Lyons-Vyaire - Mt for Relief from Stay v1
- Date
- 2024-11-14
Summary
Jeffrey Paul Lyons, II's Motion for Relief from the Automatic Stay, filed October 1, 2024 as Doc 589 in the jointly administered Chapter 11 cases of Vyaire Medical, Inc., et al., Case Nos. 24-11217 (BLS), in the U.S. Bankruptcy Court for the District of Delaware, with a hearing date of November 14, 2024. The motion states that a wrongful death action arising from an incident involving an LTV 1150 ventilator was pending against three of the debtors in the State Court of Gwinnett County, Georgia, as Case No. 22-C-07343-S5, and was stayed when the debtors filed on June 9, 2024. Applying the Rexene balancing test under 11 U.S.C. § 362(d), the movant argues that no prejudice to the estates will result because recovery is sought from insurance and third parties. It asks for an order lifting the stay effective immediately, notwithstanding Fed.R.Bankr.P. 4001(a)(3).
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Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 1 of 6
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
In re
Case Nos. 24-11217 (BLS), et seq.
VYAIRE MEDICAL, INC., et al.,1
(Jointly Administered)
Debtors.
Hearing Date: November 14, 2024, 1:30 p.m.
Objections Due By: October 18, 2024
JEFFREY PAUL LYONS, II’S
MOTION FOR RELIEF FROM THE AUTOMATIC STAY
Jeffrey Paul Lyons, II (“Movant”), by Movant’s undersigned counsel, files this
Motion for Relief From The Automatic Stay (the “Motion”), and in support hereof
states as follows:
BACKGROUND
1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157
and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is
proper pursuant to 28 U.S.C. § 1409(a). The statutory basis for the relief requested in
this motion is 11 U.S.C. § 362.
1
The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495. A
complete list of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax
identification number may be obtained on the website of the Debtors’ claims and noticing agent at
https://omniagentsolutions.com/Vyaire. The location of Debtor Vyaire Medical, Inc.’s principal
place of business and the Debtors’ service address in these chapter 11 cases is 26125 North
Riverwoods Boulevard, Mettawa, Illinois, USA 60045.
Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 2 of 6
2. On June 9, 2024 (the “Petition Date”), Vyaire Medical, Inc. and certain of
its affiliates (collectively, the “Debtors”) filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code. Since the Petition Date, the Debtors have
managed their affairs and remained in possession of their assets as debtors in
possession pursuant to 11 U.S.C. §§ 1107 and 1108. These Chapter 11 cases have
been consolidated for procedural purposes only and are being administered jointly.
3. On or about January 1, 2021, minor child J.R.B., age 3 with myotonic
muscular dystrophy, died when an LTV 1150 ventilator, which had been designed,
developed, manufactured, produced, assembled, distributed, and serviced by one or
more of the Debtors, became disconnected and failed to generate any audible or visual
alarm or signal as required (the “Incident”).
4. On December 19, 2022, Connita Ransom, as surviving parent and
guardian of J.R.B., filed a complaint against three of the Debtors, Vyaire Medical,
Inc., Vyaire Medical 203, Inc., Vyaire Medical 211, Inc., and two non-debtors in the
State Court of Gwinnett County, State of Georgia (the “State Court”), commencing
the case styled as Conitta Ransom v. Vyaire Medical, Inc., Case No. 22-C-07343-S5
(the “State Court Case”) on account of the Incident, sounding in strict liability,
negligent wrongful death, and other claims. On February 16, 2023, Ms. Ransom filed
a First Amended Complaint in the State Court Case (the “Complaint”). On February
15, 2024, Movant, as Administrator of the Estate of Connita Shontell Ransom, was
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Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 3 of 6
substituted as plaintiff in the State Court Case, and the caption of that case was
updated to Jeffrey Paul Lyons, II v. Vyaire Medical, Inc.
5. Before the State Court could adjudicate Movant’s claims and rights under
the Complaint, the Debtors filed their Chapter 11 petitions in this Court, thus staying
the State Court Case pursuant to 11 U.S.C. § 362(a).
ARGUMENT
6. Section 362(d) of the Bankruptcy Code states, in pertinent part, as
follows:
On request of a party in interest and after notice and a hearing, the court
shall grant relief from the stay provided under subsection (a) of this
section, such as by terminating, annulling, modifying, or conditioning
such stay–
(1) for cause, including the lack of adequate protection of an interest
in property of such party in interest;
(2) with respect to a stay of an act against property under subsection
(a) of this section, if–
(A) the debtor does not have equity in such property; and
(B) such property is not necessary to an effective reorganization
7. Because the automatic stay is not meant to be indefinite or absolute, the
Court has authority to grant relief from the stay in appropriate circumstances. In re
Rexene Prods., Co., 141 B.R. 574, 576 (Bankr. D. Del. 1992). Section 362(d)(1)
provides that the automatic stay may be lifted where “cause” exists. After a prima
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Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 4 of 6
facia showing by a Movant, the debtor has the burden of proving that a Movant is not
entitled to relief from the stay. Id. at 577; 11 U.S.C. § 362(g).
8. “Cause” is not defined in the Bankruptcy Code and must be determined
on a case-by-case basis. IBM v. Fernstrom Storage & Van Co., 938 F.2d 731, 735
(7th Cir. 1991). Most courts employ an equitable balancing test to determine “cause.”
Rexene Prods., Co., 141 B.R. at 576. According to the Rexene Prods. case, this
balancing test requires the Court to determine whether:
a. any great prejudice to either the bankruptcy estate or the
debtor will result,
b. the hardship to the Movant by maintenance of the stay
considerably outweighs the hardship to the debtor, and
c. the Movant has a probability of prevailing on the merits.
Id. at 576.
9. Cause exists in this case to grant Movant relief from the automatic stay.
First, there will be no prejudice to the Debtors or their bankruptcy estates. To the
extent that Movant is seeking a recovery from third parties, such as applicable
insurance, and are not attempting to execute directly on assets of the Debtors’ estates,
the Debtors’ assets will remain available for whatever disposition may ultimately be
sought by the Trustee and/or ordered by the Court.
10. Further, the hardship that will be suffered by J.R.B.’s estate far outweighs
any potential hardship to the Debtors if Movant is not granted relief from the
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Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 5 of 6
automatic stay. J.R.B.’s family has suffered greatly as a result of the Debtors’
prepetition conduct and negligence, as described above. Denying or delaying Movant
access to available insurance proceeds and claims against other third parties would
cause very severe hardship.
11. Regarding the third Rexene factor, Movant need only prove this prong
with a showing that is “very slight.” Rexene Prods., 141 B.R. at 578. The facts
described above establish sufficient probability to support a damages award in favor
of Movant. In addition, this Court has broad jurisdiction to supervise the
administration of claims, but claims arising from personal injury are expressly
excluded. 28 U.S.C. § 157(b)(5). Therefore, the usual purpose of providing a “central
forum to adjudicate claims against the Debtor,” see, e.g., 15375 Memorial Corp. v.
Bepco, LP (In re 15375 Memorial Corp.), 589 F.3d 605, 622 (3rd Cir. 2009), does not
apply to Movant’s claims.
12. When weighing the above factors, the Court should lift the automatic stay
to permit Movant to commence and prosecute Movant’s claims against the Debtors
and any other responsible individual or entity to judgment in a non-bankruptcy forum
on account of the above-described accident and satisfy any award or other resolution
Movant may obtain against the Debtor’s applicable insurance policies and any other
individuals or entities that are responsible for the injuries sustained.
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Case 24-11217-BLS Doc 589 Filed 10/01/24 Page 6 of 6
13. Movant believes that the relief granted in connection with this Motion
will be consensual and will have no meaningful effect on the administration of these
cases and the Debtors’ assets. Therefore, Movant respectfully submits that any order
granting this Motion should be effective immediately upon its entry, notwithstanding
the fourteen (14) day stay contemplated in Fed.R.Bankr.P. 4001(a)(3).
WHEREFORE, Movant requests that this Court enter an order, substantially in
the form appended hereto, lifting and modifying the stay set forth in 11 U.S.C. §
362(a); and grant Movant such further relief as this Court deems just and proper.
Dated: October 1, 2024 Respectfully submitted,
Wilmington, Delaware
HILLER LAW, LLC
/s/ Adam Hiller
Adam Hiller (DE No. 4105)
300 Delaware Avenue, Suite 210, #227
Wilmington, Delaware 19801
(302) 442-7677 telephone
ahiller@adamhillerlaw.com
-and-
Steven Nauman, Esquire
Morgan & Morgan
20 North Orange Avenue, Suite 1600,
Orlando, FL 32801
(407) 244-3962 telephone
snauman@forthepeople.com
Attorneys for Movant, Jeffrey Paul Lyons, II
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