Opinion ID: 3163849
Heading Depth: 2
Heading Rank: 1

Heading: the failed abc

Text: Nica Holdings, Inc. (“Nica”) is now the debtor in the underlying bankruptcy, but it once had valuable assets. Nica held stock in Mares Nica Noruegos S.A. (“Nicanor”), the company that ran the Nicaraguan fish farm, and it owned several parcels of land associated with that operation. Mr. Ullrich and a Norwegian firm called Biotec Holdings (“Biotec”) owned the remaining shares of Nicanor. By 2007, Nica faced financial problems. As a result, Nica executed what is known as an Assignment for the Benefit of Creditors (ABC) on July 12, 2007. An ABC is a creature of state law (here Florida), which serves as an alternative to bankruptcy. To establish an ABC, one irrevocably assigns their assets to another, Honorable Don Walter, United States District Judge for the Western District of Louisiana, sitting by designation. 2 Case: 14-14685 Date Filed: 12/17/2015 Page: 3 of 21 then the assignee in turn disposes of those assets in accordance with state law. Kenneth Welt was the assignee for Nica’s ABC. He hired Tina Talarchyk of the law firm of Squire Sanders LLP 1 to assist him with the ABC liquidation. Exactly what happened next is hotly disputed, but at least the following seems to be uncontested. During the ABC, Mr. Ullrich and Biotec independently expressed interest in acquiring control over Nicanor by purchasing its stock from Nica. Mr. Welt, as Nica’s ABC assignee, executed a separate sales contract with and accepted a separate deposit from each of the aspiring buyers. Then, without court authorization, he paid himself and other ABC expenses with these deposits. Eventually, Mr. Welt did get court approval for the stock sale to Mr. Ullrich, but Biotec blocked that sale on the basis of certain corporate stock restrictions. The sale to Mr. Ullrich was never consummated. As a result of continuing uncertainty over Nicanor’s future ownership, investors stopped investing and the fish farm closed operation. This rendered the Nicanor stock, Nica’s primary asset in the ABC, worthless. Someone—and there’s no shortage of finger-pointing—prevented Nica’s effective liquidation. Mr. Ullrich blamed Mr. Welt in a civil suit brought in state court (“the Adversary Proceeding”) and separately sought his removal as Nica’s 1 Squire Sanders LLP is now Squire Patton Boggs, but we will refer to it by its previous name, which was in use when this case began. 3 Case: 14-14685 Date Filed: 12/17/2015 Page: 4 of 21 ABC assignee. Mr. Welt, in turn, filed a malpractice suit against Ms. Talarchyk and Squire Sanders in state court (“the Malpractice Claim”). These two lawsuits are the only things of value Nica has left.