Opinion ID: 4553073
Heading Depth: 2
Heading Rank: 2

Heading: Wilton declares bankruptcy

Text: Two months after Artesanias sued, the insolvent Wilton filed for Chapter 7 bankruptcy. The Bankruptcy Code’s automatic stay stopped the warehouse foreclosure. See 11 U.S.C. § 362(a). The bankruptcy court soon appointed a trustee to liquidate Wilton’s remaining assets. To resolve Artesanias’s and North Mill’s competing claims to the warehouse, the trustee entered separate settlements with each of them so that he could sell it. The trustee agreed to (1) split the sale proceeds between the two, (2) release the estate’s claims against North Mill, and (3) not interfere with Artesanias’s pending or potential claims against North Mill and others. At the hearing on the motions to approve the settlements, the trustee, Artesanias, North Mill, and the bankruptcy court all agreed that “nothing” in the settlements would “affect [Artesanias’s] litigation” against North Mill. App. 235–36. Relying on those statements, the bankruptcy court entered both settlements and ordered the trustee to sell the warehouse. The trustee later did. Afterwards, Wilton’s bankruptcy estate had few assets left. Among them were legal claims that the trustee could bring against those who had allegedly plundered the company. If those claims succeeded, the estate could recover money to repay its remaining creditors, including Artesanias. But to bring those claims would cost money. And any recovery was speculative. Rather than spend the estate’s few remaining assets pursuing those claims, the bankruptcy court let 5 the trustee abandon all but a select few of them. App. 468–74 (the Abandonment Order). Those few included negligence, professional-liability, and breach-of-contract claims against Leisawitz Heller. The other, abandoned claims were left for Wilton itself or Artesanias to pursue.