Opinion ID: 4777078
Heading Depth: 2
Heading Rank: 5

Heading: The United States’ and the Debtors’

Text: Bankruptcy Claims On October 28, 2014, the United States filed, in the Debtors’ bankruptcy proceedings, a summary proof of claim against the Debtors for a total of approximately $222 million (the “USPOC”). The USPOC included an $84 million “DoD Surety Claim,” which consisted of contingent claims “related to Debtors’ breach of contracts resulting in a surety . . . attempting to complete numerous DoD contracts,” including 2 The parties dispute whether LTC or one of its affiliates is the legal owner of the Tax Refund. We agree with the determinations of both the Bankruptcy Court and the District Court that there is a genuine dispute of material fact regarding ownership of the Tax Refund, but that resolution of the dispute is unnecessary here. It would be relevant only if ICSP held a right to set off the Tax Refund. See generally In re Orexigen Therapeutics, Inc., 990 F.3d 748, 752–54 (3d Cir. 2021) (discussing the requirement of “mutuality” under federal bankruptcy law’s setoff provision, 11 U.S.C. § 553). 8 the NPCC Contract. A100. The NPCC Contract claim was contingent on whether ICSP and MVL “fail to complete the [NPCC] Contract via the Tender Agreement.” A156. The United States “expressly reserv[ed] its rights, pursuant to 11 U.S.C. § 553, to offset any prepetition obligation of the [United States] . . . against any portion of this claim.” A102. The United States amended the USPOC on May 24, 2016, reducing the total claim to $170 million. The amendment stated that $84 million of the total claim still stemmed from the DoD Surety Claim, which remained “contingent upon the completion of certain contracts by the Debtors’ sureties.” A636. As for the Debtors, they were also engaged in the litigation of various claims against the United States. Most of those claims were for allegedly unpaid invoices on certain contracts (the “Requests for Equitable Adjustments” or “REAs”). The bankruptcy Trustee testified that the REAs had a face value of over $50 million.