### In the



# United States Court of Appeals

For the Seventh Circuit

____________________

No. 16

‐ 1083

I N RE : M ICHAEL T OLOMEO

, Debtor

.

____________________

BCL

‐ S HEFFIELD

, LLC, et al

. Plaintiffs

‐ Appellees

,

v.

G EMINI I NT ’ L

, I NC

., et al

., Defendants

‐ Appellants

.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 15 C 8118

— Sara L. Ellis

, Judge

.

____________________

S UBMITTED J ULY 25, 2016

— D ECIDED A UGUST 11, 2016

____________________

Before P OSNER

, M ANION

, and R OVNER

, Circuit Judges

.

P OSNER

, Circuit Judge

. The appellants (defendants below)

in this proceeding are the wife of, and businesses controlled

by, the debtor in a Chapter 7 bankruptcy proceeding. The

appellees (plaintiffs below) are creditors of the debtor who2 No. 16

‐ 1083

contend that the appellants’ assets rightfully belong to the

debtor’s estate and so should, pursuant to 11 U.S.C. § 542(a),

be turned over to the debtor’s trustee, liquidated, and the

proceeds given to the plaintiffs, who to repeat are the debt

‐

or’s creditors. To obtain this and other relief, the plaintiffs

filed an adversary complaint in the bankruptcy court seek

‐ ing to have the defendants deemed alter egos of the debtor.

Pursuant to 28 U.S.C. § 157(c)(1) and Federal Rule of Bank

‐

ruptcy Procedure 9033, the bankruptcy court recommended

to the district court that judgment on the pleadings (sought

by the plaintiffs) should be granted. The district court did so,

saying the “undisputed facts substantially show” that the

defendants were alter egos of the debtor and the corporate

veils should [therefore] be pierced and the assets “brought

into the Debtor’s bankruptcy estate.” The next week, with

the alter ego issue settled and no stay or appeal on the hori

‐

zon, the bankruptcy court ordered the defendants’ assets

turned over to the debtor’s estate.

Three weeks later, the defendants, having failed to file a

timely appeal of the bankruptcy court’s turnover order to

the district court, see Federal Rule of Bankruptcy Procedure

8002, appealed to our court the district court’s order re

‐ manding the case to the bankruptcy court to implement the

district court’s ruling requiring that the defendants’ assets be

turned over to the debtor’s estate.

The defendants base their appeal on the aforecited 28

U.S.C. § 157(c)(1), which states that “a bankruptcy judge

may hear a proceeding that is not a core proceeding but that

is otherwise related to a case under title 11. In such proceed

‐ ing, the bankruptcy judge shall submit proposed findings of

fact and conclusions of law to the district court, and any finalNo. 16

‐ 1083 3

order or judgment shall be entered by the district judge after

considering the bankruptcy judge’s proposed findings and

conclusions and after reviewing de novo those matters to

which any party has timely and specifically objected.” The

defendants argue that the plaintiffs’ turnover claim is not a

“core proceeding” and so only the district court may enter a

final order resolving the claim. Core proceedings are pro

‐ ceedings under bankruptcy law; non

‐ core proceedings are

proceedings that relate to a bankruptcy but arise under some

other body of law. The turnover of the defendants’ assets to

the debtor’s estate, and the liquidation of the assets for the

benefit of the defendants, is a core proceeding, see 28 U.S.C.

§ 157(b)(2)(E), based therefore on bankruptcy law, and so the

limitations on the bankruptcy court’s authority that are im

‐ posed by section 157(c)(1) are irrelevant, because those limi

‐

tations are applicable only to a bankruptcy court’s admin

‐

istration of non

‐ core proceedings.

The bankruptcy court’s order implementing the district

court’s decision regarding the estate’s entitlement to the de

‐

fendants’ assets was therefore valid, and is in any event not

challenged by the appellants. The appeal is therefore

D ISMISSED

.