeking to have them held personally liable for the corporation's debts, which the district court determined could be either a corporate claim or a personal claim of a creditor under Utah law. The court then held that a determination of that issue depended on whether placing the claim within the bankruptcy estate would further federal bankruptcy policies. Since a successful alter ego claim concludes that insiders are personally liable for all of the corporation's debts, fundamental principles of bankruptcy compel a conclusion that the bankruptcy trustee should be the one to assert such a claim, on behalf of all creditors. Plaintiff did have standing to bring its tort claims against the defendants because those claims alleged direct injury to plaintiff and not to others.