Judges: Posner
Filed: Aug. 11, 2016
Latest Update: Mar. 03, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 16-1083 IN RE: MICHAEL TOLOMEO, Debtor. _ BCL-SHEFFIELD, LLC, et al. Plaintiffs-Appellees, v. GEMINI INT’L, INC., et al., Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 8118 — Sara L. Ellis, Judge. _ SUBMITTED JULY 25, 2016 — DECIDED AUGUST 11, 2016 _ Before POSNER, MANION, and ROVNER, Circuit Judges. POSNER, Circuit Judge. The appellants (d
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 16-1083 IN RE: MICHAEL TOLOMEO, Debtor. _ BCL-SHEFFIELD, LLC, et al. Plaintiffs-Appellees, v. GEMINI INT’L, INC., et al., Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 8118 — Sara L. Ellis, Judge. _ SUBMITTED JULY 25, 2016 — DECIDED AUGUST 11, 2016 _ Before POSNER, MANION, and ROVNER, Circuit Judges. POSNER, Circuit Judge. The appellants (de..
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16‐1083
IN RE: MICHAEL TOLOMEO,
Debtor.
____________________
BCL‐SHEFFIELD, LLC, et al.
Plaintiffs‐Appellees,
v.
GEMINI INT’L, INC., et al.,
Defendants‐Appellants.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 8118 — Sara L. Ellis, Judge.
____________________
SUBMITTED JULY 25, 2016 — DECIDED AUGUST 11, 2016
____________________
Before POSNER, MANION, and ROVNER, Circuit Judges.
POSNER, Circuit Judge. The appellants (defendants below)
in this proceeding are the wife of, and businesses controlled
by, the debtor in a Chapter 7 bankruptcy proceeding. The
appellees (plaintiffs below) are creditors of the debtor who
2 No. 16‐1083
contend that the appellants’ assets rightfully belong to the
debtor’s estate and so should, pursuant to 11 U.S.C. § 542(a),
be turned over to the debtor’s trustee, liquidated, and the
proceeds given to the plaintiffs, who to repeat are the debt‐
or’s creditors. To obtain this and other relief, the plaintiffs
filed an adversary complaint in the bankruptcy court seek‐
ing to have the defendants deemed alter egos of the debtor.
Pursuant to 28 U.S.C. § 157(c)(1) and Federal Rule of Bank‐
ruptcy Procedure 9033, the bankruptcy court recommended
to the district court that judgment on the pleadings (sought
by the plaintiffs) should be granted. The district court did so,
saying the “undisputed facts substantially show” that the
defendants were alter egos of the debtor and the corporate
veils should [therefore] be pierced and the assets “brought
into the Debtor’s bankruptcy estate.” The next week, with
the alter ego issue settled and no stay or appeal on the hori‐
zon, the bankruptcy court ordered the defendants’ assets
turned over to the debtor’s estate.
Three weeks later, the defendants, having failed to file a
timely appeal of the bankruptcy court’s turnover order to
the district court, see Federal Rule of Bankruptcy Procedure
8002, appealed to our court the district court’s order re‐
manding the case to the bankruptcy court to implement the
district court’s ruling requiring that the defendants’ assets be
turned over to the debtor’s estate.
The defendants base their appeal on the aforecited 28
U.S.C. § 157(c)(1), which states that “a bankruptcy judge
may hear a proceeding that is not a core proceeding but that
is otherwise related to a case under title 11. In such proceed‐
ing, the bankruptcy judge shall submit proposed findings of
fact and conclusions of law to the district court, and any final
No. 16‐1083 3
order or judgment shall be entered by the district judge after
considering the bankruptcy judge’s proposed findings and
conclusions and after reviewing de novo those matters to
which any party has timely and specifically objected.” The
defendants argue that the plaintiffs’ turnover claim is not a
“core proceeding” and so only the district court may enter a
final order resolving the claim. Core proceedings are pro‐
ceedings under bankruptcy law; non‐core proceedings are
proceedings that relate to a bankruptcy but arise under some
other body of law. The turnover of the defendants’ assets to
the debtor’s estate, and the liquidation of the assets for the
benefit of the defendants, is a core proceeding, see 28 U.S.C.
§ 157(b)(2)(E), based therefore on bankruptcy law, and so the
limitations on the bankruptcy court’s authority that are im‐
posed by section 157(c)(1) are irrelevant, because those limi‐
tations are applicable only to a bankruptcy court’s admin‐
istration of non‐core proceedings.
The bankruptcy court’s order implementing the district
court’s decision regarding the estate’s entitlement to the de‐
fendants’ assets was therefore valid, and is in any event not
challenged by the appellants. The appeal is therefore
DISMISSED.