Islam v. LX Avenue Bagels, Inc.

VAD □□□□□□□□□□□□□□□□□□□□□□□□ LE LAUUUINO POU Aas LG Faye a VI LY TRAVIS LAW PLLC 80 Maiden Lane, Suite 304 New York, New York 10038 Tel: (212) 248-2120 www .travislawnyc.com November 18, 2019 □□ Qbeeusge BRB □□ Hon. Ronnie Abrams bb United States District Court USDC-SDNY Southern District of New York 40 Foley Square DOCUMENT New York, NY 10007 | ELECTRONICALLY FILED DOC #: Re: Islam v. LX Avenue Bagels, Inc., et al. vet rrp La Case No.: 18-cv-04895-RA AE Eee Dear Judge Abrams: Our firm represents the Defendants in the above-referenced action. We write to inform Your Honor and Plaintiffs, that defendants LX Avenue Bagels, Inc., Amir Ram Bagels, Inc., and Tal on 1* Inc. (the “Corporate Defendants” or “Debtors”) have recently filed for bankruptcy in the Eastern District of New York on November 8 and 9, 2019. Attached are the Notices of Bankruptcy Case Filings for the Corporate Defendants. Accordingly, the individual defendants Mohammed Kamal, Imanuel Halon, Amir Ram, and Hossam Zebib (the “Individual Defendants”), request to extend the automatic stay effective in the chapter 11 cases of the Corporate Defendants to the Individual Defendants. It should be noted that all relevant payroll records and other documents are property only of the Debtors and are protected by the automatic stay. Courts have joined suit against a non-debtor under the general premise that suit should not be permitted when it threatens the possibility of successful reorganization. See In Re Lazarus Burman Associates, 161 B.R. 891, 898 (E.D.N.Y. 1993); see also Galvez v. Kem Rest., Inc., et al. (Case No. 17-cv-1514 [JMF]); and Salazr, et al. v. 203 Lena Inc., et al. (Case No. 16-cv-07743 [RWS]). The standard for application of the automatic stay to non-debtor codefendants, like the Individual Defendants, was established by the Second Circuit in Queenie, Ltd. v. Nygard Int’l., 321 F.3d 282 (2d Cir. 2003). The automatic stay pursuant to 11 U.S.C. § 362 (a), invoked by virtue of a bankruptcy filing, can be extended to non-debtors under certain circumstances. Generally, “a suit against a codefendant is not automatically stayed by the debtor’s bankruptcy filing.” Queenie, Ltd. v. Nygard Int’l., 321 F.3d at 287 (internal quotation marks omitted); accord Springer v. Code Rebel Corp., No. 16 Civ. 3492, 2017 WL 838197 , at 3 (S.D.N.Y. Mar. 2, 2017). However, the automatic stay can apply to non-debtors when a claim against the non-debtor “will have an immediate adverse economic consequence for the debtor’s estate,” such as where “there is such identity between the debtor and the third-party defendant that UWas€ L.10-CV-U4090-RA-AVWL UVOCUMENL FHEG Li/Lo/LI Frage 4 O1iv the debtor may be said to be the real party defendant.” Queenie, 321 F.3d at 287-88 (internal citations omitted). Three examples of an adverse economic impact are (1) claims to establish an obligation where the debtor is a guarantor, (2) a claim against the debtor’s insurer, and (3) where there is an identity between the party defendant and the debtor such that the debtor may be said to be the real party defendant. Rentrak Corp. v. Ladieu (In re Ladieu), Case No. 07-10868, Adv. Pro. No. 081010 (Bankr. D. Vt. June 17, 2011) citing Queenie. Under appropriate circumstances, Bankruptcy Courts have also enjoined suit against a nondebtor pursuant to 11 U.S.C. § 105 (a) under the general premise that suit should not be permitted when it threatens the possibility of successful reorganizations. See In Re Lazarus Burman Associates, 161 B.R. 891, 898 (E.D.N.Y. 1993) (and citing numerous other cases enjoining third party suits). The Bankruptcy Court found relevant that “[i]n many of the cases cited above, the actions against principals were enjoined where their time and energy was important to the rehabilitation of a debtor’s business or to the formulation of a plan reorganization.” Id. The analysis that this Court should undertake is whether the Individual Defendants are “absentee owners” or they are sufficiently involved with the day to day operations of the Corporate Defendants playing a central role in their reorganization. See, e.g., In re United Health Care Org., 210 B.R. 228 (S.D.N.Y. 1997) (staying actions against two non-debtor defendants where debtor corporation’s successful reorganization was contingent upon the contribution of defendants’ personal assets and efforts). The facts of this case support the extension of the automatic stay to cover the non-debtor individual codefendants. All discovery in connection with this case will be of the Debtors — not the Individual Defendants in their individual capacities. The payroll records, time records, and all typical FLSA evidence is with the Debtors not the individuals. Additionally, the Debtors are reorganizing in chapter 11. See, for example, the Court in Uto v. Job Site Services, Inc., 444 B.R. 222 (E.D.N.Y. 2011) declined to extend the automatic stay because the debtor was liquidating in chapter 7. The bankruptcies, filed on November 8 and 9, 2019, are in the early stages, and the Corporate Defendants should be afforded a breathing spell to determine whether, in bankruptcy, they can reorganize and propose a plan to pay creditors. All four individual defendants are essential to the operations of the Corporate Defendants and work at the businesses. Removing the services of any of them from the day to day operations would negatively impact the ability of the Corporate Defendants to reorganize. Finally, as a matter of judicial economy and to promote the due administration of this case and each Bankruptcy Case, all matters should be dealt with by the Bankruptcy Court because, practically speaking it makes no sense to have two different cases proceeding on two different tracks. WADG □□□□□□□□□□□□□□□□□□□□□ LL LAYUUUIIOCHIL VO PMU Eh □□□ Fayuv UI LY We therefore request that Your Honor continue the stay of this entire matter. This was the reasoning in the order entered in Bernal v. Tres Amigos Corp., et al., which we have attached hereto. Respectfully submitted, /s/ Christopher R. Travis Enclosures cc: All counsel of record (via ECF) If Plaintiffs oppose Defendants’ request to continue the automatic stay and intend to file a response, they shall do so no later than November 25, 2019. / SO ORDERED. cen Hon. Ronnie Abrams 11/19/2019 Cas@ 1:10-CV-U40990-RA-AVWL VOCUMeNT OG FHeQ Lifioily Frage 4 Of iv United States Bankruptcy Court Eastern District of New York _ ea Notice of Bankruptcy Case Filing irr ee ak: I. ae 7 □□ A bankruptcy case concerning the debtor(s) listed below was i nal ih a a 2 filed under Chapter 11 of the United States Bankruptcy □ ea es Code, entered on 11/09/2019 at 12:32 AM and filed on he. ee Pag 11/09/2019. ae | i □□ =a a F ah | | a Vg □□ eee SA ||| |i ee □□ New York, NY 10028 aoe 4 ren Tax ID / EIN: 13-3608145 We ; i □□ a a i an a” SON ulee” The case was filed by the debtor's attorney: Lawrence Morrison 87 Walker Street Floor 2 New York, NY 10013 212-620-0938 The case was assigned case number 1-19-46770-cec to Judge Carla E. Craig. In most instances, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor's property. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay. If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalized. Consult a lawyer to determine your rights in this case. If you would like to view the bankruptcy petition and other documents filed by the debtor, they are available at our Internet home page https://ecf.nyeb.uscourts.gov/ or at the Clerk's Office, 271-C Cadman Plaza East, Suite 1595, Brooklyn, NY 11201-1800. You may be a creditor of the debtor. If so, you will receive an additional notice from the court setting forth important deadlines. Robert A. Gavin, Jr. Clerk, U.S. Bankruptcy Court PACER Service Center 11/11/2019 12:07:53 MASE L.LOTUVTUTODITENENT MEMES VO PG Bh AOA TS ee PACER □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ Code: Login: Criteria: cec Pages: Ne Ae NSS ON esa eee Ne BEN EE BS SRN SE ae te ee IE ete was Sst /_ United States Bankruptcy Court Eastern District of New York 4 se oi Pe aT on 4 > Notice of Bankruptcy Case Filing Se v4 er a □□ A bankruptcy case concerning the debtor(s) listed below was ee a pio il erg □ □ filed under Chapter | 1 of the United States Bankruptcy ae Rea iP Peas Code, entered on 11/09/2019 at 12:52 AM and filed on i 357 Avenue le Foie a ee □ Fy New York, NY 10010 ato i □□ Tax ID / EIN: 46-4894986 a ao The case was filed by the debtor's attorney: Lawrence Morrison 87 Walker Street Floor 2 New York, NY 10013 212-620-0938 The case was assigned case number 1|-19-46771-nhl to Judge Nancy Hershey Lord. In most instances, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor's property. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay. If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalized. Consult a lawyer to determine your rights in this case. If you would like to view the bankruptcy petition and other documents filed by the debtor, they are available at our Internet home page https://ecf.nyeb.uscourts.gov/ or at the Clerk's Office, 271-C Cadman Plaza East, Suite 1595, Brooklyn, NY 11201-1800. You may be a creditor of the debtor. If so, you will receive an additional notice from the court setting forth important deadlines. Robert A. Gavin, Jr. Clerk, U.S. Bankruptcy Court | PACER Service Center | Transaction Receipt | 11/11/2019 12:08:36 Ne Ae a SO ON a sr AP Aa Ns I NY fw ae tit t “May fF NT PACER Ifmorrison2007:2588979:0||Client Code: Login: a . wy: Search I 19-46771- | Pages: | WADED 4.140°TU UTOSOS YL LAYVUUTIIOIIL Vo PHM 42a Lu he pay. vw av United States Bankruptcy Court Eastern District of New York Me if aa rae i 7 an □ Notice of Bankruptcy Case Filing tt das ae A bankruptcy case concerning the debtor(s) listed below was / ie ee ne 9 □□□ filed under Chapter 11 of the United States Bankruptcy ie a P| ree □ Code, entered on 11/08/2019 at 6:09 PM and filed on □ 7 site = □ 11/08/2019. ee ee ASTORIA, NY 11105 an an □ Tax ID / EIN: 42-1537214 ey oa ay, ie ne The case was filed by the debtor's attorney: Lawrence Morrison 87 Walker Street Floor 2 New York, NY 10013 212-620-0938 The case was assigned case number 1-19-46769. In most instances, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor's property. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay. If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalized. Consult a lawyer to determine your rights in this case. If you would like to view the bankruptcy petition and other documents filed by the debtor, they are available at our Internet home page https://ecf.nyeb.uscourts.gov/ or at the Clerk's Office, 271-C Cadman Plaza East, Suite 1595, Brooklyn, NY 11201-1800. You may be a creditor of the debtor. If so, you will receive an additional notice from the court setting forth important deadlines. Robert A. Gavin, Jr. Clerk, U.S. Bankruptcy Court | PACER Service Center Transaction Receipt WADG □□□□□□□□□□□□□□□□□□□□□□□ EL = LYUUUTTICIIL OO FHEeM 2a lLOorle Faye □□ Lv PACER lfmorrison2007:2588979:0 |Client Code: Login: ae oa: Search I1-19Notice of Filing feet [lars Billable Pages: Cost: Jo.10 ~~ Case 1'18-cv-09567-ER Document 20 Filed 04/03/19 PageTofi UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK CAMILO BERNAL, Plaintiff, -against- ORDER TRES AMIGOS CORP., d/b/a La Pulperia, TRES Seren) MOSQUETEROS CORP., d/b/a La Pulperia, CARLOS BARROZ, individually, VICTOR MEDINA, individually, ATHONY MEA, JR., individually, Defendants, Ramos, D.J.: For the reasons stated on the record at the hearing held on April 3, 2019, this matter is STAYED with regard to all Defendants pending the resolution of the Chapter 11 bankruptcy proceedings. The parties are ordered to notify the Court within forty-eight hours of each bankruptcy proceedings’ resolution. It is SO ORDERED. Dated: April 3, 2019 ) New York, New York C) | Edgardo Ramos, U.S.D.J