Vyaire - First Substantive Omnibus Claims Objection to 503b9 Claims
- Date
- 2025-03-05
Summary
The Plan Administrator's First Omnibus Objection (Substantive) to Certain Section 503(b)(9) Claims, filed January 27, 2025 as Doc 976 in In re: Vyaire Medical, Inc., et al., Case No. 24-11217 (BLS), in the U.S. Bankruptcy Court for the District of Delaware, with a hearing date of March 5, 2025. David M. Barse, as Plan Administrator, asks the court to disallow, modify, reduce or reclassify claims on four schedules: Assumed Claims, Non-Statutory Period Claims, Non-Goods Claims and Books and Records Claims. The objection states that thirty-six 503(b)(9) Claims totaling approximately $9 million have been filed, and that Trudell assumed certain such claims in the sale of the Respiratory Diagnostics Business. It sets out the legal standard under 11 U.S.C. § 503(b)(9), which covers goods received within 20 days before the case, not services. Counsel is Cole Schotz P.C.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 1 of 13
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
)
VYAIRE MEDICAL, INC., et al.,1 ) Case No. 24-11217 (BLS)
)
Debtors. ) (Jointly Administered)
)
) Hearing Date: March 5, 2025 at 10:30 a.m. (ET)
) Obj. Deadline: February 26, 2025 at 4:00 p.m. (ET)
THE PLAN ADMINISTRATOR’S FIRST OMNIBUS OBJECTION
(SUBSTANTIVE) TO CERTAIN SECTION 503(B)(9) CLAIMS
(Assumed Claims, Non-Statutory Period Claims, Non-Goods Claims,
Books and Records Claims)
TO ALL PARTIES RECEIVING THIS OBJECTION:
YOU SHOULD REVIEW SCHEDULE 1, SCHEDULE 2, SCHEDULE 3, AND
SCHEDULE 4 TO THE PROPOSED ORDER TO LOCATE YOUR NAME AND
CLAIM(S) AND DETERMINE IF YOUR CLAIM(S) ARE SUBJECT TO THIS
OBJECTION. IF YOUR CLAIM(S) ARE LISTED ON THE SCHEDULES ATTACHED
TO THE PROPOSED ORDER, YOU MAY HAVE SUBSTANTIVE RIGHTS AFFECTED
BY THIS OBJECTION.
YOUR SUBSTANTIVE RIGHTS MAY ALSO BE AFFECTED BY FURTHER
OBJECTIONS THAT MAY BE FILED IN THESE CHAPTER 11 CASES.
THE RELIEF SOUGHT IN THIS OBJECTION IS WITHOUT PREJUDICE TO THE
RIGHTS OF THE PLAN ADMINISTRATOR, THE DEBTORS, THEIR ESTATES, ANY
SUCCESSORS THERETO OR ANY OTHER PARTY IN INTEREST TO PURSUE
FURTHER OBJECTIONS AGAINST THE CLAIMS SUBJECT TO THIS OBJECTION,
AND NOTHING HEREIN OR THE PROPOSED ORDER IS INTENDED OR SHALL BE
DEEMED TO BE AN ALLOWANCE OF ANY SUCH CLAIMS.
David M. Barse, solely in his capacity as the Plan Administrator of Vyaire Medical, Inc.,
et al. (the “Plan Administrator”), appointed pursuant to the Second Amended Joint Chapter 11
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.
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 2 of 13
Plan of Vyaire Medical, Inc. and Its Debtor Affiliates [Docket No. 719] (the “Plan”), which was
confirmed by the Order of the United States Bankruptcy Court for the District of Delaware (the
“Court”) on November 14, 2024 [Docket No. 745] (the “Confirmation Order”),2 hereby files this
first omnibus objection (substantive) (the “Objection”) seeking entry of an order, substantially in
the form attached hereto as Exhibit A (the “Proposed Order”), disallowing and expunging,
modifying, reducing, or reclassifying, as applicable, the claims listed on (i) Schedule 1 (the
“Assumed Claims”), (ii) Schedule 2 (the “Non-Statutory Period Claims”), (iii) Schedule 3 (the
“Non-Goods Claims”), and (iv) Schedule 4 (the “Books and Records Claims”). In support of
the Objection, the Plan Administrator submits and incorporates herein the declaration of Joel
Amico of AP Services, LLC attached hereto as Exhibit B (the “Amico Declaration”), and
respectfully represents as follows:
JURISDICTION AND VENUE
1. This Court has jurisdiction to consider the Objection under 28 U.S.C. §§ 157 and
1334, and the Amended Standing Order of Reference from the United States District Court for
the District of Delaware dated February 29, 2012. This is a core proceeding under 28 U.S.C.
§ 157(b) and, pursuant to Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and
Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local
Rules”), the Plan Administrator consents to the entry of a final order by the Court in connection
with the Objection to the extent that it is later determined that the Court, absent consent of the
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.
2
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the
Confirmation Order or Plan, as applicable.
2
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 3 of 13
parties, cannot enter final orders or judgments consistent with Article III of the United States
Constitution.
2. Venue is proper in this District under 28 U.S.C. §§ 1408 and 1409.
3. The statutory and legal predicates for the relief requested in the Objection are
sections 502(b), 503(b) and 506(a) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532
(the “Bankruptcy Code”), Rule 3007 of the Federal Rules of Bankruptcy Procedure (the
“Bankruptcy Rules”) and Local Rule 3007-1.
BACKGROUND
A. The Chapter 11 Cases
4. On June 9, 2024, Vyaire Medical, Inc. and its affiliated debtors in the above-
captioned chapter 11 cases (collectively, the “Debtors”) each commenced a voluntary case under
the Bankruptcy Code with the Court.
5. The Debtors’ chapter 11 cases are being jointly administered under the case styled
In re: Vyaire Medical, Inc., et al. for procedural purposes only pursuant to Bankruptcy Rule
1015(b), Local Rule 1015-1, and the Order (I) Directing Joint Administration of Chapter 11 Cases
and (II) Granting Related Relief [Docket No. 84] entered by the Court on June 11, 2024. The
Debtors operated their business and managed their properties as debtors in possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code.
3. On June 26, 2024, the Office of the United States Trustee for the District of
Delaware (the “U.S. Trustee”) appointed an official committee of unsecured creditors in the
chapter 11 cases [Docket No. 121] (the “Committee”).3 On October 30, 2024, the Court
3
Pursuant to Article IV.I. of the Plan, except for certain limited purposes, including to prosecute fee applications,
the Committee dissolved on the Effective Date (as defined herein).
3
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 4 of 13
appointed a fee examiner [Docket No. 690]. No trustee has been appointed in these chapter 11
cases.
4. Once in chapter 11, the Debtors continued to actively market their assets. On
August 20, 2024, the Debtors selected Trudell Medical Limited (“Trudell”) as the successful
bidder for the Respiratory Diagnostics Business. On September 4, 2024, the Court approved the
sale of the Respiratory Diagnostics Business to Trudell [Docket No. 497] (the “Trudell
Transaction”). On November 12, 2024, the Debtors closed the Trudell Transaction.
6. Pursuant to Article I, Section 1.3(i) of the asset purchase agreement in the Trudell
Transaction, Trudell assumed certain liabilities, including certain claims pursuant to section
503(b)(9) of the Bankruptcy Code (the “503(b)(9) Claims”).4
7. On November 14, 2024, this Court entered the Confirmation Order.
8. On November 27, 2024 (the “Effective Date”), the Plan became effective in
accordance with its terms [Docket No. 810].
9. On the Effective Date, David M. Barse, in his capacity as Plan Administrator,
became the sole representative of the Debtors’ estates for the purpose of, inter alia, reconciling
claims filed against the Debtors’ estates and facilitating distributions in accordance with the Plan.
See Plan, Art. IV.E. and VII.
B. The Claims Reconciliation Process
10. On July 9, 2024, the Court entered the Order (I) Setting Bar Dates for Filing
Proofs of Claim, Including Under Section 503(b)(9), (II) Establishing Amended Schedules Bar
Date and Rejection Damages Bar Date, (III) Approving the Form of and Manner for Filing
Proofs of Claim, Including Section 503(b)(9) Requests, and (IV) Approving Form and Manner of
4
A copy of the Trudell asset purchase agreement was filed at Docket No. 736.
4
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 5 of 13
Notice Thereof [Docket No. 227] (the “Bar Date Order”), which established, inter alia, August 2,
2024 (the “Bar Date”) as the deadline for all persons and entities to file prepetition proofs of
claim against the Debtors, including 503(b)(9) Claims.
11. Pursuant to Article I.A.6. of the Plan, the Plan Administrator’s deadline for filing
objections to the 503(b)(9) Claims “shall be the later of (a) 60 days after the Effective Date [i.e.,
January 27, 2025]5 and (b) 60 days after the Filing of the applicable request for payment of the
Administrative Claim” (the “Administrative Claims Objection Bar Date”).
12. On January 24, 2025, the Plan Administrator filed a motion seeking to extend the
Administrative Claims Objection Bar Date through and including May 27, 2025 [Docket No.
971].
13. To date, thirty-six (36) 503(b)(9) Claims have been filed in the chapter 11 cases
totaling approximately $9 million.6
RELIEF REQUESTED
14. By this Objection, the Plan Administrator objects to the claims set forth on
Schedules 1, 2, 3, and 4 to the Proposed Order (collectively, the “Disputed Claims”) pursuant to
section 502(b) of the Bankruptcy Code, Bankruptcy Rule 3007 and Local Rule 3007-1. The Plan
Administrator respectfully requests entry of the Proposed Order disallowing, expunging,
modifying, reducing, or reclassifying, as applicable, the (i) Assumed Claims on Schedule 1 to the
Proposed Order, (ii) the Non-Statutory Period Claims on Schedule 2 to the Proposed Order, (iii)
5
Because 60 days after the Effective Date falls on Sunday, January 26, 2025, the Administrative Claims
Objection Bar Date rolls until the next business day – i.e., Monday, January 27, 2025. See FED. R. BANKR. P.
9006(a).
6
Four of the 503(b)(9) Claims totaling approximately $4.6 million have been resolved by the Order Approving
Joint Stipulation Between the Debtors and SunMed Group Holdings, LLC (d/b/a AirLife) in Connection With
Zoll Sale [Docket No. 632] leaving a balance of approximately $4.468 million.
5
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 6 of 13
the Non-Goods Claims on Schedule 3 to the Proposed Order, and (iv) the Books and Records
Claims on Schedule 4, as set forth herein.
OBJECTION
A. Legal Standard
15. When asserting a proof of claim against a bankrupt estate, a claimant must allege
facts that, if true, would support a finding that the debtor is legally liable to the claimant. See In
re Energy Future Holdings, 2016 WL 4925052, at *3 (D. Del. Sept. 14, 2016) (“The initial
burden is on the claimant to allege sufficient facts to support the claim”); In re Allegheny Int’l,
Inc., 954 F.2d 167, 173 (3d. Cir. 1992). Where the claimant alleges sufficient facts to support its
claim, its claim is afforded prima facie validity. See Allegheny Int’l, 954 F.2d at 173. A party
wishing to dispute such a claim must produce evidence in sufficient force to negate the claim’s
prima facie validity. See Energy Future Holdings, 2016 WL 4925052, at *3 (“The objector must
produce evidence which, if believed, would refute at least one of the allegations that is essential
to the claim’s legal sufficiency”); see also 11 U.S.C. § 502(a); FED. R. BANKR. P. 3001(f). A
claim should not be allowed if that claim is unenforceable against a debtor and property of a
debtor, under any agreement or applicable law. See 11 U.S.C. § 502(b)(1). If an objection is
made to the proof of claim, the claimant has the ultimate burden of persuasion as to the validity
and amount of the claim. See Allegheny Int’l, 954 F.2d at 172. In addition, Bankruptcy Rule
3007 and Local Rule 3007-1 permits the Plan Administrator to make omnibus objections to the
Disputed Claims.
16. Section 503(b)(9) of the Bankruptcy Code elevates the priority of certain
prepetition claims based on goods received by the debtor within 20 days before the
commencement of a case:
6
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 7 of 13
(b) After notice and a hearing, there shall be allowed, administrative
expenses, . . . including . . .
(9) the value of any goods received by the debtor within 20 days
before the commencement of the case under this title in which the
goods have been sold to the debtor in the ordinary course of such
debtor’s business.
11 U.S.C. § 503(b)(9).
17. Claimants asserting 503(b)(9) Claims have the ultimate burden of proof with
respect to the validity of such claims. See In re Wetco Rest. Group, LLC, 2008 WL 1848779, at
*2 (Bankr. W.D. La. Apr. 23, 2008) (the claimant has the “burden to establish that the value of
the 20-Day Goods qualifies for administrative expense treatment under section 503(b)(9)”); see
also In re Goody’s Family Clothing Inc., 401 B.R. 131, 136, n.24 (Bankr. D. Del. 2009) (finding
burden not met where creditor did not submit evidence establishing delivery of goods occurred
within priority period) (citing In re Insilco Techs., Inc., 309 B.R. 111, 114 (Bankr. D. Del.
2004)). For the reasons set forth below, there is ample evidence to rebut the prima facie validity
of each Disputed Claim.
18. As a threshold matter, a party asserting a 503(b)(9) Claim must show that the
Debtors received goods within twenty (20) days of the Petition Date (the “Statutory Period”). 11
U.S.C. § 503(b)(9). For purposes of section 503(b)(9) of the Bankruptcy Code, a debtor has
“received” goods when it takes actual possession of such goods. See In re World Imports, Inc.,
862 F. 3d 338, 343-44 (3d Cir. 2017) (finding that “received” means taking physical possession,
for section 503(b)(9)); SRC Liquidation, 2017 WL 2992718, *2-3 (Bankr. D. Del. Jul. 3, 2017)
(recognizing that “receipt” is not defined in the Bankruptcy Code, and finding it can include
physical or constructive possession); see also In re ADI Liquidation, Inc., 572 B.R. 543, 548-49
(Bankr. D. Del. 2017), aff'd, No. BR 14-12092 (KJC), 2019 WL 211528 (D. Del. Jan. 16, 2019)
7
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 8 of 13
(goods are “received” when the debtor physically possesses the goods, rather than upon shipment
or delivery to a related third-party).
19. In addition, the language in section 503(b)(9) encompasses claims for goods—not
services. See In re Goody’s Family Clothing Inc., 401 B.R. at 135 (“the construction of the
Bankruptcy Code itself excludes services from the meaning of the term ‘goods’”) (citing 11
U.S.C. § 101(4A)); see also In re Circuit City Stores, Inc., 416 B.R. 531, 535 (Bankr. E.D. Va.
2009) (“expenses under § 503(b)(9) should only be for claims arising from the sale and delivery
of goods to the [d]ebtors). The Court should interpret section 503(b)(9) of the Bankruptcy Code
narrowly and in accordance with its plain meaning. See In re LaRoche Indus. Inc., 284 B.R. 406,
408 (Bankr. D. Del. 2002) (when interpreting section 502(d) of the Bankruptcy Code, stating that
what “Congress says in a statute is what it means and means in a statute what it says there.”); see
also United States v. Ron Pair Enter., 489 U.S. 235, 241 (1989) (stating that when a “statute’s
language is plain . . . the sole function of the courts is to enforce it according to its terms.”). If a
claimant has submitted a 503(b)(9) claim for services, such claim falls patently outside of the
ambit of section 503(b)(9) of the Bankruptcy Code and such claims should be reclassified as
general unsecured claims.
B. Assumed Claims
20. The Plan Administrator has reviewed the Assumed Claims on Schedule 1 to the
Proposed Order and has determined that such claims have been assumed by Trudell pursuant to
the Trudell Sale Transaction as set forth on Schedule 1.
21. Based on the assumptions, the Debtors are not liable for the Assumed Claims and
the Plan Administrator requests that the Assumed Claims be disallowed and expunged or
modified and reduced, as applicable.
8
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 9 of 13
C. Non-Statutory Period Claims
22. With respect to the Non-Statutory Period Claims listed on Schedule 2 to the
Proposed Order, each claimant’s proof of claim form indicates that the Debtors received the
goods underlying the Non-Statutory Period Claims outside of the Statutory Period or the
Debtors’ records reflect that the goods underlying the Non-Statutory Period Claims were
received outside of the Statutory Period.
23. Accordingly, the Plan Administrator objects to the Non-Statutory Period Claims
and respectfully requests that all such claims be reclassified as non-priority general unsecured
claims.
D. Non-Goods Claims
24. With respect to the Non-Goods Claims listed on Schedule 3 to the Proposed
Order, the proof of claim form indicates that the claim is not based on the Debtors’ receipt of
goods, but rather relates to services provided to the Debtors. This is consistent with the Debtors’
books and records.
25. Accordingly, the Plan Administrator objects to the Non-Goods Claims and
respectfully requests that all such claims be reclassified as non-priority general unsecured claims.
E. Books and Records Claims
26. For the reasons set forth herein and on Schedule 4 to the Proposed Order, the Plan
Administrator objects to the Books and Records Claims identified on Schedule 4 and seeks to
reclassify any Section 503(b)(9) Claims asserted therein to non-priority general unsecured
claims.
27. Based on the Plan Administrator’s review of the Debtors’ books and records, the
Debtors’ schedules of assets and the Books and Records Claims, including supporting
documentation provided by the claimant, if any, the Plan Administrator has determined that the
9
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 10 of 13
Section 503(b)(9) Claims asserted in the Books and Records Claims are not sufficiently
supported by the claimant. Unless the Books and Records Claims are reclassified as requested
herein, the claimants may receive an improper distribution in the chapter 11 cases in
contravention of the provisions and policies of the Bankruptcy Code and to the direct detriment
of the Debtors and other creditors.
28. Therefore, for all the foregoing reasons, the Books and Records Claims identified
on Schedule 4 should be reclassified as set forth on Schedule 4.
RESPONSES TO OBJECTION
29. Filing and Service of Responses. To contest the Objection, a claimant must file
and serve a written response to the Objection (a “Response”) so that it is received by 4:00 p.m.
(Eastern Time) on February 26, 2025 (the “Response Deadline”). A claimant who has timely
filed a Response and wishes to oppose the Objection must attend or make other plans to
participate in the hearing on the Objection, which is scheduled to be held on March 5, 2025 at
10:30 a.m. (Eastern Time) before The Honorable Brendan L. Shannon, United States
Bankruptcy Judge, United States Bankruptcy Court for the District of Delaware, 824 N. Market
Street, 6th Floor, Courtroom No. 1, Wilmington, Delaware 19801.
30. Every Response should be filed with the Office of the Clerk, United States
Bankruptcy Court for the District of Delaware, 824 North Market Street, 3rd Floor, Wilmington,
Delaware 19801, and served on counsel for the Plan Administrator, so that the Response is
received no later than the Response Deadline at the following address:
10
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 11 of 13
Patrick J. Reilley, Esq.
Stacy L. Newman, Esq.
500 Delaware Avenue, Suite 1410
Wilmington, DE 19801
Telephone: (302) 652-3131
Facsimile: (302) 652-3117
preilley@coleschotz.com
snewman@coleschotz.com
- and -
Matteo Percontino, Esq.
Court Plaza North, 25 Main Street
Hackensack, NJ 07601
Telephone: 201-489-8000
mpercontino@coleschotz.com
31. Timely Response Required. If a claimant fails to file and serve a timely
Response, then, without further notice to the claimant or a hearing on the Objection, the Plan
Administrator will present the Court with an order, substantially in the form attached hereto as
Exhibit A, and the relief requested in the Objection may be granted without a hearing.
RESERVATION OF RIGHTS
32. The Plan Administrator hereby reserves his right and those of the Debtors’ estates
and any successors thereto to object further to the Disputed Claims on any additional factual or
legal grounds. Without limiting the generality of the foregoing, the Plan Administrator
specifically reserves the right to amend the Objection, file additional papers in support thereof or
take other appropriate actions, including to: (a) respond to any allegation or defense that may be
raised in a Response by or on behalf of any claimant or other party in interest; (b) object further
to any claim for which a claimant provides (or attempts to provide) additional documentation or
substantiation; and (c) object further to any claim based on additional information that may be
discovered on further review by the Plan Administrator or through discovery.
11
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 12 of 13
NOTICE
33. Notice of this Objection will be given to: (i) the U.S. Trustee; (ii) counsel for
Trudell; (iii) claimants whose claims are subject to this Objection and their counsel, if known,
and (iv) all parties entitled to notice pursuant to Bankruptcy Rule 2002. The Plan Administrator
submits that, under the circumstances, no other or further notice is required.
NO PRIOR REQUEST
34. No prior request for the relief sought in the Objection has been made to this or
any other court.
COMPLIANCE WITH LOCAL RULE 3007-1
35. To the best of the Plan Administrator’s knowledge and belief, the Objection,
including its exhibits and schedules, substantially complies with Local Rule 3007-1. To the
extent that the Objection does not comply with the requirements of Local Rule 3007-1, the Plan
Administrator submits that the deviations are not material and respectfully request that those
requirements be waived.
[Remainder of Page Intentionally Left Blank]
12
68877/0001-49193452v1
Case 24-11217-BLS Doc 976 Filed 01/27/25 Page 13 of 13
CONCLUSION
WHEREFORE, for the reasons stated herein, the Plan Administrator respectfully requests
that the Court enter the Proposed Order, substantially in the form attached hereto as Exhibit A,
granting the relief requested in the Objection and such other and further relief as the Court deems
just and proper.
Dated: January 27, 2025
Wilmington, Delaware
COLE SCHOTZ P.C.
/s/ Stacy L. Newman
Patrick J. Reilley, Esq. (No. 4451)
Stacy L. Newman, Esq. (No. 5044)
500 Delaware Avenue, Suite 1410
Wilmington, DE 19801
Telephone: (302) 652-3131
Facsimile: (302) 652-3117
preilley@coleschotz.com
snewman@coleschotz.com
- and -
Matteo Percontino, Esq. (Admitted Pro Hac Vice)
Court Plaza North, 25 Main Street
Hackensack, NJ 07601
Telephone: (201) 489-3000
Facsimile: (201) 489-1536
mpercontino@coleschotz.com
Counsel to David M. Barse, solely in his capacity as
the Plan Administrator of Vyaire Medical, Inc., et
al.
13
68877/0001-49193452v1
File and source
- File
- gov.uscourts.deb.193283.976.0.pdf
- Size
- 210,872 bytes
- SHA-256
- 6c81c12e1daaecf85f46df0293c5d2b17e8ea291fab024f7bf30932729936eea
- Original
- PACER (login required)