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Kelley v. Opportunity Finance, LLC

United States District Court, D. Minnesota

January 26, 2015

DOUGLAS A. KELLEY, in his capacity as the Court-appointed Chapter 11 Trustee of Debtors
v.
OPPORTUNITY FINANCE, LLC, et al., Defendants. Petters Company, Inc.; SPF Funding, LLC; and PC Funding, LLC; Plaintiff,

Daryle L. Uphoff, Mark D. Larsen, James A. Lodoen, Kirstin D. Kanski, and Adam C. Ballinger, Lindquist & Vennum PLLP, Counsel for Plaintiff Douglas A. Kelley.

John R. McDonald, Scott M. Flaherty, and Kari S. Berman, Briggs & Morgan, PA; Christopher J. Mandernach, Joseph G. Petrosinelli, and Jonathan Landy, Williams & Connolly LLP; and Frank R. Berman, Frank R. Berman, P.A., Counsel for Defendants Opportunity Finance, LLC; Opportunity Finance Securitization, LLC; Opportunity Finance Securitization II, LLC; Opportunity Finance Securitization III, LLC; International Investment Opportunities, LLC; Sabes Family Foundation; Sabes Minnesota Limited Partnership; Robert W. Sabes; Janet F. Sabes; Jon R. Sabes; and Steven Sabes.

Michael A. Rosow, Winthrop & Weinstine, PA, and H. Peter Haveles, Jr., Kaye Scholer LLP, Counsel for Defendant DZ Bank AG Deutsch Zentral-Genossenschaftbank.

Patrick J. McLaughlin, Thomas O. Kelly, III, and Elizabeth A. Hulsebos, Dorsey & Whitney LLP, Counsel for Defendant West Landesbank AG.

David L. Mitchell, and Thomas C. Mahlum, Robins Kaplan Miller & Ciresi LLP, Counsel for Defendant The Minneapolis Foundation.

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief District Judge.

I. INTRODUCTION

This matter is before the Court on the Motion of Defendants Opportunity Finance, LLC and Its Related Defendants to Withdraw the Reference to the Bankruptcy Court. [Docket No. 1] The motion has been joined by all other Defendants. [Docket Nos. 1-3, 5, 7, 25] For the reasons set forth below, the Court denies the motion and dismisses this proceeding with prejudice.

II. BACKGROUND

This adversary case arises out of the Thomas Petters fraud indictment and related bankruptcy. Petters Company, Inc. ("PCI") was wholly owned by Petters. The Chapter 11 Trustee for PCI, Plaintiff Douglas A. Kelley ("Trustee"), has brought approximately 300 adversary proceedings in bankruptcy court seeking to avoid transfers made by various Petters-related entities. On September 30, 2010, Kelley commenced the current adversary proceeding to seek to avoid transfers made by two Petters-related special purpose entities-PC Funding, LLC, and SPF Funding, LLC-to Defendant Opportunity Finance LLC. Kelley v. Opportunity Finance, LLC, Adv. No. 10-4301 (Bankr. D. Minn.) (Kishel, C.B.J.). The Second Amended Complaint seeks to avoid $2 billion in loan repayments. (Second Am. Compl. ¶ 108 [Adv. No. 10-4301, Docket No. 83].) It asserts twenty-three counts, including fraudulent and preferential transfers, lien avoidance, and unjust enrichment/equitable disgorgement.

Defendants Opportunity Finance, LLC, Opportunity Finance Securitization, LLC, Opportunity Finance Securitization II, LLC, Opportunity Finance Securitization III, LLC, International Investment Opportunities, LLC, Sabes Family Foundation, Sabes Minnesota Limited Partnership, Robert W. Sabes, Janet F. Sabes, Jon R. Sabes, and Steven Sabes (collectively "Opportunity Finance") now move this Court to withdraw the reference to the bankruptcy court "for cause shown" under 28 U.S.C. § 157(d). [Docket No. 1] All Defendants join in the motion. [Docket Nos. 1-3, 5, 7, 25]

III. DISCUSSION

A. Bankruptcy Court Jurisdiction

Under the bankruptcy ...


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