Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-3_14-ap-03156/USCOURTS-canb-3_14-ap-03156-0/pdf.json

Parties Involved:
Progressive Environmental Services, Inc.
Plaintiff
Metawise Group, Inc.
Defendant
Draco Resources, Inc.
Defendant
Armco Metals Holdings, Inc.
Defendant
Metamining, Inc.
Defendant
Songqiang Chen
Defendant

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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re ) Bankruptcy Case

 ) No. 14-31652DM

METAWISE GROUP, INC. and DRACO )

RESOURCES, INC., ) Chapter 11

)

Debtors. ) 

___________________________________) 

PROGRESSIVE ENVIRONMENTAL SERVICES,) Adversary Proceeding

INC., ) No. 14-3156DM

)

 Plaintiff, )

)

v. )

)

METAWISE GROUP, INC.; DRACO )

RESOURCES, INC.; ARMCO METALS )

HOLDINGS, INC.; METAMINING, INC.; )

and SONGQIANG CHEN, )

)

 Defendants. )

___________________________________)

MEMORANDUM DECISION ON MOTIONS TO DISMISS CLAIMS

 AGAINST CERTAIN DEFENDANTS 

On November 13, 2014, debtors Metawise Group, Inc. (Case No.

14-31652) and Draco Resources, Inc. (Case No. 14-31654) filed

their chapter 11 petitions in this court. Metawise owns 100% of

the stock of Draco. Prior to the petition date, plaintiff

Progressive Environmental Services, Inc. (“Plaintiff”), a judgment

creditor of Metawise, filed this action asserting fraudulent

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Signed and Filed: January 12, 2015

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

January 12, 2015

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 14-03156 Doc# 12 Filed: 01/12/15 Entered: 01/12/15 13:49:00 Page 1 of 4 
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transfer, conspiracy and aiding and abetting in conspiracy to

defraud against both debtors and third parties Metamining, Inc.

(“Metamining”), Songqiang Chen (“Mr. Chen”), and Armco Metals

Holdings, Inc. (“Armco”). Plaintiff sought to enjoin possible

transactions between the third parties and the debtors.

On November 25, 2014, Metamining and Chen filed and properly

served a motion to dismiss all of Plaintiff’s claims against them;

the hearing on their motion is set for January 16, 2015. On

December 8, 2014, Armco filed and properly served its motion to

dismiss the claims against it; Armco’s motion is also set for

hearing on January 16, 2015. Pursuant to B.L.R. 7007-1(b), the

deadline for filing opposition(s) to these motions to dismiss was

January 2, 2015. As of January 8, 2015, no opposition has been

filed to either motion.

The court has reviewed the motions to dismiss, and finds them

both well-taken. First, the claims against Armco have been

rendered moot by the bankruptcy filing. Plaintiff sought to

enjoin a stock exchange between Draco and Armco. No such transfer

occurred prior to the petition date and still has not occurred. 

At this juncture, Metawise (as the holder of 100% of the stock of

Draco) will have to obtain court approval of a sale or transfer of

its ownership interests in Draco, or at least give creditors and

others parties in interest of its intent to do so, either through

a plan or a motion under 11 U.S.C. § 363. As any such stock

transfer is thus subject to this court’s review, the request for

an injunction and for declaratory relief as to Armco is moot. 

Thus, the court will grant Armco’s motion to dismiss.

Moreover, Plaintiff sought a declaratory judgment that it “is

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Case: 14-03156 Doc# 12 Filed: 01/12/15 Entered: 01/12/15 13:49:00 Page 2 of 4 
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the proper party to own and hold the 2% common stock in Metamining

and all of the shares in Draco that were previously owned by

Metawise, requiring Metawise to immediately turn over the 2%

common stock in Metamining and all of the shares in Draco to SWS.” 

The automatic stay precludes further prosecution of this claim for

relief, as Schedule B, Item 13 reflect that Metawise owns 100% of

Draco’s stock and a 2% equity interest in Metamining, Inc.

Finally, Plaintiff lacks standing to prosecute its fraudulent

transfer claims against Mr. Chen and Metamining (and others), as

those claims are property of the bankruptcy estate, and must be

prosecuted by an estate representative (usually a trustee, 

debtor-in-possession, or a creditors’ committee) or by a party

authorized by the court to pursue such relief.

For the foregoing reasons and in the absence of any timely

opposition, the court will grant both motions to dismiss and will

take the January 16 hearings off calendar. Counsel for each

movant should prepare and upload orders granting their respective

motion for the reasons stated in this memorandum decision. 

Counsel should serve the proposed orders on Plaintiff’s counsel 

and file a separate certificate of such service.

*** END OF MEMORANDUM DECISION ***

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Case: 14-03156 Doc# 12 Filed: 01/12/15 Entered: 01/12/15 13:49:00 Page 3 of 4 
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COURT SERVICE LIST

Brian Gearinger, Esq.

Colleen B. Kelley, Esq.

Gearinger Law Group

825 Van Ness Avenue, 4th Fl.

San Francisco, CA 94109

Brandon T. Crossland, Esq

Baker Hosteller

Sun Trust Center, Suite 2300

200 South Orange Avenue

Orlando, FL 32801-3432

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Case: 14-03156 Doc# 12 Filed: 01/12/15 Entered: 01/12/15 13:49:00 Page 4 of 4