Gene Express, Inc.

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILMINGTON DIVISION
IN RE:
GENE EXPRESS, INC.,
DEBTOR.
CASE NO. 10-08432-8-JRL
CHAPTER 7
ORDER
This matter came before the court on the trustee’s notice of abandonment of licensed
patent rights and the motion to strike filed by the petitioning creditors. Also before the court was
a motion to determine property of the estate, which was resolved by consent order between the
trustee and moving party. A hearing was held on September 11, 2012 in Raleigh, North
Carolina.
An involuntary petition was filed under chapter 7 of the Bankruptcy Code on October
14, 2010, by Ronald B. MacNeill, Nick Lazardidis, John Anders and Jerry Vardzel (hereinafter
“petitioning creditors”). Three of the petitioning creditors were also the principals of
AccuGenomics, Inc. (“AccuGenomics”), which succeeded to the intellectual property of Gene
Express, Inc. (hereinafter “Gene Express” or “debtor”) and is the successor corporation to Eman
SO ORDERED.
SIGNED this 18 day of September, 2012.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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1MacNeill was a substantial shareholder of the debtor, Lazardis was the former president
of the debtor and Vardell was a former chief executive officer of the debtor.
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2, LLC.1 The intellectual property included certain patent rights originally assigned to the
University of Rochester by the Medical University of Ohio and subsequently licensed to the
debtor by licensing agreement dated October 11, 2005. 	At the request of the petitioning
creditors, an order appointing an interim trustee was entered on November 12, 2010. On July 9,
2012, the trustee gave notice of an intent to abandon any property rights the bankruptcy estate
had in the licensed patents rights. The notice explicitly reserved any rights the trustee may have
against the University of Rochester, AccuGenomics, the petitioning creditors or any person for
violating the automatic stay, complicity in attempting to deprive the bankruptcy estate of the
licenses to the patent rights, or any act that rendered the patent rights becoming of
inconsequential value to the estate.
On July 25, 2012, the petitioning creditors responded to the trustee’s notice of
abandonment and moved the court to strike all immaterial, scandalous and defamatory
statements included therein. The trustee filed a response requesting that the motion to strike be
denied. On July 25, 2012, the trustee received correspondence from Austrian counsel
representing Claudia Lechner and other shareholders of Gene Express objecting to the trustee’s
abandonment of the patent rights and alluding to alleged criminal activity by the management of
Gene Express. This correspondence also informed the trustee that Ms. Lechner and the other
shareholders wished to solve the matter on their own and suggested that the trustee take no
further steps in the matter.
Under § 365(d)(1) of the Bankruptcy Code, where the trustee “does not assume or reject
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an executory contract or unexpired lease . . . of personal property of the debtor within 60 days
after the order for relief, or within such additional time as the court, for cause, within such 60-
day period, fixes, then such contract or lease is deemed rejected.” 11 U.S.C. § 365(d)(1). The
trustee acknowledged his failure to timely accept the executory patent licenses within the 60-day
period proscribed by § 365(d)(1) and reiterated that the notice of his intent to abandon was meant
to reinforce his position that the patent rights not be included as property of the estate because
they were burdensome and of inconsequential value to the bankruptcy estate. 	Accordingly, the
court finds no reason to deny the trustee’s abandonment of licensed patent rights.
Pursuant to § 107(b) of the Bankruptcy Code, the court may strike material to “protect a
person with respect to scandalous or defamatory matter contained in a paper filed in a case under
this title.” 11 U.S.C. § 107(b). 	The petitioning creditors did not oppose the effect of the
trustee’s abandonment of the licensed patent rights; however, they contend that the notice’s
contents is peppered with scandalous and defamatory material that is calculated to prejudice and
harm their reputations. 	A motion to strike alleged defamatory or scandalous material under §
107(b) “is addressed to the sound judicial discretion of the Court.” Hope on Behalf of Clark v.
Pearson, 38 B.R. 423, 424 (Bankr. M.D. Ga. 1984). Based on arguments and responses of
counsel, the court finds that the material present in the trustee’s notice of abandonment does not
constitute scandalous or defamatory matter warranting protection under § 107(b).
Based on the foregoing, trustee’s notice of abandonment is GRANTED and debtor’s
motion to strike is DENIED.
END OF DOCUMENT
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