IN RE TRISTAR ESPERANZA PROPERTIES, LLC, Debtor, PENSCO TRUST COMPANY, a New Hampshire Company; JANE O'DONNELL, Appellants,
TRISTAR ESPERANZA PROPERTIES, LLC, a California Limited Liability Company, Appellee
Argued and Submitted February 11, 2015, Pasadena, California
Appeal from the Ninth Circuit Bankruptcy Appellate Panel. BAP No. 12-1340. Pappas, Klein, and Dunn, Bankruptcy Judges, Presiding.
On appeal from the Bankruptcy Appellate Panel, the panel affirmed the bankruptcy court's summary judgment in an adversary proceeding to subordinate a creditor's claim based on a minority interest in a chapter 11 debtor.
The panel held that the claim was subject to mandatory subordination under 11 U.S.C. § 510(b) because it was a claim for damages arising from the purchase or sale of a security of the debtor.
Jane O'Donnell (argued), Sacramento, California, for Appellants.
Ian S. Landsberg (argued), Summer Saad, and Brigitte Gomelsky Kay, Landsberg
& Associates, Woodland Hills, California, for Appellee.
Before: Consuelo M. Callahan, Paul J. Watford, and John B. Owens, Circuit Judges. Opinion by Judge Owens.
OWENS, Circuit Judge
Jane O'Donnell challenges the decisions of the bankruptcy court and the Bankruptcy Appellate Panel (BAP) that her claim based on a minority membership interest in the debtor, Tristar Esperanza Properties, LLC (Tristar), is subject to mandatory subordination under the Bankruptcy Code. Before the bankruptcy petition was filed, Tristar failed to pay O'Donnell the amount an arbitrator awarded for the repurchase of her membership interest, and O'Donnell sought and received a money judgment for that amount in state court. Because the claim ...