FiberCore, Inc.

1 Unless otherwise noted, all statutory references are to Title 11 of the United States Code (the “Bankruptcy
Code” or the “Code”).
1
United States Bankruptcy Court
District of Massachusetts
Western Division
________________________________
)
In re: 	)
) 	Chapter 7
FIBERCORE, INC., 	) 	Case No. 03-46551-HJB
)
Debtor. 	)
________________________________)
MEMORANDUM OF DECISION
Before this Court is the “Trustee’s Motion for Approval of Compromise” (the “Motion
to Compromise”) filed by Steven Weiss, the Chapter 7 trustee (the “Trustee”) of Fibercore,
Inc. (the “Debtor”). The Trustee seeks leave to enter into an agreement with the Debtor
and investment and merchant bank Cagan McAfee Capital Partners, LLC (“Cagan
McAfee”) to settle a claimed violation of the automatic stay under 11 U.S.C. § 362. 1 Silica
Tech, LLC (“Silica Tech”), a creditor and shareholder of the Debtor, objects to the Motion
to Compromise. 	The issue to be determined by this Court is whether the Motion to
Compromise meets the standards set forth by the First Circuit Court of Appeals in Jeffrey
v. Desmond, 70 F.3d 183 (1st Cir. 1995).
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2 The Nevada Court action is Volpe v. Fibercore, Inc., No. CV06-02006 (Nev. 2nd J. Dist. Ct., filed August
18, 2006).
3 The language of Nevada Revised Statute § 78.347 at the time of the filing of the Custodianship Proceeding
was as follows:
“Any stockholder may apply to the district court to appoint one or more persons to be
custodians of the corporation, and, if the corporation is insolvent, to be receivers of the
corporation when:
(A) The business of the corporation is suffering or is threatened with
irreparable injury because the directors are so divided respecting the
management of the affairs of the corporation that a required vote for action
by the board of directors cannot be obtained and the stockholders are
unable to terminate this division; or
(B) The corporation has abandoned its business and has failed within a
reasonable time to take steps to dissolve, liquidate or distribute its assets in
accordance with this chapter.
“A custodian appointed to this section has all the powers and titles of a trustee appointed
under NRS 78.590, 78.635 and 78.650, but the authority of the custodian is to continue the
business of the corporation and not to liquidate its affairs or distribute its assets, except when
the district court so orders and except in cases arising pursuant to paragraph (b).”
2
I. 	FACTS AND TRAVEL OF THE CASE
The Debtor filed a Chapter 11 petition in this Court on November 14, 2003. Prior
thereto, the Debtor was involved in the manufacture and sale of fiber optic cable through
subsidiary corporations both in the United States and abroad. The Debtor is incorporated
in the state of Nevada and, before filing this case, its stock was publicly traded.
On May 4, 2004, this Court ordered the appointment of a Chapter 11 trustee.
Attorney Steven Weiss was appointed by the United States trustee for Region 1. 	And,
following a request from the Chapter 11 trustee, this Court converted the case to Chapter
7 on October 6, 2004. Attorney Weiss was then appointed as the Chapter 7 trustee.
Unbeknownst to the Trustee, on August 18, 2006, shareholders of the Debtor filed
a proceeding in the Second Judicial District Court of the State of Nevada, County of
Washoe (the “Nevada Court”) for the appointment of a custodian (the “Custodianship
Proceeding”) 2 pursuant to Nevada Revised Statute § 78.347. 3 The Nevada Court
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NRS 78.347(1)(1991).
4 The “Report of the Custodian and Request for Discharge” states that the Custodian investigated the current
“condition and status of the Corporation” which included a search for the Debtor’s former officers and directors
and for its corporate and financial records. The Custodian reported the following to the Nevada Court:
“Based on that investigation, the Custodian has determined that the former officers and
directors of the Corporation, who cannot now be located or who have failed to respond to the
Custodian, have abandoned their duties and offices, and have failed and refused to carry out
their fiduciary duties to the Corporation and its shareholders. Accordingly, as Custodian, I
have appointed Mark Smith of Carson City, Nevada, as sole officer and director serving as
President and Secretary of the Corporation, to act in the best interests of the Corporation.
I have also appointed a new resident agent for the Corporation, Laughlin Associates, Inc. Of
Carson City, Nevada....
Further, based on his investigation, the Custodian has determined that there are 68,876, 094
shares of the $.001 par value common stock of the Corporation validly issued and
outstanding and that there is 1 preferred share of the Corporation validly issued or
outstanding.
Further, based on his investigation, the Custodian has been unable to locate any assets
belonging to the Corporation, and no records of any valid remaining liabilities, liens,
judgments, warrants, options, or other claims against the Corporation or its stock. Upon the
conclusion of the Custodian’s investigation, it is agreed that the findings will be presented to
the shareholders in a shareholder meeting to be held within 90 days after receiving the
Corporation’s Certified Shareholder List from the Transfer Agent, or its equivalent.”
See Report of Custodian and Request for Discharge, Case No. CV06-02006, Docket No. 3, filed
November 3, 2006.
3
appointed a Mark Smith as custodian (the “Custodian”). In October 2006, the Custodian
submitted a report to the Nevada Court and requested that he be discharged. In summary,
the Custodian reported that he was unable to find the Debtor’s officers, directors, records
or assets.4 Seemingly satisfied, the Nevada Court discharged the Custodian.
The Trustee first became aware of the Custodianship Proceeding in late November,
2006, upon receipt of a notice of proposed shareholder’s meeting from a representative of
Silica Tech. After obtaining a copy of the notice of entry of default and default judgment
entered by the Nevada Court in the Custodianship Proceeding, the Trustee sent a letter to
counsel to the plaintiff shareholders, dated December 6, 2006, stating that, to the extent
that the Custodianship Proceeding constituted an attempt to obtain control over the
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5
A “reverse merger” . . . . is a transaction in which a private operating corporation (a “private”
company) merges into a corporation whose stock has previously been offered to the public
(a “public” company). Typically, the public company will at the time of the reverse merger be
a “shell” company with minimal assets and liabilities and no actual operations. To complete
the securities aspect of the reverse merger, the public shell company will exchange its
treasury stock (along with, perhaps, shares from its stockholders) for all outstanding shares
of the private company, and in consideration, the shareholders who control the public shell
company will transfer most of their shares in the shell company to the owners of the private
company. Often the public shell company will take on the name formerly used by the private
company, and operations will carry on as before, except the formerly private company is now
an issuer of publicly traded securities. The overall transaction thus provides a way for the
private company effectively to offer its stock to the public.
S.E.C. v. M & A West, Inc., 2005 WL 1514101 (N.D. Cal. June 20, 2005).
4
Debtor’s assets, it was likely invalid as a violation of the automatic stay. 	At some time
subsequent to that communication from the Trustee, Hipoteca Seville, Inc. and Milagrosa
Vista Corp. (“Hipoteca” and “Milagrosa”), which acquired their shares from the Custodian
in exchange for providing advisory services to the Debtor during the Custodianship
Proceeding, sold their shares of stock in the Debtor to Cagan McAfee for a collective sum
of $140,000. Cagan McAfee is a California investment and merchant bank represented by
The Krueger Group, LLP. Part of Cagan McAfee’s business strategy is to identify corporate
shell entities as potential candidates for acquisition and for reverse merger. 5 The shares
were purchased after inquiry and discussion with the Trustee regarding the Custodianship
Proceeding as an alleged violation of the automatic stay.
Based on the Trustee’s allegations, Cagan McAfee and the Trustee entered into
settlement discussions. Those discussions bore fruit, resulting in the following agreement,
subject to approval from this Court:
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6 If the Motion to Compromise is approved, Cagan McAfee intends to disburse $60,000 to the Debtor which
The Krueger Group, LLP is currently holding in its attorney-client trust account pending this Court’s decision.
These funds will then be paid to the Trustee.
7 The Court takes note that in the Motion to Compromise filed with the Court on October 26, 2007, the date
for relief from the automatic stay nunc pro tunc was to January 1, 2006. In the Trustee’s Memorandum in
Support of Motion for Approval of Compromise filed with this Court on February 1, 2008, the proposed
compromise cites a date of August 1, 2006 from which relief from the automatic stay will be granted. A
footnote attached to the August 1, 2006 date, however, states that the Trustee and Cagan McAfee have
agreed to a June 1, 2006 date. This June 1, 2006 date was repeated by the Trustee at the February 6, 2008
hearing and therefore this Court recognizes the June 1, 2006 date as that which the Trustee and Cagan
McAfee intended. In any event, the Court’s decision below moots any impact of the discrepancy.
5
(a) 	the Debtor 6 would pay the Trustee the sum of $60,000.00, within thirty (30)
days of court approval;
(b) 	the Trustee would release the Debtor, the Custodian, and their agents and
attorneys from any claims relating to the Custodianship Proceeding and the
Custodian and the Debtor would release any claims that they might have
against the bankruptcy estate; and
(c) 	the Debtor and the Custodian would be granted relief from the automatic stay
nunc pro tunc to June 1, 2006, 7 so that actions taken in the Custodianship
Proceeding and subsequent actions by the current board of directors
would be validated.
After Silica Tech filed its objection, a hearing was held thereon after which the matter
was taken under advisement. 	Supplemental briefs and responses were filed by the
Trustee, Silica Tech and Cagan McAfee in support of their respective positions.
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6
II. 	POSITION OF THE PARTIES
a. 	The Trustee
The Trustee urges this Court to approve the proposed settlement, arguing that it is
in the bankruptcy estate’s best interest and that Silica Tech has not provided any evidence
or legal authority in support of its objection. The Trustee contends that the compromise
would resolve any potential claims that the estate would have against the Debtor’s current
officers and directors and the Custodian for damages for any violation of the automatic stay
under § 362 and thereby avoid costly litigation. Further, the Trustee argues that there is
a question as to whether the estate was in fact damaged by the actions of the Custodian.
The Trustee cites to cases which hold that a debtor’s corporate structure, including
authorized but unissued stock, does not constitute property of the estate. See In re Paso
del Norte Oil Co., 755 F.2d 421, 424 (5th Cir. 1985) and In re Mid-America Petroleum, 71
B.R. 140, 141 (Bankr. N.D. Tex. 1987). And thus, the Trustee maintains that the claim that
a debtor’s “corporate shell” is an asset of the bankruptcy estate is not without question. But
that question would be squarely presented if the Trustee attempted to sell the “corporate
shell.” The compromise here avoids that problem since the Trustee is not attempting to
“sell” anything. Given that there is no dispute regarding estate ownership of the alleged
stay violation, the Trustee takes the position that settlement of that asset (damages for the
stay violation) is preferential to the attempted sale of the Debtor’s “corporate shell.” And,
even assuming that the commencement of the Custodianship Proceeding was found to be
a stay violation, the Trustee asserts it might be difficult to demonstrate that the violation
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7
was a knowing, willful act or that the actions taken by the shareholders and the Custodian
resulted in actual damage to any identifiable, ascertainable estate asset.
The Trustee further takes issue with Silica Tech’s claim that shareholder equity
interests will be adversely affected by the compromise. According to the Trustee, Silica
Tech’s stock interest in the Debtor has no value in this case, as there will never be enough
estate funds to fully compensate unsecured creditors. In fact, the Trustee maintains that
allowing the compromise would actually provide the shareholders with a potential benefit -
if the reverse merger is successful, the shareholders would still be holders of their shares
in an operating, publicly traded corporation.
Finally, the Trustee fears that denial of leave to compromise would mire the estate
in a shareholder dispute over 2,000 miles away and of questionable benefit to the estate.
The Trustee contends that any dispute by Silica Tech seeking value for its shares or to
challenge the due process afforded Silica Tech in Nevada should be adjudicated not here,
but in the Nevada courts. Because the Custodianship Proceeding was commenced under
Nevada state law, the Trustee argues that Silica Tech could more appropriately determine
its shareholder rights in the courts more familiar with corporate governance issues
regulated by Nevada state law.
b. 	Silica Tech
Silica Tech views the motion before the Court as the “abandonment” or “sale” of an
estate asset - and not a compromise. As both a creditor and shareholder of the Debtor,
Silica Tech objects to the motion on the grounds that there is insufficient information to
evaluate the compromise and that if allowed, the compromise would, in effect, result in the
transfer of the Debtor’s “corporate shell.” 	More specifically, Silica Tech argues that the
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8 Silica Tech stated at the hearing that bankruptcy estates are “routinely paid some significantly more than
$60,000 for the rights to operate and be the Board of Directors for the corporate shell.” Transcript of Hearing
at 16, No. 360 (February 6, 2008). The source for that statement was not identified.
9 The Trustee rejects Silica Tech’s tax argument on two fronts. First, there would be no capital gain loss to
the estate as this is not a “sale” and secondly, even if the Trustee was selling an asset, the fact that the Debtor
has pre-petition losses totaling over $36.5 million would offset any gain from the sale.
8
Trustee provides no evidence for the reasonableness of the $60,000 proposed payment
or for the value of the Debtor’s “corporate shell,” 8 and has not identified the tax implications
of the compromise. 9
Silica Tech maintains that the Custodianship Proceeding was a clear violation of the
automatic stay requiring that all actions by the Custodian be deemed void. And if void, the
shares issued to Hipoteca and Milagrosa would be no longer valid, and Cagan McAfee
would no longer have a majority interest in the Debtor - quashing the prospective reverse
merger. 	Silica Tech maintains that allowance of the compromise would amount to this
Court’s blessing the actions of the Nevada Court with respect to which shareholders were
provided no notice and would negatively impact the value of its current shares. Indeed,
Silica Tech contends that allowing Cagan McAfee to continue as majority shareholder
would likely result in the election of new directors whose interest would conflict with those
of other creditors and shareholders.
Further, Silica Tech claims that this compromise is not the best result that the
Trustee could attain on behalf of the estate. Silica Tech presents its own purchase offer
for the Debtor’s “corporate shell” to the Trustee as evidence that there is a “better”
alternative to a compromise of the potential stay violation:
“Silica Tech will pay the estate $100,000 plus 8.5% of the common stock of
reorganized FiberCore, Inc. 	Silica Tech will pay $60,000 in cash (the
“deposit”) upon the Trustee’s acceptance of this offer. 	The Trustee will
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10 The Trustee represents that the offer by Silica Tech to acquire the Debtor’s “corporate shell” and potentially
attempt its own reverse merger involves significant obstacles as the offer is contingent upon confirmation of
a Chapter 11 plan for the Debtor and also a final order confirming that the Nevada proceedings are void as
a violation of the automatic stay. The Trustee questions the ability of Silica Tech to produce a successful
proposal given Silica Tech has not received any revenue since purchasing estate property in 2005 and is led
by the same persons who led the Debtor into Chapter 11. Other obstacles listed by the Trustee include:
addressing tax and securities issues, successful resolution of litigation between Silica Tech and J-Fiber,
unsecured creditor approval, and adequate capitalization and operational success of Silica Tech. Trustee’s
Response to Silica Tech’s Brief in Opposition to Trustee’s Motion for Approval of Compromise at 3-4, No. 362
(February 27, 2008).
9
withdraw the Motion to Compromise with prejudice. The Trustee will jointly
move with Silica Tech to reconvert the case to proceedings under Chapter
11. Silica Tech will prepare, at its expense, a Chapter 11 Plan and disclosure
statement describing that Plan. Upon acceptance of the Plan, Silica will fund
the Plan provisions by transferring additional consideration of $40,000 in
cash and 8.5% of the outstanding stock in reorganized FiberCore to the
estate. 	Silica’s offer is subject to higher and better offers, solicited in
compliance with the bankruptcy code and federal and local rules. If Silica is
not the successful bidder at any resulting auction, it will be entitled to a
breakup fee of $60,000, the amount of the deposit. The offer is contingent
upon the following:
a) entry of a final order confirming that the Nevada Action is
void as a violation of the automatic stay; and
b) confirmation of Silica’s Plan.”
Silica Tech’s Reply to the Trustee’s Response to the Brief in Opposition to the Trustee’s
Motion for Approval of Compromise at 3, No. 364 (March 3, 2008).10
Silica Tech admits that a ruling by this Court approving the compromise does not
deny it the opportunity to litigate its concerns in the Nevada courts - but claims that it
should not have to go to the Nevada state court whose actions clearly violated the
automatic stay. Nor does Silica Tech believe that cause has been shown for retroactive
relief from the stay as there do not exist the “special circumstances” necessitated under
the First Circuit precedent of Soares v. Brockton Credit Union. Instead, Silica Tech avers
that the facts this case demand denial of nunc pro tunc relief as the orders of the Nevada
judge were obtained under “false or fraudulent pretenses,” the action harmed the Debtor,
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11 Blair Kreuger, on behalf of Cagan McAfee, appeared with the Trustee at the February 6, 2008 hearing on
the Motion to Compromise and was admitted as counsel pro hac vice. Included in the Trustee’s supplemental
materials submitted after the hearing, was a response from Cagan McAfee to Silica Tech’s opposition brief.
10
the creditors and shareholders, and the proceedings effectuated a transfer of rights and
property out of the estate for less than adequate value.
c. 	Cagan McAfee 11
Cagan McAfee represents that it is nothing more than a “bona fide third-party
purchaser and acquires a controlling interest through good faith reliance upon the judicial
orders of a Nevada judge.” 	Declaration of Robert Blair Kreuger, ESQ. In Support of
Trustee’s Motion for Approval of Compromise at 2, No. 352 (January 21, 2008). 	It
contends that the outstanding shares of the Debtor are not estate assets and that the
Custodianship Proceeding was not a violation of the automatic stay as it was not an action
“against the debtor” under § 362(a)(1). 	Cagan McAfee emphasizes that no action was
taken against the Debtor and none of the Debtor’s assets were “liquidated, distributed or
otherwise disturbed” during the course of the Custodianship Proceeding. It concurs with
the Trustee’s assertion that Silica Tech’s complaint regarding shareholder rights and
inadequate notice would best be served by pursuing action in the Nevada courts as the
Debtor subjected itself to the Nevada custodianship statute by incorporating itself in that
forum.
Cagan 	McAfee 	also 	takes 	serious 	issue 	with 	Silica 	Tech’s 	claim 	that 	the
Custodianship Proceeding and Cagan McAfee’s majority ownership of the Debtor’s shares
harms the other shareholders. According to Cagan McAfee, the shares of the Debtor are
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12 Bankruptcy Rule 9019(a) states:
“On motion by the trustee and after notice and a hearing, the court may approve a
compromise or settlement. Notice shall be given to creditors, the United States trustee, the
debtor, and indenture trustees as provided in Rule 2002 and to any other entity as the court
may direct.”
11
currently worthless and through a successful reverse merger, the value of the Debtor’s
shares will be greatly increased.
III. 	DISCUSSION
Under First Circuit precedent, violations of the automatic stay are generally void.
Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969, 976 (1st Cir. 1997). The
automatic stay is a “fundamental protection for all parties affected by the filing of a petition
in bankruptcy” and “should not be dismantled without good reason.” 	Id. at 977 (citation
omitted). 	Retroactive relief from the automatic stay may be granted upon a showing of
appropriate circumstances and “must rest on a set of facts that is both unusual and
unusually compelling.” Id. at 976-977. The decision to grant retroactive relief is “within the
wide latitude of the Court with each decision being considered on a case-by-case basis.”
In re Stockwell, 262 B.R. 275, 280 (Bankr. D. Vt. 2001)(citations omitted).
Pursuant to Bankruptcy Rule 9019(a) 12 , a bankruptcy judge has the authority to
approve the compromise of a claim, including those for claimed violations of the automatic
stay. In deciding whether to approve a compromise, the bankruptcy court is required to
“assess and balance the value of the claim that is being compromised against the value to
the estate of the acceptance of the compromise proposal.” Jeffrey v. Desmond, 70 F.3d
at 185 (quoting In re GHR Cos., 50 B.R. 925, 931 (Bankr. D. Mass. 1985)). The factors
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which a bankruptcy court should consider when making this determination are: (1) the
probability of success in the litigation being compromised; (2) the difficulties, if any, to be
encountered in the matter of collection; (3) the complexity of the litigation involved, and the
expense, inconvenience and delay attending it; and (4) the paramount interest of the
creditors and a proper deference to their reasonable views in the premise. Id. (citing In re
Anolik, 107 B.R. 426, 429 (D. Mass. 1989)). When considering the foregoing, deference
should also be given to the Trustee’s judgment regarding the settlement, Hill v. Burdick (In
re Moorhead Corp.), 208 B.R. 87 (1st Cir. BAP 1997), provided that the trustee can
demonstrate that the proposed compromise falls within a ‘range of reasonableness’. In re
Whispering Pines Estates, Inc., 370 B.R. 452, 61 (1st Cir. BAP 2007)(citing In re 110
Beaver St. P’ship, 244 B.R. 185, 187 (Bankr. D. Mass. 2000)).
Although the Court recognizes fully well the fundamental importance of the
automatic stay and appreciates the concern that Silica Tech expresses towards the
preservation of this fundamental principal, the Court need not decide today whether there
was a violation of the stay. 	Nor need it decide whether a “corporate shell” is an estate
asset or determine its precise legal definition. Nor need the Court ascertain whether the
actions of the Trustee are tantamount to a sale. Resolving these legal questions is not only
beyond the scope of this Motion to Compromise, but, in fact, the point of the proposed
compromise is to avoid asking the Court to make those rulings and thereby avoid the risk
of an adverse result. Accordingly, the Court now turns to the Jeffrey v. Desmond factors.
I. 	Probability of Success in the Compromised Litigation
The litigation avoided by this compromise is the pursuit of an order finding that the
Custodianship Proceeding was a violation of the automatic stay and that the bankruptcy
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estate was damaged thereby. Silica Tech believes that the actions taken in the Nevada
Court are “clear” violations of the automatic stay. Cagan McAfee disagrees. Neither the
Custodian nor the officers or directors of the Debtor have conceded that there was a
violation. 	The Trustee is himself not certain of the outcome or what damages would be
awarded if liability were found. Thus, what is “clear” to one party appears foggy to another
and the Trustee believes it is better to pursue a guaranteed, relatively immediate payment
to the estate of $60,000 than pursue litigation hoping for more. This Court can not quarrel
with that conclusion. And even assuming that the Trustee would be successful in an action
against those involved in the Custodianship Proceeding, punitive damages may not be
available and any award would be then limited to attorney fees and costs, which at this
point are likely less than the proposed $60,000 settlement. Valuation of the claimed loss
to the estate is also difficult to ascertain as it has not been established whether the estate
actually “lost” anything. Also avoided is likely future litigation with respect to any attempt
by the Trustee to sell the rights that are in dispute.
II. 	Difficulties in Collection
Collection of any judgment against those who purportedly violated the automatic
stay would require additional legal action by the Trustee in a forum over 2,000 miles away.
The compromise presented to this Court, however, guarantees an immediate monetary
benefit to the estate. And questions with respect to the Trustee’s ability to sell the rights
in dispute are avoided.
III. 	Complexity of Litigation
In considering the complexity of the litigation being compromised, the Court looks
also to the expense, inconvenience and delay which may be involved. As explained by the
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Trustee, there exists a legal question about the ability of a Trustee to sell a debtor’s
“corporate shell.” Thus, even if the Nevada action was deemed void, it is not certain that
the Trustee would be able to sell anything of the Debtor for estate benefit - even to Silica
Tech. The sale proposed by Silica Tech is contingent both upon a finding that there was
a violation of the automatic stay and the confirmation of a Chapter 11 plan. The contingent
offer by Silica Tech would ensure that the Debtor remained in bankruptcy for an uncertain
number of additional years. 	The Debtor’s case was filed in 2003 and the Trustee,
apparently, has finally reached the point of winding up the estate. To pursue the actions
which Silica Tech proposes would likely result in a significant delay in administering the
estate without the guaranty of success - and an indeterminable increase in administrative
costs.
IV. 	Interest of the Creditors
The Trustee has been left with essentially two “offers.” One, which is encompassed
in the motion before this Court, provides an immediate monetary benefit to the estate. The
other is the Silica Tech proposal to purchase the “corporate shell” for approximately twice
the amount in this settlement, but conditioned upon events which are not guaranteed to
occur and, if they do, may not occur for some time. 	The choice as to which is best for
creditors has been made by the Trustee, and is one with which the Court, again, can not
quarrel.
On the basis of the foregoing, this Court is inclined to find and rule that the
compromise is sound. Still, there is one more problem. Cagan McAfee has argued that
the automatic does not apply. That argument is plausible, and, in any event, has not yet
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been established. Accordingly, the Trustee could settle on the basis that Cagan McAfee
may be correct on that point. 	But that is not what the proposed settlement provides.
Instead, it provides that the Court will rule that the automatic stay has been lifted post facto
to a date certain. 	This the Court will not do. 	If the Court is required to rule that the
automatic stay applied - a seemingly necessary predicate to its being lifted - the facts here
will not support a finding that there exist “unusual and unusually compelling” circumstances
within the meaning of Soares in order to permit a post facto order - particularly where
actions were taken contrary to the alleged stay after the Trustee warned the parties that
their actions might violate the stay.
IV. 	CONCLUSION
For the foregoing reasons, the Court approves the “Trustee’s Motion for Approval
of Compromise,” but only if amended so that the Trustee waives his claim that the stay
applied, in lieu of a ruling by this Court that the automatic stay applied, but is post facto
lifted. As for Silica Tech, it is free to pursue its shareholder claims, if any, in Nevada. With
the estate’s rights settled, what happened in Nevada should stay in Nevada. An order in
conformity with this Memorandum shall issue forthwith.
DATED: 	July 14, 2008 	_______________________
Henry J. Boroff
United States Bankruptcy Court
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