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UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

WEST PALM BEACH DIVISION

In re: 

21 DROPS, LLC, Case No. 21-21960-MAM

Chapter 11

Debtor.

/

MINORITY OWNERS’ MOTION TO DISMISS

FOR LACK OF GOOD AND FOR RELATED RELIEF 

Movants, Cary Caster, in her capacity as trustee of the Richard F. Caster 2009 Irrevocable 

Trust dated January 26, 2009, Lana Caster in her capacity as trustee of Richard Caster Family 2007 

Irrevocable Trust dated December 13, 2007, and Richard Caster, in his capacity as trustee of the 

Cary M. Caster 2010 Irrevocable Trust dated June 23, 2010 (collectively, the “Movants” or 

“Minority Owners”), file this motion to dismiss this case commenced by Kavita Shai (the 

“Insider”) on behalf of the Debtor 21 Drops, LLC (the “Debtor”) and for other relief, and, in 

support, state as follows:

INTRODUCTION

The Debtor has essentially admitted in its pre-petition correspondence, filings and in open 

court that it commenced this bankruptcy case and a related adversary proceeding against the 

Minority Owners as a litigation tactic relating to a dispute between its members that a Florida state 

court held can only be litigated in a Delaware court. The Debtor has no significant non-insider 

third-party debt. There was no pre-petition pressure from creditors to collect against the Debtor. 

There is no business to reorganize in this Chapter 11. As this case was filed in bad faith and is 

otherwise improper, the Court should dismiss it with prejudice and award bankruptcy-related legal 

fees to the Movants against the Debtor, its counsel, and the Insider, jointly and severally.

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FACTUAL AND PROCEDURAL BACKGROUND

1. The Debtor has been in the business of manufacturing essential oil-based products 

for natural wellness.1

 

2. It is a Delaware limited liability company. Its members are the Minority Owners

(35%), the Insider (14.7%), and Turtle Tail, LLC (51%).

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A. The Debtor’s Unsuccessful Prior Florida Lawsuit

3. On October 21, 2020, the Debtor, the Insider, and Turtle Tail, LLC (collectively, 

the “Debtor Litigants”) commenced a civil action against the Minority Owners by filing a 

complaint in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida

(“State Court Action”), which was assigned case number 502020CA011481XXXXMB. A true 

and accurate copy of the complaint is attached hereto as Exhibit A.

4. The Debtor Litigants, which were represented by the law firm seeking to represent 

the Debtor in this bankruptcy case, alleged in the state court complaint that:

a. the Insider had acquired ownership of the majority owner, Turtle Tail, including its 

voting rights;

b. the Insider subsequently exercised complete control over the Debtor, attempted to 

sell the Debtor, and sent a related notice to the Minority Owners purporting to 

trigger certain sale-related procedures set forth in the Debtor’s operating agreement 

(a copy of which is attached to the state court complaint as Exhibit 1); 

c. the Minority Owners disputed the Insider’s authority under the Debtor’s operating 

agreement to have wrested control of the Debtor from them; and

d. the Minority Owners allegedly owed $32,000 to the Debtor on account of prior 

approved distributions.

5. The Debtor Litigants sought declaratory relief in the State Court Action that its 

1 See D.E. 10, p. 1.

2 See D.E. 15-1, p. 34; D.E. 31, p. 3.

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purported takeover of the Debtor and subsequent sale notice were valid. The Debtor Litigants 

contended that such relief would entitle them to recover at least $32,000.

6. The Minority Owners successfully moved to dismiss the State Court Action with 

prejudice based on the existence of mandatory Delaware forum-selection provisions in the 

Debtor’s operating agreement. A true and accurate copy of such dismissal order is attached hereto 

as Exhibit B.

7. The Debtor Litigants have never commenced an action in a Delaware court to seek 

the relief sought in the Florida State Court Action.

B. The Debtor’s Pre-Petition Threat to Forum-Shop Through Bankruptcy

8. Instead of proceeding to litigate its disputed claim only in Delaware as required, 

the Debtor Litigants continued to press their positions through post-dismissal demands and threats.

9. Of particular significance, the Debtor Litigants, through its counsel, threatened a

bankruptcy filing to avoid having to litigate in Delaware and to try to deprive the Movants of the 

value of their ownership interests.3 They did so through the following correspondence:

If we cannot reach an agreement in any other way, my client is prepared to put the 

company into bankruptcy. It clearly has debts that currently exceed its assets. If we 

do file bankruptcy, the entire company would come under the jurisdiction of the 

bankruptcy court. The bankruptcy court venue would be Palm Beach County, and 

that venue would supersede the venue provisions in the operating agreement. Once 

in bankruptcy, whether in a Chapter 7 or a Chapter 11, all of the assets of the 

company would come under the jurisdiction of the bankruptcy court. Once in 

bankruptcy, 21 Drops or a bankruptcy trustee could file claims against the Casters 

for the monies that they received and the value of the property that Cary Caster 

took. I truly believe that the Casters would be better off trying to work with us 

rather than have a bankruptcy trustee coming after them. Additionally, Ms. Sahai 

could buy the company from the bankruptcy trustee and would take 100% of the 

ownership.

(underlining added).

3 A true and accurate copy of such correspondence is attached hereto as Exhibit C. 

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10. Such threat made clear that the Debtor Litigants planned to put the Debtor into a 

Florida bankruptcy case to enable (a) them to circumvent the terms of the Debtor’s operating 

agreement and ruling against them in the State Court Action; and (b) the Insider to acquire 

complete ownership of the Debtor’s assets to the detriment of the Minority Owners.

11. Counsel for the Movants promptly responded that any such bankruptcy case would 

be commenced in bad faith and therefore subject to dismissal.4

12. Nonetheless, the Insider chose to file this case for the Debtor and subsequently filed 

an adversary proceeding seeking relief previously dismissed in the State Court Action.

C. The Debtor’s Bankruptcy Filing

13. On December 23, 2021, the Insider filed on behalf of the Debtor a voluntary petition 

for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).5 Such 

filing occurred six months after the State Court Action was dismissed as improper forum-shopping.

14. The Debtor, in its Case Management Summary, states that the reason it filed for 

relief was because the Debtor was “[u]nable to make [sic] take a loan or run business due to a 

shareholder that is uncoperative [sic] and has not returned formulas or distribution to help pay 

debt. Supply chain disruption that led to excessive shipping costs.” 6

15. Aleida Martinez-Molina has been appointed to serve as the Subchapter V trustee.7

16. The Insider personally is funding the fees of the Debtor’s proposed counsel.

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17. The Debtor’s proposed counsel was counsel for the Insider as well as the Debtor in 

4 A true and accurate copy of related correspondence between counsel is attached hereto as 

Exhibit D.

5 See D.E. 1. 

6 See D.E. 10 (underlining added)

7 See D.E. 4. 

8 See D.E. 9. 

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the State Court Action.

18. The Debtor claimed in its case management summary that its cash, inventory, and 

intellectual property were worth less than $32,0009 (suspiciously the same amount as the debt the 

Debtor claimed in the State Court Action to be owed by the Minority Owners). 

19. However, in its bankruptcy schedules, the Debtor valued its assets at $143,700,10

consisting of cash ($28,000), receivables ($22,000), inventory ($41,700), intellectual property 

($2,000), and a nondescript “Uncategorized Asset” ($50,000).

20. The Debtor also claimed in its case management summary that “the only creditor 

of the Debtor is the Executive Officer who has not been paid her salary for 2021 because of the 

financial situation of the Debtor.”11 However, the Debtor claimed elsewhere that such executive 

officer (i.e., the Insider) is owed $200,000 for a shareholder loan and $165,333 for accrued 

wages.12

21. The Debtor scheduled $130,000 of the Insider’s claim as a priority wage claim 

under 11 U.S. C. Section 507(a)(4),13 even though the current statutory limit for a valid priority 

wage claim is only $13,650.14

9 See D.E. 25, p. 3.

10 See D.E. 18, p. 8.

11 See D.E. 17, p. 2. 

12 See D.E. 31, p. 4. The Debtor also scheduled a very small credit card debt.

13 See D.E. 18, p. 10.

14 That statute treats the following as fourth priority unsecured claims:

4) Fourth, allowed unsecured claims, but only to the extent of $10,000 for each 

individual or corporation, as the case may be, earned within 180 days before the 

date of the filing of the petition or the date of the cessation of the debtor’s business, 

whichever occurs first, for—

(A) wages, salaries, or commissions, including vacation, severance, and sick leave 

pay earned by an individual; or

(B) sales commissions earned by an individual or by a corporation with only 1 

employee, acting as an independent contractor in the sale of goods or services for 

the debtor in the ordinary course of the debtor’s business if, and only if, during the 

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22. The Debtor intends to liquidate and has proposed a Subchapter V Plan of 

Liquidation15, wherein the Debtor expects that the only likely bidders for the Debtor’s assets are 

its members16 (e.g., the Insider, Turtle Tail, LLC and the Movants).

23. This Court dismissed the Debtor’s bankruptcy case on January 7, 2022, for failure 

to comply with its disclosure obligations, and reinstated it on January 24, 2022.17

24. The Debtor failed to file its required initial case status report.

25. The Debtor has not attained approval from this Court to retain bankruptcy counsel, 

and the proposed counsel may have a conflict of interest due to prior representation of the Insider.

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26. The Debtor has made a material misrepresentation/omission regarding its financial 

condition. It filed a recent balance sheet reflecting an alleged $148,000 debt to Costco.19 

However, the Debtor’s bankruptcy schedules reflect no such debt. The Insider denied the existence 

of such debt during the initial meeting of creditors. As a result, either the Debtor’s balance sheet 

contains a material misrepresentation or the Debtor’s schedules contain a material omission.

27. The Debtor has failed to file its January 2022 monthly operating report.

28. The Debtor’s monthly operating reports for December 2022 and March 2022 reflect 

12 months preceding that date, at least 75 percent of the amount that the individual 

or corporation earned by acting as an independent contractor in the sale of goods or 

services was earned from the debtor.

When the Debtor’s petition was filed, the $10,000 limit referenced in the statute had been 

increased to $13,650. See Federal Register, Vol. 8, No. 29, p. 3488.

15 See D.E. 17, p. 2 (“The Debtor intends to file a Chapter 11 Plan that will seek liquidation 

and sell-off of any assets of the Debtor.”). For December 2021, the Debtor reported income 

of only $6,702.95, but expenses that included $33,333.34 for payroll. See D.E. 33-1, p. 9. 

The Debtor paid the Insider $100,000 during the year before the bankruptcy filing for an 

undisclosed reason. See D.E. 18, p. 16; D.E. 56.

16 See D.E. 15, p. 2 (“If such a sale is held, it is anticipated that the only parties who would 

bid are the owners of the company.”).

17 See D.E. 13 & 26.

18 See D.E. 61.

19 See D.E. 19.

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that the Debtor has negative cash flow and that the Insider’s husband made a $2,000 payment for 

the Debtor, which the Debtor “has not reimbursed.”20

D. The Debtor’s Forum-Shopping Adversary Proceeding 

29. On February 7, 2022, the Debtor commenced an adversary proceeding against the 

Movants regarding the same $32,000 distribution that was the subject of the dismissed State Court 

Action.

21 That proceeding has been assigned case number 22-01048.

30. The Debtor accuses the Movants in such proceeding of somehow violating the 

automatic stay imposed by 11 U.S.C. Section 362(a)(3) by not complying with the Debtor’s 

disputed demand for payment.

31. The Debtor failed to disclose in its adversary proceeding Complaint, however, that 

the United States Supreme Court has conclusively established that passive retention of alleged 

estate funds cannot violate Bankruptcy Code Section 362(a)(3). See City of Chicago, Illinois v. 

Fulton, 141 S. Ct. 585, 592 (2021).

ANALYSIS

32. A bankruptcy court possesses the authority to dismiss or convert a Chapter 11 for 

cause. See 11 U.S.C. Section 1112(b)(1). A debtor’s lack of good faith in commencing a Chapter 

11 case constitutes such cause. See In re Phoenix Piccadilly, Ltd., 849 F.2d 1393, 1394 (11th Cir. 

1988); In re Albany Partners, Ltd., 749 F.2d 670, 674 (11th Cir. 1984); accord In re State St.

Houses, Inc., 356 F.3d 1345, 1347 (11th Cir. 2004).

33. There is no particular test for determining whether a bankruptcy case has been 

commenced in bad faith. Phoenix Piccadilly, Ltd., 849 F.2d at 1394. A court should consider any 

20 See D.E. 55-1.

21 See D.E. 31. 

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facts that reflect an intent to abuse the judicial process and purposes of reorganization statutes. Id. 

For example, a court may consider pre-bankruptcy misconduct and other facts indicating that the 

debtor is not the type of “honest but unfortunate debtors” for whose benefit bankruptcy laws were 

designed to protect. See Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 373–74 

(2007).

34. “Two questions relevant to the good faith inquiry are: ‘(1) whether the petition 

serves a valid bankruptcy purpose, e.g., by preserving a going concern or maximizing the value of 

the debtor's estate, and (2) whether the petition is filed merely to obtain a tactical litigation 

advantage.’” See In re On the Ocean, Inc., 16-16204-BKC-RBR, 2016 WL 8539791, at *2 (Bankr. 

S.D. Fla. June 6, 2016) (citations omitted).

35. In this case, the Debtor cannot prove that it has proceeded in good faith. A party 

misuses the Bankruptcy Code and acts in bad faith when it commences a bankruptcy case to 

relitigate issues resolved in prior state court proceedings in a manner adverse to it, and thereby 

create an alternate litigation forum. See In re Quartz Hill Mining, LLC, 14-15419-BKC-AJC, 

2014 WL 8381311, at *4 (Bankr. S.D. Fla. Aug. 4, 2014) (dismissing Chapter 11 case filed to 

avoid having to post state court supersedeas bond); In re Gooding, 234 B.R. 157, 159 (Bankr. 

M.D. Fla. 1999). A party also acts in bad faith when it commences a bankruptcy case to try to take 

control of a company or its assets. See In re Taberna Preferred Funding IV, Ltd., 594 B.R. 576, 

601 (Bankr. S.D.N.Y. 2018).

36. The Debtor and the Insider filed the State Court Action to try to validate the 

Insider’s contested exercise of control over the Debtor and recover a proper prior distribution. 

That action was dismissed with prejudice as the court held that any such claims can only be 

asserted in a Delaware court. The Debtor made an in judicio admission of forum-shopping during 

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a status conference before this Court on February 24, 2022.

37. Also indicative of the Debtor’s bad faith is its repeated failure to do the bare 

minimum required properly to advance this bankruptcy case by (a) failing to timely file required 

financial disclosures, which, when filed, were inconsistent with previous documents filed by the 

Debtor, (b) failing to file the required case status report, and (c) failing to obtain approval from 

this Court to employ bankruptcy counsel.

38. Furthermore, the Debtor attempted to seek disqualification of Movants’ legal 

counsel without any legitimate factual basis and has an active frivolous adversary proceeding 

against the Movants. In re Evergreen Sec., Ltd., 570 F. 3d 1257, 1274 (11th Cir. 2009) 

(“[C]ontinually advancing groundless and patently frivolous litigation is tantamount to bad faith.”) 

(internal quotation and citation omitted).

39. When a debtor’s lack of good faith is shown, the debtor bears the burden of proving

that it commenced the bankruptcy case in good faith. See In re Quartz Hill Mining, LLC, 14-

15419-BKC-AJC, 2014 WL 8381311, at *4 (Bankr. S.D. Fla. Aug. 4, 2014). As stated supra, the 

Debtor here is unable to prove it is proceeding in good faith and the case should be dismissed with 

prejudice.

40. Sanctions may be properly issued against the Debtor in connection with the 

Debtor’s misconduct. A bankruptcy court has the inherent authority to sanction parties and their 

counsel for bad faith conduct. In re Walker, 532 F.3d 1304, 1309 (11th Cir. 2008). This includes 

the authority to impose sanctions in connection with a bad faith bankruptcy filing. See In re: Little 

Rest Twelve, Inc., 662 Fed. Appx. 887, 889 (11th Cir. 2016).

41. Because of the Debtor’s bad faith in commencing and prosecuting this Chapter 11

case, cause exists for the Court to enter an award against the Debtor, its counsel, and the Insider, 

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jointly and severally, for the reasonable legal fees and expenses incurred by the Movants in 

connection with these proceedings.

WHEREFORE, the Movants respectfully request that the Court:

A. Dismiss this bankruptcy case, including the adversary proceeding, with prejudice;

B. Reserve jurisdiction to enter an award of legal fees and costs to the Movants against 

the Debtor, its counsel, and the Insider, jointly and severally, in an amount later to be determined

by this Court for the bad faith filing; and

C. Grant such other and further relief as might be deemed just, proper, and equitable.

Dated: April 14, 2022

/s/ John Schank

David Neal Stern, Esq.

Florida Bar No.: 040398

John Schank, Esq.

Florida Bar No.: 1002828

FRANK, WEINBERG & BLACK, P.L. 

Attorneys for Movants

7805 SW 6th Court

Plantation, FL 33324

(954) 474-8000 (T)

(954) 474-9850 (F)

dnstern@fwblaw.net

jschank@fwblaw.net

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