Mary D. France, Chief Bankruptcy Judge.
Before the Court is the objection of Durham Commercial Capital Corp. ("Durham") to the motion filed by Dryden Advisory Group, LLC ("Dryden"), the debtor in the within case, for an order approving Dryden's use of cash collateral. Durham opposes Dryden's motion as it pertains to certain accounts receivable Durham asserts it purchased under a factoring agreement entered into between the parties before Dryden filed its bankruptcy petition. If Durham is correct, the accounts it purchased are not property of Dryden's bankruptcy estate.
Dryden counters that the agreement with Durham, while described as a sale, should be recharacterized as a financing agreement with the accounts receivable serving as collateral for certain extensions of credit made by Durham. Under the latter scenario, the accounts would remain property of the estate.
Beneficial Mutual Savings Bank ("Beneficial"), setting aside the issue of whether the agreement reflects a true sale or a secured financing arrangement, argues that any interest Durham purports to hold is subordinate to Beneficial's security interest in Dryden's accounts receivable. Beneficial asserts that it only agreed to release its lien on two accounts receivables from Dryden's account debtor, Fiserv Cir.,
For the reasons set forth below, Durham's objections to Dryden's use of cash collateral will be sustained. Because the disputed accounts are not property of the estate, the Court also finds that it lacks subject matter jurisdiction under 28 U.S.C. § 1334(b) to determine the respective interests of Beneficial, Citibank, and Durham in the disputed accounts.
Dryden is a sales and use tax consulting firm established by John Ridley ("Ridley") in 1997. Before starting the consulting business, Ridley worked for twenty years as a tax auditor for the Pennsylvania Department of Revenue. In the process of auditing tax returns, Ridley observed that taxpayers not only underpaid taxes, they often overpaid them. Ridley formed Dryden to assist clients in defending tax audits and in identifying refunds or credits against assessed taxes. Dryden obtains commissions based upon the amount of tax savings it obtains for its clients.
While pursuing claims through the administrative and judicial appeals process, a process that can extend for years, Dryden often experienced cash flow problems. During one of these periods, Dryden contacted a consultant, Innovative Financing Solutions ("IFS"), for assistance in obtaining additional financing. IFS suggested that Dryden apply for financing through the U.S. Small Business Administration (the "SBA"). One of IFS's partners for SBA financing was Beneficial, which agreed to make several loans to Dryden.
In July 2011, Beneficial and Dryden entered into three loan agreements (collectively, the "Beneficial Loans"). Two of the loans, each in the original principal amount of $1,360,200, were guaranteed by the SBA. The third loan, which was not guaranteed by the SBA, was a revolving credit agreement in the amount of $300,000. The Beneficial Loans were secured by perfected liens on Dryden's business assets, including its accounts receivable. At about the same time, Citibank, which held existing liens on Dryden's assets, and Beneficial entered into an "Intercreditor and Subordination Agreement" whereby Citibank agreed to subordinate its existing lien position to Beneficial in exchange for a partial payment of the outstanding indebtedness owed to Citibank and other consideration.
Less than a year after receiving the Beneficial Loans Dryden stopped making the required payments and contacted IFS to recommend possible workout solutions. IFS suggested to Beneficial that Dryden could monetize its accounts receivable through factoring and further advised the bank that under SBA guidelines, Beneficial could consent to the factoring of one Dryden account without obtaining approval from the SBA. Beneficial approved the factoring of the Fiserv accounts, comprising two invoices in a total amount of $310,000. IFS served as the liaison between Beneficial, Durham, and Dryden while the factoring agreement was being negotiated.
The stated purpose of the Amended Factoring Agreement was to "obtain a true nonrecourse sale of [Dryden's] accounts receivable to Durham." Durham Ex. 3 § 1. Although Dryden entered into the agreement because it was unable to make its payments to Beneficial, Dryden warranted that its business was "solvent," and that it was "presently paying its debts as they became due." Durham Ex. 3 § 3.1.
Under the Amended Factoring Agreement, Dryden would offer to Durham an account for purchase using Durham's "Assignment Schedule of Invoices" together with the original invoice and all supporting documents. Durham Ex. 3 § 4.5. If Durham determined that a particular account receivable was an "acceptable account," Durham would purchase the account for the face amount less discounts or allowances afforded to the account debtor. Durham. Ex. 3 § 4.6. For each account purchased, Durham would charge a factoring fee of 3.5% of the original face amount of the account.
To insure that its fee was paid pending collection of the invoice, the Amended Factoring Agreement also provided that Durham would reserve 25% of the face amount of each account purchased against which Durham's fees would be charged. Once Durham received payment on the account, the remaining amount in reserve associated with the account would be paid to Dryden. However, Durham had the option to retain the reserve if there was a default on any account purchased or there was less than 25% of the unpaid balance on the reserve held for any account purchased. Durham Ex. 3 § 4.9. Durham agreed to assume the risk of non-payment on accounts it purchased if the cause of the non-payment was "solely due to the occurrence of an account debtor's financial inability to pay, an `Insolvency Event.'" Durham Ex. 3 § 4.10. The maximum amount Durham agreed to advance to Dryden under the Amended Factoring Agreement was $350,000. Durham Ex. 3 § 2.9.
Durham Ex. 5.
Beneficial and Durham dispute the meaning of this acknowledgment. Durham asserts that it constitutes a general subordination agreement whereby Beneficial authorized Durham to purchase any accounts it found acceptable from Dryden free and clear of Beneficial's lien. Beneficial argues that the only accounts it agreed to release were the Fiserv accounts and that it could not agree to the release of other accounts without prior approval of the SBA.
While Beneficial interpreted the Amended Factoring Agreement narrowly, Dryden and Durham interpreted it broadly. At Dryden's request, Durham factored numerous additional accounts for Dryden. For its part, although the Amended Factoring Agreement specified that "[Dryden] shall not offer to Durham any Account for purchase, without Beneficial's prior written consent to release its Senior Lien on such Account," Dryden did not request Beneficial to release its lien on additional invoices after the Fiserv invoices were factored. When questioned about whether prior consent was obtained to factor additional invoices, Ridley stated: "I just signed the agreement with Durham and figured that—I was never privy to [Durham's] agreement with Beneficial in the
It is unclear from the record exactly when additional invoices subject to Beneficial's lien were first factored. At least as early as November 2013, Dryden contacted Durham about factoring a receivable for Dryden's client, Janney Montgomery Scott ("Janney"). On November 1, 2013, Michael Eismann ("Eismann"), Dryden's Vice-President of Sales and Marketing, requested Durham to factor Dryden's anticipated fee of $114,450 on the Janney invoice. Debtor Ex. 5. Apparently in recognition of the $350,000 limit specified in the Amended Factoring Agreement, Eismann asked whether Dryden had "room to factor the whole thing." Id. Scott DiBerardinis ("DiBerardinis"), Dryden's immediate contact at Durham, responded, "We went through and raised your credit line to $500,000. That should give you some room to work with for any additional invoices." Id. On November 4, 2012, Dryden executed and delivered to Durham an "account purchase addendum" for the Janney invoice. Beneficial was not contacted by either Dryden or Durham about releasing its lien before the account was factored.
Although the Amended Factoring Agreement does not specify how Dryden's factored accounts would be collected, a practice developed whereby once a final determination was made as to a client's tax liability, a check would be made out to the client and sent to William Felker ("Felker"), the attorney who handled tax appeals for Dryden. Felker would then send the check to Dryden to forward to the client with a bill for services. If the client received an offset against its tax liability rather than a refund, Dryden would simply notify the client of the result and enclose its invoice for services. For accounts factored with Durham, Dryden would sell the invoice to Durham attached to a purchase addendum. Durham would then pay Dryden 75% of the invoice and retain 25% in reserve. The invoice would direct the client, in most cases, to remit payment of Dryden's fee to Felker. Dryden's clients responded in a variety of ways. Some remitted the fees to Dryden, others to Felker. The funds were then sent by either Dryden or Felker to Durham.
In December 2013 and January 2014, Dryden and Durham executed additional account purchase addenda for invoices from Dryden's account debtors. During this same period there were regular email exchanges between DiBerardinis and Eismann regarding the time frame in which the invoices were being paid. In response to numerous frantic emails from DiBerardinis to Eismann about delays in the payment of the Mountainview Thoroughbred ("Mountainview") and Susquehanna Bank ("Susquehanna") invoices, Eismann described the status of various accounts. He stated that Dryden expected to receive payment of the Mountainview invoice between January 23 and February 1 and that the Verizon invoice was due February 14. Although the Janney account had been transferred to Durham in November, Eismann reported that there were credits of more than $1 million to review and that Dryden could not get the auditor to finalize her work papers. He also reported that Dryden expected to receive the Susquehanna account "any day." Durham's representative, Tim Mura ("Mura"), responded and thanked Eismann for the update, but also requested new invoices be submitted to "off set the ones we have for Mountainview, Susquehanna and Janney." Debtor Ex. 5. In response, Dryden submitted five additional invoices to substitute for the funds advanced on other invoices, but not yet received from the account debtors. Durham did not advance additional funds
In late January 2014, Dryden received payment on the Mountainview invoice and wired $126,00 of the funds received to Durham, which reflected the amount advanced to Dryden on the invoice. DiBerardinis contacted Dryden to demand that the full amount of the invoice ($189,000) be sent to Durham so that the funds received would match the amount of the invoice purchased. DiBerardinis promised that Durham would rebate the funds not advanced by Durham. Mura directed Dryden to wire the balance of the invoice immediately because there was still $22,569.90 outstanding over ninety days attributable to other factored accounts.
On February 6, 2014, Mura sent Dryden rebate documents for the Mountainview invoice, the rebate statement for the Susquehanna invoice, and the account purchase addendum for the five invoices submitted to replace the Susquehanna invoice. He further notified Dryden that because on several occasions invoices were paid directly to Dryden and not to Felker, all of Dryden's customers were put on notice to remit payments directly to Durham.
Unaware that Dryden had factored numerous accounts in addition to the Fiserv accounts, Beneficial discovered the additional activity when it performed a site audit in May 2014. Beneficial responded by demanding that Durham cease and desist from further factoring of its collateral and return any funds collected from Dryden's assets. In response, Durham asserted that Beneficial had authorized the factoring of Dryden's accounts.
Dryden filed its bankruptcy petition on February 13, 2015, and on February 20, 2015 filed a motion seeking an interim order for the use of cash collateral. Beneficial objected to the motion, but the objection was ultimately resolved by the parties through stipulation. After the interim cash collateral order was entered on February 24, 2015, Durham requested reconsideration of the order asserting that some of the accounts receivable included in the cash collateral order had been purchased by Durham more than a year before the bankruptcy filing. Beneficial and Dryden objected to the motion for reconsideration, which was denied by the Court. However, the Court reserved for final decision the issue of whether the factored accounts were property of the bankruptcy estate.
At the continued hearing on Dryden's use of cash collateral held on April 28, 2015, Debtor's counsel represented that while Durham had asserted rights in six outstanding invoices on the date the petition was filed, four of the invoices had been collected before the bankruptcy filing. Counsel initially stated that only a Verizon invoice of $117,400 and a partial payment on a Janney invoice of $71,000 remained uncollected on the petition date. The Janney invoice was collected by Dryden post-petition. Counsel later amended this representation to also include in Durham's claim an invoice of $28,558.89 for fees related to DST Health Solution Services.
An evidentiary hearing was held on April 28, 2015 and on May 7, 2015 on the issues of whether Dryden should be permitted
The issue before the Court is whether the Amended Factoring Agreement is a sale of Dryden's accounts receivable (a true sale) or whether it constitutes an extension of credit with accounts receivable as collateral (a loan). This issue is significant because if certain accounts were sold to Durham pre-petition, those accounts are not property of the bankruptcy estate. If the accounts are not property of the estate, this court lacks jurisdiction to determine the priority of interests in the accounts among Durham, Beneficial, and Citibank.
A business with outstanding payables may decide that it needs cash immediately. One solution to this liquidity problem is to sell receivables at some discounted price, another is to use the receivables to collateralize a loan. If the transaction is a "sale," then title passes to the purchaser. If the transaction creates a security interest in favor of the lender, the business remains the owner of the receivables subject to the lender's interest.
Factoring is "[t]he buying of accounts receivable at a discount. The price is discounted because the factor (who buys them) assumes the risk of delay in collection and loss on the accounts receivable." Black's Law Dictionary (10th ed.2014). When the owner of receivables enters into a factoring agreement with a party, the transaction may be characterized as a true sale or as a financing agreement. To classify a transaction accurately, several attributes must be examined, primarily the allocation of risk. Most courts determine the nature of the transaction by considering a list of factors. Some of the most common factors are: 1) whether the buyer has a right of recourse against the seller; 2) whether the seller continues to service the accounts and commingles receipts with its operating funds; 3) whether there was an independent investigation by the buyer of the account debtor; 4) whether the seller has a right to excess collections; 5) whether the seller retains an option to repurchase accounts; 6) whether the buyer can unilaterally alter the pricing terms; 7) whether the seller has the absolute power to alter or compromise the terms of the underlying asset; and 8) the language of the agreement and the conduct of the parties. See Robert D. Aicher, William J. Fellerhoff, Characterization of A Transfer of Receivables as a Sale or a Secured Loan Upon Bankruptcy of the Transferor, 65 Am. Bankr.L.J. 181, 186-94 (1991) (collecting cases). Courts use some or all of these factors to determine whether a purported sale should be recharacterized as a loan. Id. Analysis of the various factors and their impact on the nature of the parties' agreement is fact-intensive, and a determination must be made based on the totality of the circumstances. The court must examine "the parties' practices, objectives, business activities and relationships and determine[] whether the transaction was a sale or a secured loan only after analysis of the evidence as to the true nature of the transaction." Major's Furniture Mart, Inc. v. Castle Credit Corp.,
To constitute a bona fide factoring agreement under New York law,
New York factoring law holds that all other risks associated with the sale of the accounts receivable remain with the client (e.g., commercial disputes, regardless of the merits thereof). See State Bank of India v. Walter E. Heller & Co., Inc., 655 F.Supp. 326, 332 (S.D.N.Y.1987) (observing that in factoring relationship, right to charge back because of commercial disputes is "absolute"); Bonnie & Co. Fashions, 945 F.Supp. at 700; Danleigh Fabrics, Inc. v. Gaynor-Stafford Indus., Inc., 95 A.D.2d 719, 463 N.Y.S.2d 828, 830 (N.Y.App.Div.1983), aff'd, 62 N.Y.2d 677, 476 N.Y.S.2d 287, 464 N.E.2d 985 (N.Y.1984)). Thus, Durham's rights under the parties' agreement includes the standard components of factoring agreements recognized under New York law.
The Amended Factoring Agreement, by its own terms, is described as a "purchase contract and security agreement." The purpose of the agreement is stated to be "a true nonrecourse sale of [Dryden's] accounts. Durham Ex. § 1. Numerous other provisions also specifically reference or suggest a sale. See, e.g., § 2.2 (defining "Acceptable Account" or "Purchased Account" as one "approved for purchase in whole or in part. . . ."); § 3.2
Looking beyond labels and into the details of the transaction, however, the Court finds substantial evidence that the parties entered into a true sale agreement. One consideration is the manner in which receivables were handled. If receivables are commingled with the seller's general operating funds, a loan rather than a sale is suggested. Here, § 4.12 of the Amended Factoring Agreement required Dryden to "hold in trust and safekeeping, as the property of Durham, and immediately turn over to Durham the identical check or other form of payment received by [Dryden], whenever any payment on any Purchase Account comes into [Dryden's] possession. . . ." This provision indicates the parties' intent that monies related to transferred accounts would be retained separately and not be commingled with Dryden's general operating accounts.
As described above, the process by which Durham would collect the accounts receivable is not specified in the Amended Factoring Agreement. Durham's and Dryden's witnesses differed on whether payment of the invoices was made by Felker or by Dryden. Because Durham's witness was not directly involved with the Dryden account, Dryden's witnesses are more credible on this issue. As explained by Dryden's witnesses, once a final determination was made as to a client's tax liability, a check would be issued and sent to Attorney Felker. Felker would then either send the check to Dryden, which would release funds to Durham, or send a check directly to Durham. If a refund was not obtained, but the client's tax liability was reduced, Dryden would bill the client for its fee, collect the fee, and then remit the funds to Durham. Because Felker is Dryden's agent, whether Felker or Dryden remitted the funds is not relevant to the Court's resolution of this matter. The Amended Factoring Agreement specifies that the proceeds of the accounts were Durham's property. Insufficient evidence was provided that the processing of the accounts supports recharacterization of the transaction as a loan
The ability of a buyer to demand that it receive payment directly from account debtors supports the finding that the transaction is a sale. Here, § 4.4 of the Amended Factoring Agreement gives Durham that right. "Durham may notify any Customer [i.e., account debtor] to make payments directly to Durham for any Account." Durham Ex. 3 § 4.4. After payment of several invoices was delayed, Durham exercised this right and demanded payment directly from Dryden's account debtors. Had Durham exercised this right at the inception of the agreement it would have been abundantly clear that the transfer of the accounts was a sale. Durham may have preferred not to exercise this right initially to avoid disrupting the business relationship between Dryden and its
Courts have held that the most important single factor when determining whether a transaction is a true sale is the buyer's right to recourse against the seller. One of the core attributes of owning a receivable is the risk that it will not be paid. If the buyer "sells" the receivable, but retains the risk of non-payment, it is more likely that the transaction will be recharacterized as a loan. An agreement "without recourse" means that the purchaser/factor agreed to assume the full risk of collecting the money owed to the seller, whereas an agreement "with recourse" means that the seller retains the risk of collection." Filler v. Hanvit Bank, 339 F.Supp.2d 553, 556 (S.D.N.Y.2004), aff'd, 156 Fed.Appx. 413 (2d Cir.2005). Generally, if there is a full right of recourse against the seller, this weighs in favor of the existence of a loan because there is no transfer of risk. Recourse can take many forms including an obligation to repurchase accounts, a guaranty of the collectibility of accounts, or a reserve which is released when the receivables are paid. See Aicher & Fellerhoff, supra at 186.
The Amended Factoring Agreement provided that Durham accepted the risk of "nonpayment on Purchased Accounts, so long as the cause of non-payment is solely due to the occurrence of an account debtor's financial inability to pay, an "Insolvency Event." Durham Ex. 3 § 4.10. As to this discrete event, Durham had no recourse against Dryden. The agreement does, however, specify some events which would afford Durham recourse for non-payment. For example, Dryden agreed to "accept back (repurchase) from Durham any Purchased Account subject to a dispute between Customer and Client of any kind whatsoever." Id. at § 4.11. This included Durham's right to require Dryden to repurchase disputed accounts, all Purchased Accounts if there was an event of default, and accounts unpaid after ninety days if an insolvency event had not previously occurred. Id. at § 6.4.1. While the foregoing provisions limit Durham's risk and provide some forms of recourse, they are insufficient to support recharacterization of the transaction as a loan.
Even the existence of a right of full recourse is not dispositive. Thus, for example, "the presence of recourse in a sale agreement without more will not automatically convert a sale into a security interest." Major's Furniture Mart, Inc., 602 F.2d at 544. "The question for the court then is whether the nature of the recourse, and the true nature of the transaction, are such that the legal rights and economic consequences of the agreement bear a greater similarity to a financing transaction or to a sale." Id. Put somewhat differently, if a seller conveys its entire interest in a receivable, the transfer is a true sale, even if the seller has a recourse obligation. See generally Harris & Mooney, supra (proposing that the more critical factor is whether the seller retains a significant interest in the property, not whether the seller has a recourse obligation). Here, Dryden transferred the full economic interest in the Purchased Accounts to Durham. Further, Dryden did not have a full recourse obligation, although it is misleading to characterize the transaction as "nonrecourse" when the agreement included a hold back provision (the "Reserve" in ¶ 4.9) and Durham could require Dryden to repurchase accounts "on demand" as set forth in ¶ 6.4.
Some courts also have examined the allocation of responsibility for servicing transferred accounts. A loan rather than
Consideration of other factors also weigh in favor of finding this to be a true sale. Durham paid "a price equal to the net amount of [each] Acceptable Account," defined to mean "the face amount thereof less discounts or allowances of any nature.. . ." Durham Ex. 3 § 4.6. This is typical for a sale. In addition, Durham received a fee of 3.5% of the original face amount of each purchase account, plus additional fees payable after thirty days from the sale of the invoice. Durham Ex. 3 § 4.7. While this "fee" provision may be viewed as a substitute for interest indicative of a loan-type transaction, it just as readily may be characterized as the computation of the discount at which the accounts were purchased. Therefore, this provision is insufficient on balance to characterize the agreement as a secured loan. Moreover, with the exception of the reserve (which is common in factoring agreements), Durham did not have a right to recover from Dryden any deficiencies from the accounts receivable, nor did Dryden have the right to repurchase the accounts if it paid the face amount plus Durham's fees.
Accordingly, when the above factors are considered, most support a finding that the Amended Factoring Agreement provided for a true sale.
Dryden has argued that the terms of the Amended Factoring Agreement were modified by the course of conduct of the parties. Section 6.6 of the Amended Factoring Agreement provides that it "may be modified only by a written instrument executed by the parties hereto." As a general rule, under New York law, "a written agreement that expressly states it can be modified only in writing cannot be modified orally." Towers Charter & Marine Corp. v. Cadillac Ins. Co., 894 F.2d 516, 522 (2d Cir.1990). "Under certain conditions . . . a written agreement which provides that it cannot be modified except by a writing, can be modified by a course of conduct or actual performance." Seven-Up Bottling Co. (Bangkok) v. PepsiCo, Inc., 686 F.Supp. 1015, 1022 (S.D.N.Y.1988). For example, "when one party has induced the other party to rely
Similarly, while the agreement lacks any provision for "swapping out" slow paying invoices for new ones with no additional payments being made to Dryden, which clearly was demanded by Durham, this practice is insufficient to support recharacterization of the agreement as a loan. When the collection of the Mountainview accounts was delayed through no fault of Dryden or the account debtor, Durham asked Dryden to supply new invoices for the Mountainview account. While the substitution of invoices is more suggestive of a loan than of a sale, the practice seems to have functioned as a hedge against the depletion of funds held in reserve and as an alternative to declaring a default under § 5.1.1. Because Durham did not accept any risks other than those related to insolvency, it could require Dryden to buy back late accounts unrelated to an insolvency event. Therefore, this course of conduct does not weigh in favor of recharacterizing the transaction as a loan.
Dryden places great reliance on In re Grand Union, 219 F. 353 (2d Cir.1914). The Court finds, however, that the transaction in Grand Union is readily distinguishable from the agreement between Dryden and Durham. As an initial matter, Dryden contends that the Grand Union court focused on the parties' course of dealing rather than on the terms of the parties' agreement. This is not entirely accurate. The Second Circuit was not looking to the parties' course of dealing outside the four corners of the agreement, but was closely scrutinizing the terms of the agreement to ascertain whether it described a true sale or a loan notwithstanding that the parties' agreement purported to constitute a sale. The Second Circuit stated that "[i]t may be conceded that the evidence to prove a transaction to be different from what it appears to be from the written papers . . . must be clear and convincing." 219 F. at 357. Thus, the parties' agreement is the primary focus and evidence contradicting the parties' agreement must be clear and convincing. Such evidence was readily found in Grand Union, but is lacking here.
An examination of the facts in Grand Union illustrates this point. In Grand Union, a lessor of pianos, entered into an agreement with Hamilton Investment Company ("Hamilton"), whereby Hamilton, purportedly, would purchase certain leases. The Second Circuit found that despite the parties' use of language suggesting a purchase and sale, numerous elements of the contract suggested a loan. For example, one of the provisions of the agreement provided that Grand Union guaranteed the principal and interest of the contract.
In contrast, here, as previously discussed, Durham retained the credit risk, the accounts were not returned to Dryden upon full payment to Durham, Durham provided notice that it was directly collecting monies, Durham had the right to service the accounts, and Durham looked to Dryden's clients for payment (although not until later in the process when there was concern over the timely receipt of payments).
The foregoing analysis is not to say that the parties' agreement clearly and unequivocally demonstrates that it was intended as a true sale. There are some terms and conduct by the parties suggestive of a loan. However, for the reasons stated, the Court finds that, on balance, the Amended Factoring Agreement is more properly characterized as a true sale. Accordingly, the accounts Durham purchased pre-petition are not part of the bankruptcy estate.
The Court's conclusion that the Amended Factoring Agreement constituted a true sale of Dryden's accounts does not mean that any such sales were free of any liens held by Citibank or Beneficial. While it appears that all accounts were subject to Citibank's liens and all but the Fiserv invoices are subject to Beneficial's liens, that determination is beyond this Court's jurisdiction.
Section 1334(b) of title 28 provides a bankruptcy court may, by reference from the district court, hear cases "arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b) (emphasis added). "Related to" cases may only be heard if the "outcome of [the] proceeding could conceivably have any effect on the estate being administered. Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984), overruled in part by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 124-25, 116 S.Ct. 494, 133
For the reasons set forth above, the Amended Factoring Agreement is determined to be a true sale of accounts and, therefore, the accounts receivable transferred by Dryden to Durham more than ninety days before the filing of the bankruptcy petition are not assets of Dryden's bankruptcy estate. Further, having determined that the accounts are not property of the estate, the Court lacks jurisdiction to determine the relative interests of Beneficial, Citibank, and Durham in the transferred accounts.
An Order consistent with this Opinion will be entered.
