Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01387/USCOURTS-casd-3_08-cv-01387-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LASALLE BANK NATIONAL

ASSOCIATION,

Plaintiff,

CASE NO. 08cv1387 DMS (POR)

ORDER RE: RECEIVER’S SIXTH

REPORT

[Doc. 105]

vs.

COMAIR ROTRON, INC., THERMAFLO,

INC.; and COMAIR PARENT CORP.,

Defendant.

On November 6, 2009, and pursuant to Court order, Joel B. Weinberg, the receiver herein

(“Receiver”), filed the Receiver’s Sixth Report and Petition for Instructions (“Sixth Report”). (Doc.

105.) The Sixth Report is unopposed. (See Doc. 107.) The matter is suitable for submission without

oral argument, pursuant to Local Rule 7.1(d). 

Pursuant to Local Rule 66.1, a receiver’s report must include (1) a summary of Receiver’s

operations; (2) an inventory of receivership assets and their appraised value; (3) a schedule of all

receipts and disbursements; (4) a list of all creditors, their addresses, and claimed amounts; and (5) a

petition for instructions including a recommendation as to whether the receivership should be

continued. The Sixth Report provides the following:

1. Defendants’ Business Operations

As discussed in this Court’s October 9, 2008 order concerning Receiver’s First Report,

Case 3:08-cv-01387-DMS-POR Document 108 Filed 11/18/09 Page 1 of 4
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Defendant Comair Parent Corp. is a Delaware corporation. (Doc. 38, at 2.) It owns 100 percent of the

issued and outstanding shares of Defendant Comair Rotron, Inc., which is also a Delaware corporation.

(Id..) Comair Rotron, Inc., and Comair Parent Corp own 99.96 percent and .04 percent, respectively,

of the shares in Comair Rotron de Mexico, S. de R.L. de C.V. (“Mexican Subsidiary”). (Id.)

Defendant Comair Rotron, Inc. owns 100 percent of the issued and outstanding stock of Comair

Rotron Europe, Ltd. (“UK Subsidiary”), Electronic Systems Cooling, Inc., and Defendant ThermaFlo,

Inc. (Id. at 2-3.) The UK Subsidiary is currently under the control of an administrator appointed by

a court in the United Kingdom. (Id. at 3.) Pursuant to this Court’s order, the Receiver sold Defendant

Comair Rotron’s 100 percent stake in Shanghai Comair Cooling Fan, Co, to an affiliate of WET

enterprises (“WET”). (See Order re: Receiver’s Second Report, December 3, 2008, Doc. 61, at 2.)

During the time frame of the Sixth Report, the receivership proceedings have progressed to the

point where the receivership estate is no longer conducting business operations. (Pet. Ex. A, ¶1.)

With limited exceptions, all of the receivership assets have been liquidated. (Id.) A claim involving

the landlords of the Mexican Subsidiary was settled and the settlement was consummated. (Pet., ¶ 3.)

The Receiver indicates that the only remaining tasks are the pursuit of an inter-company account

receivable from the UK Subsidiary, the allocation of assets and expenses as between Plaintiff’s

collateral and non-collateral, and the disposition of a claim against an individual named Gary Kuzmin

that is currently in arbitration. These are discussed below.

The Receiver further reports that he has paid all of the receivership’s operating expenses when

due. (Pet. Ex. A, ¶2.) In addition, and pursuant to Court Order, the Receiver has paid all professional

fees incurred in connection with the receivership. (Id.) Finally, the Receiver has not remitted excess

proceeds to the Plaintiff from the liquidation of assets which are subject to its security interest because

the Receiver has not received any excess proceeds during the period of the Sixth Report. (Id. at ¶3)

2. Defendants’ Financial Condition

 As of September 30, 2009, Defendants have a cash balance of $866,595.63. (Pet., Ex. B, at

17.) Setting aside the UK inter-company account receivable, Defendants’ net accounts receivable is

$ 0. (Id. at 18) Defendants no longer have any inventories of finished goods and raw materials and

components, as they have either been delivered to customers or sold at public auction. (Id.) The Sixth

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Report also details Defendants’ receipts and disbursements (Pet. Ex. C), as well as Defendants’

creditors, addresses, and claimed amounts (Pet. Ex. D). 

3. Receiver’s Petition for Instructions

The Receiver requests that the Receivership be continued through April 30, 2010, for several

reasons. (Pet., at 4.) First, the Receiver is monitoring proceedings in the UK over an inter-company

account receivable which the Receiver believes will have substantial value of the receivership. (Id.

at ¶1) The UK Subsidiary is currently “in administration” in the United Kingdom, which is similar

to a receivership. (Id.) The Receiver submitted a claim for $2,094,879. (Id.) The UK administrator

has acknowledged receipt of the claim and indicates the anticipated dividend is between 60 and 70

cents on the dollar. (Id.) Thus, the claim has an expected value between $1,256,000 and $1,466,000.

(Id.)

Second, the Receiver must conclude an allocation of the sale of assets that were not Plaintiff’s

collateral and expenses attendant to such sale. (Pet., ¶3.) The Receiver has begun negotiations with

Plaintiff’s counsel to that end. Any agreement would require Court approval. Moreover, to the extent

the Receiver is holding proceeds which are not collateral of the Plaintiff, the Receiver would have to

distribute such proceeds to Defendants’ unsecured creditors. (Id.) The Receiver anticipates that he

will present plansfor the solicitation of unsecured creditors’ claims and distribution of proceeds to all

valid claims to the Court for its approval in the future. (Id.)

Third, the Receiver reports that the receivership estate may have a claim against Mr. Kuzmin

for nearly $200,000. (Pet., ¶5.) The claim concerns Mr. Kuzmin’s contractual obligation to pay

Defendants’ reasonable attorney fees arising out of pre-receivership litigation against Defendants in

a federal district court in Texas, which was subsequently ordered to arbitration. (Id.) The claim is

currently handled by Defendants’ pre-receivership counsel at no expense to the receivership estate.

For these reasons, IT IS HEREBY ORDERED:

1. The receivership shall continue through the date upon which this Court makes a further

order with respect to the Receiver’s Seventh Report and Petition for Instructions; and

2. Pursuant to Civ. L. R. 66.1, the Receiver shall file and serve his Seventh Report and

Petition no later than April 12, 2010. Comments or objections shall be filed no later than April 19,

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2010. The matter shall be calendared for Friday, April 23, 2010 at 1:30 p.m.

The Receiver shall notify interested parties of the Court’s decision.

IT IS SO ORDERED.

DATED: November 18, 2009

HON. DANA M. SABRAW

United States District Judge

Case 3:08-cv-01387-DMS-POR Document 108 Filed 11/18/09 Page 4 of 4