Ritchie Risk-Linked Strategies Trading (Ireland),

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK 	FOR PUBLICATION
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In re: 	No. 07-11906 (BRL)
RITCHIE RISK-LINKED STRATEGIES 	(Jointly Administered)
TRADING (IRELAND), LTD., et al.,
Debtors.
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APPEARANCES:
SIDLEY AUSTIN LLP
787 Seventh Avenue
New York, New York 10019
Telephone: 	(212) 839-5300
Facsimile: 	(212) 839-5599
By: 	John G. Hutchinson
Lee S. Attanasio
Counsel for U.S. Bank National Association, as Securities Intermediary
BRAVERMAN KASKEY, P.C.
One Liberty Place, 56th Floor
1650 Market Street
Philadelphia, Pennsylvania 19103
Telephone: 	(215) 575-3800
Facsimile: 	(215) 575-3801
By: 	David L. Braverman
Richard S. Julie
Counsel for The Bancorp Bank
Before: Hon. Burton R. Lifland
United States Bankruptcy Judge
MEMORANDUM DECISION AND ORDER GRANTING MOTION OF U.S. BANK
NATIONAL ASSOCIATION, AS SECURITIES INTERMEDIARY, TO ENFORCE THIS
COURT’S JANUARY 17, 2008 SALE ORDER
Before the Court is the Motion (the “Motion”) of U.S. Bank National Association
(“U.S. Bank”), in its capacity as securities intermediary, to enforce this Court’s January 17, 2008
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Sale Order1 approving the sale (the “Sale”) of substantially all the assets of Ritchie Risk-Linked
Strategies Trading (Ireland) II, Ltd. (“Ritchie Risk” or the “Debtor”) to Nutmeg Life Settlement
Trust (“Nutmeg” or the “Purchaser”). In particular, U.S. Bank seeks entry of an order enforcing
the Sale Order’s injunctive provisions against The Bancorp Bank (“Bancorp”) to prevent
Bancorp from pursuing, in any fashion or forum whatsoever, its purported death benefit claim
against a life insurance policy purchased by Nutmeg pursuant to the Sale Order. 	Bancorp
counters that (i) the Motion should have been brought as an adversary proceeding, not a motion;
(ii) the Court should permissively abstain from determining this matter; and, (iii) if the Court
does not abstain, it should deny the Motion because Bancorp was not provided with adequate
notice.
The ultimate subject of this Motion concerns the proceeds of a life settlement, also
known as a Viatical settlement,2 in an industry quasi-regulated to avoid abuse and fraud.
Although the circumstances surrounding the transfers of ownership are somewhat obscure,
disclosures at oral argument confirmed that a substantial economic interest in the underlying life
insurance policy is shared by both the respondent Bancorp and David Braverman, one of its
counsel in this proceeding and a member of the original law firm owner / seller of the life
insurance policy.
As for the merits, for the reasons set forth below and at oral argument, the Court finds
that the Motion need not have been brought as an adversary proceeding, permissive abstention is
1 Order (A) Approving The Asset Purchase Agreement Between The Debtor And The Purchaser At the Auction,
(B) Authorizing The Sale Of Substantially All Of The Debtor’s Assets Free And Clear Of All Liens, Claims,
Encumbrances And Other Interests, And (C) Granting Related Relief [hereinafter the “Sale Order”] (Dkt. No. 177).
2 A viatical settlement often entails “the sale of a policy owner’s existing life insurance policy to a third party for
more than its cash surrender value, but less than its net death benefit” and “provides the policy owner with an [sic]
lump sum,” such that the “third party becomes the new owner of the policy, pays the monthly premiums, and
receives the full benefit of the policy when the insured dies.” 	See Wikipedia, Viatical settlement, available at
http://en.wikipedia.org/wiki/Viatical_settlement (last visited May 22, 2012).
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inappropriate, and that Bancorp was afforded adequate notice. 	Accordingly, the Motion is
GRANTED.
BACKGROUND
1. 	The Insurance Policy’s Chain of Ownership Prior to the Sale
Bancorp’s interest in the Motion arises from an assignment of term life insurance policy
number 17B685914 (the “Term Policy”) issued on or about December 17, 2003, by Banner Life
Insurance Company (“Banner”) on the life of the Honorable Robert C. Daniels (“Daniels”) in the
amount of $3 million. 	At the time, Daniels was an equity owner and David L. Braverman
(“Braverman”) was a member of a law firm, Braverman Daniels Kaskey, Ltd. (“BDK”), which
was the Term Policy’s beneficiary and owner (and a loan recipient from Bancorp).
In July 2004, BDK granted Bancorp a lien on the Term Policy in connection with BDK’s
indebtedness loan no. 139002213-1 (the “Loan”), pursuant to a collateral security agreement (the
“Collateral Assignment”). 	See Hutchinson Decl.,3 Ex. H. 	Bancorp has alleged that, as of
November 2011, BDK owed Bancorp a balance of approximately $504,000 in connection with
the Loan, see Hutchinson Decl., Ex. I, which is still secured by the Collateral Assignment, see
Objection,4 p. 4.
Since BDK granted Bancorp a lien on the Term Policy, that policy has been owned by
several entities. 	In June 2006, BDK transferred its ownership and beneficiary interest in the
Term Policy to the Daniels Trust. 	On July 17, 2006, Banner granted the Daniels Trust’s
application to convert the Term Policy to a universal life policy and accordingly issued policy
3 Declaration of John G. Hutchinson in Support of the Motion of U.S. Bank National Association, as Securities
Intermediary, to Enforce this Court’s January 17, 2008 Sale Order [hereinafter “Hutchinson Decl.”] (Dkt. No. 390).
4 Non-Party Bancorp Bank’s Objection To Motion Of U.S. Bank National Association, As Securities Intermediary,
To Enforce This Court’s January 17, 2008 Sale Order [hereinafter the “Objection”] (Dkt. No. 392).
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number 17B357078 (the “UL Policy” and, together with the Term Policy, the “Policy”). 	See
Hutchinson Decl., Ex. L.5
On July 28, 2006, Coventry First LLC (“Coventry”) purchased the UL Policy from the
Daniels Trust pursuant to an insurance policy purchase agreement (together with Addendum 1.0
thereto, the “Coventry Purchase Agreement”). 	In connection with this and future sales of the
Policy, each new buyer acquired the Policy subject to the misrepresentation that it was lien-free.
Specifically, in the Coventry Purchase Agreement, the Daniels Trust expressly represented to
Coventry that “[t]here are no Liens on the [UL Policy].” See Hutchinson Decl., Ex. N, ¶ 3.1(iv);
see also Hutchinson Reply Decl.,6 Ex. D, p. 2 (Daniels circled “no” above the query, “Is the
policy subject to liens?”). 	Ritchie Risk then acquired beneficial ownership of the UL Policy
from Coventry on August 18, 2006, with the representation that any transfer of the UL Policy
would be made, “to [Coventry’s] knowledge, free of any Lien imposed in favor of any third
party.” See Hutchinson Decl., Ex. DD ¶ 3.02(a)(ii)(B).7
2. 	The Sale
On June 20, 2007, Ritchie Risk commenced a voluntary case under chapter 11 in this
Court.8 In January 2008, Ritchie Risk and Nutmeg entered into an asset purchase agreement (the
5 Bancorp’s lien is on the Term Policy number 17B685914. It is not clear that the lien attached to the converted UL
Policy bearing new policy number 17B357078. However, for purposes of this Motion the Court will assume that the
lien against the UL Policy is perfected.
6 Declaration of John G. Hutchinson in Support of the Reply of U.S. Bank National Association, as Securities
Intermediary, in Further Support of the Motion of U.S. Bank National Association, as Securities Intermediary, to
Enforce this Court’s January 17, 2008 Sale Order [hereinafter “Hutchinson Reply Decl.”] (Dkt. No. 399).
7 As securities intermediary, U.S. Bank was the record holder of the UL Policy and held it in a securities account
maintained for Ritchie Risk, as well as subsequent purchasers.
8 On June 27, 2007, this Court entered an order pursuant to Federal Rule of Bankruptcy Procedure 1015(b)
authorizing the joint administration of the Debtor’s chapter 11 case with that of Ritchie Risk-Linked Strategies
Trading (Ireland), Limited (together with Ritchie Risk, the “Debtors”). See Dkt. No. 25.
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“APA”) 9 pursuant to which Ritchie Risk was to sell a portfolio of life settlement assets (the
“Assets”), including the UL Policy, free and clear of any future claims against the Assets or the
Purchaser.
On January 17, 2008, this Court approved the sale of the Assets for a purchase price of
more than $56 million. In connection therewith, the Court (i) permitted the free and clear status
of the sale as proposed in the APA, (ii) specified that any future claimants with claims arising
from purported liens in the Assets could bring those claims against only the sale proceeds, and
(iii) enjoined such future claimants from asserting those claims against the Assets or the
Purchaser. See Sale Order, ¶¶ 7-9.
In addition, with respect to notice, the Court specified that (i) the affidavit of service for
previous insureds and policy owners was filed under seal (out of privacy and sensitivity
concerns), see Sale Procedures Order,10 ¶ 8; (ii) previous insureds, policy owners, and “all
persons or entities known or reasonably believed to have asserted a Lien on the Assets” have
received notice, see Sale Order, ¶ N; and (iii) the “published notice of the Sale Motion, the Sale,
the time and place of the Auction and the time and place of the Sale Hearing in The Wall Street
Journal” on October 5, 2007 (the “Wall Street Journal Notice”) was “sufficient and reasonably
calculated under the circumstances” to reach “parties who have claims against the Debtor, but
whose identities are not reasonably ascertainable by the Debtor,” see Sale Order, ¶ O;
Hutchinson Decl., Ex. BB.
9 Asset Purchase Agreement by and between Ritchie Risk and Nutmeg, dated as of January 11, 2008, and amended
as of January 31, 2008 (Dkt. No. 84), Ex. E.
10 Order signed on October 2 2007 (A) Approving Bidding Procedures In Connection With The Sale Of All Or
Substantially All Of The Debtors Assets, (B) Approving The Form And Manner Of Notice, (C) Scheduling An
Auction And Sale Hearing, And (D) Granting Related Relief [hereinafter the “Sale Procedures Order”]
(Dkt. No. 98).
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Approximately three years after the Sale, on October 3, 2011, Daniels passed away. Two
days later, despite receiving notice of the Sale, Banner sent a letter to Nutmeg’s servicer
indicating that the UL Policy is subject to the Collateral Assignment with Bancorp. 	Bancorp
subsequently submitted a death benefit claim (the “Bancorp Claim”) to Banner against the UL
Policy based on the Collateral Assignment between BDK and Bancorp securing the Loan, which
still had an outstanding debt of approximately $504,000. 	On December 23, 2011, on behalf of
Nutmeg, U.S. Bank filed with Banner a death benefit claim against the UL Policy in the amount
of $3 million, the full death benefit, under cover of a letter denying the existence of Bancorp’s
purported lien.
3. 	The Delaware Action
On January 17, 2012, to resolve the competing death benefit claims against the UL
Policy, Banner filed a complaint for statutory interpleader against Bancorp and U.S. Bank in the
United States District Court for the District of Delaware (the “Delaware Court”). 	Banner
interpleaded the UL Policy death benefits into the registry of the Delaware Court, seeking a
determination of the respective rights of Bancorp and U.S. Bank (the “Delaware Action”).
Shortly thereafter, U.S. Bank filed the instant Motion to enjoin Bancorp from pursuing any claim
against the UL Policy, including in the Delaware Action. 	U.S. Bank and Bancorp have been
granted extensions to respond to Banner’s interpleader complaint while this Court adjudicates the
Motion.
4. 	Bancorp Counsel’s Economic Interest in the Motion
Braverman serves as Bancorp’s counsel in the instant Motion and has a direct and
significant economic interest in its outcome. Specifically, as of May 8, 2012, Braverman was a
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guarantor and BDK was an obligor of the debt owed to Bancorp, see Hr’g Trans.,11 pp. 12-13,
which as of November 2011, was more than $500,000, see Hutchinson Decl., Ex. I. In addition,
Braverman’s interest in the Motion appears to exceed that of his client, as payments against the
debt owed to Bancorp are current. 	See Hr’g Trans., pp. 12-13 (“A payment has never been
missed. . . . It is current . . . .”).12
DISCUSSION
I. 	THE M OTION NEED NOT H AVE B EEN BROUGHT AS AN ADVERSARY PROCEEDING .
As a threshold matter, contrary to Bancorp’s argument, the Motion need not have been
brought as an adversary proceeding since U.S. Bank seeks only the enforcement of an injunction
already in effect under this Court’s existing Sale Order, not the issuance of a new injunction.
Indeed, “an adversary proceeding is not necessary where the relief sought is the enforcement of
an order previously obtained.” 	See In re WorldCorp, Inc., 252 B.R. 890, 895 (Bankr. D. Del.
2000); see also Luan v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223 (2d Cir.
2002) (confirming bankruptcy court jurisdiction to enforce injunction provision in its sale order
without adversary proceeding).
II. PERMISSIVE ABSTENTION I S I NAPPROPRIATE U NDER THESE CIRCUMSTANCES .
When determining whether to exercise permissive abstention, courts consider a number
of factors, see In re Motors Liquidation Co., 457 B.R. 276, 289 (Bankr. S.D.N.Y. 2011), not all
of which need be applied, see In re Portrait Corp. of Am., 406 B.R. 637, 642 (Bankr. S.D.N.Y.
2009). The court should balance the factors “heavily . . . in favor of the exercise of jurisdiction.”
Id. (citations omitted).
11 Transcript of Motion Of U.S. Bank National Association, As Securities Intermediary, To Enforce This Court’s
January 17, 2008 Sale Order Before Honorable Burton R. Lifland United States Bankruptcy Judge [hereinafter the
“Hearing Transcript”].
12 At this time, the Court expresses no opinion as to the propriety of Braverman’s representation of Bancorp.
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Bancorp asserts that this Court should permissively abstain here, as it did in In re Dana
because adjudication of this dispute will require the Court to address non-bankruptcy issues and
apply state and constitutional law. 	See In re Dana, No. 06-10354, 2011 WL 6259640, at *5
(Bankr. S.D.N.Y. Dec. 15, 2011) (abstaining where resolution of the issues centered on
application of federal labor law).
This Court finds permissive abstention inappropriate for two principal reasons. 	First,
bankruptcy courts should enforce and construe their own orders, particularly when doing so can
protect a free and clear purchaser from successor liability. See Motors Liquidation Co., 457 B.R.
at 289, 291 (finding a “classic example” of when “bankruptcy courts (like others) need the ability
to enforce their orders, and to construe them if necessary. . . . is where a sale order conveys
assets free and clear of claims, and someone nevertheless brings suit in another court in an
attempt to assert successor liability”).
Second, non-bankruptcy law issues do not clearly predominate over bankruptcy ones.
The only issue before the Court is whether to enforce its Sale Order, the adjudication of which
does not involve any complicated non-bankruptcy law and is “worthy of greater protection from
being upset by later motion practice.” In re Lehman Brothers Holdings Inc., 445 B.R. 143, 149,
(Bankr. S.D.N.Y. 2011). Contrary to Bancorp’s suggestion, the Court need not examine whether
Bancorp had a perfected lien in the Term Policy or which state’s law should be applied to such
question, as U.S. Bank has assumed that Bancorp had a perfected lien for the purposes of the
Motion. 	Nor must the Court determine whether Bancorp has a claim against Banner or the
Daniels Trust, as neither is named here and such a determination does not, in any way, bear on
whether the Debtor provided adequate notice. Indeed, all this Court need address is whether to
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enforce the Sale Order, which turns solely on the adequacy of the notice afforded here.
Therefore, the Court declines to permissively abstain from determining the Motion.
III. THE D EBTOR PROVIDED PROPER N OTICE O F THE SALE O RDER.
The crux of this decision focuses on whether the Debtor provided adequate notice of the
Sale Order. Bancorp emphasizes that it did not receive actual or constructive notice of the Sale
Order until October 2011, more than three years after such Order was entered. 	Specifically,
Bancorp asserts that (i) it is not bound by the Sale Order because it was a known creditor who
did not receive actual notice as a result of the Debtor’s inadequate efforts to identify reasonably
ascertainable creditors, and (ii) even if Bancorp was not a known creditor, the Debtor did not
provide sufficient constructive notice of the Sale because neither the Wall Street Journal Notice,
nor any of the documents filed on the docket, listed the requisite specifics of the UL Policy.
Bancorp therefore contends that it is entitled to pursue the Bancorp Claim in the Delaware
Action.
As a preliminary matter, the Debtor was reasonable in relying on previous affirmative
representations given by the Policy’s predecessor owners regarding the lien-free status of the
Policy. Coventry, Ritchie Risk, and U.S. Bank each received representations that there were no
liens on the Policy. The Daniels Trust affirmatively represented to Coventry that there were no
liens on the UL Policy. See Hutchinson Decl., Ex. N, ¶ 3.1(iv); see also Hutchinson Reply Decl.,
Ex. D, p. 2. 	Coventry made the same representation to Ritchie Risk. 	See Hutchinson Decl.,
Ex. DD ¶ 3.02(a)(ii)(B); see also Motion, ¶ 44 n.13 (“To U.S. Bank’s knowledge, Banner . . .
affirmatively advised Coventry prior to the [Sale] that there were no liens or collateral
assignments on the UL Policy.”). Finally, as recently as 2010, Banner itself represented to U.S.
Bank that there were no liens or collateral assignments on the UL Policy. See Hutchinson Decl.,
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Ex. Z (Banner’s representative responded “n/a” to inquiry as to whether “current records show
any assignments, encumbrances, or liens of record [on the UL Policy]”); see also Shred-It USA,
Inc. v. Mobile Data Shred, Inc., 228 F. Supp. 2d 455, 463 (S.D.N.Y. 2002) (finding buyer
reasonably relied on seller’s representation regarding the lien-free status of certain property on
which the seller previously granted a security interest to a third party), aff’d, 92 F. App’x 812
(2d Cir. 2004).
Further, the Court is not persuaded, by either of Bancorp’s assertions. 	In particular, the
Court finds that the Debtor made adequate efforts to reasonably ascertain whether there were any
creditors by searching through its books and records, and therefore, Bancorp was not a known
creditor entitled to actual notice. In addition, the Wall Street Journal Notice included appropriate
information regarding the Sale, and as such, the Court finds that the Debtor provided sufficient
constructive notice of the Sale.
1. 	Notice Standard
To comport with due process requirements, “a party seeking relief must provide notice
reasonably calculated, under all the circumstances, to apprise interested parties of the pendency
of the action and afford them an opportunity to present their objections.” Morgan Olson, LLC v.
Frederico (In re Grumman Olson Indus.), 445 B.R. 243, 254 (Bankr. S.D.N.Y. 2011) (quotations
and citations omitted). 	That notice must “convey the required information” and “afford a
reasonable time for those interested to make their appearance.” Mullane v. Cent. Hanover Bank
& Trust Co., 339 U.S. 306, 314 (1950) (citations omitted). 	In particular, section 363(b) of the
Code “requires notice and a hearing before assets can be sold outside of the ordinary course of
business,” and a sale order under section 363(f) of the Code that “purports to free a purchaser
from the debtor’s liabilities does not bind parties in interest that did not receive appropriate
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notice of the sale.” In re Grumman Olson Indus., 445 B.R. at 254. Whether a creditor received
adequate notice, however, “is a fact-specific inquiry and depends on the facts and circumstances
of each case.” 	DePippo v. Kmart Corp., 335 B.R. 290, 295 (S.D.N.Y. 2005). 	As a result,
“unless a creditor is given reasonable notice[,] . . . its claim cannot be constitutionally
discharged.” Id.
To determine whether notice was reasonably given, “[t]he proper inquiry is whether the
[noticing party] acted reasonably in selecting means likely to inform persons affected, not
whether [a particular party] actually received notice.” 	Weigner v. City of New York, 852 F.2d
646, 649 (2d Cir. 1988). In this regard, “what constitutes ‘reasonable notice’ principally depends
on the status of the parties[,] and whether the creditor is a ‘known’ creditor or an ‘unknown’
creditor.” DePippo, 335 B.R. at 295 (citations omitted). Actual notice is required for “known”
creditors, while constructive notice is sufficient for “unknown” creditors. Id. at 295-96; Grant v.
U.S. Home Corp. (In re U.S.H. Corp. of New York), 223 B.R. 654, 658 (Bankr. S.D.N.Y. 1998).
2. 	Bancorp Was Not A Known Creditor Entitled To Actual Notice
Bancorp was not a known creditor entitled to actual notice. As indicated by the Supreme
Court, a “known” creditor is one whose identity is either known or “reasonably ascertainable” by
the debtor. Tulsa Prof’l Collection Servs., Inc. v. Pope, 485 U.S. 478, 490 (1988). A “creditor’s
identity is ‘reasonably ascertainable’” if that creditor can be identified through “reasonably
diligent efforts.” 	In re U.S.H., 223 B.R. at 659 (quoting Mennonite Bd. of Missions v. Adams,
462 U.S. 791, 798 n.4 (1983)). 	Reasonable diligence does not necessitate “impracticable and
extended searches . . . in the name of due process.” DePippo, 335 B.R. at 296 (quoting Mullane,
339 U.S. at 317) (internal citation omitted). 	Instead, reasonable diligence involves a search
focusing “on the debtor’s own books and records.” Id.
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Here, the record clearly reveals that the Debtor made reasonably diligent efforts to search
through its books and records to identify creditors, yet Bancorp’s interests did not become
apparent as a result of such efforts. Specifically, the Debtors undertook a review of “hundreds of
thousands of pages of documents,” see 2007 Hr’g Trans.,13 p. 4; Sale Procedures Order, ¶ 8, as
well as all the policies that the Debtors provided to potential bidders, see Sale Order, ¶¶ G, H.
Moreover, it appears the Debtors conducted this review with an aim towards providing “all
known creditors of the Debtors [as well as] all persons or entities known or reasonably believed
to have asserted a Lien on any of the Assets” with a reasonable opportunity to object or be heard.
Id. Sale Order, ¶ N.
Bancorp nevertheless argues that the Debtor did not adequately search for known
creditors because the Debtor did not contact Banner to inquire about possible liens on the UL
Policy. But this argument is unpersuasive because requiring a debtor, as proposed by Bancorp,
to contact every insurer about any possible lien on each insurance policy to be sold in a free and
clear sale involving hundreds of similar policies, is well beyond the requirements of due process
jurisprudence. Specifically, “[w]hile a debtor must directly notify entities identified as creditors
in the debtor’s records, a debtor is not required to search elsewhere for those who might have
been injured.” 	Curatola v. Saint Vincent’s Catholic Med. Centers of N.Y., No. 07-CIV-8257,
2008 WL 1721471, at *1 (S.D.N.Y. Apr. 10, 2008) (internal quotations omitted). 	Indeed,
“impracticable and extended searches in the name of due process” are not required because, in
some cases, they “completely vitiate the important goal of prompt and effectual administration
and settlement of debtors’ estates.” In re U.S.H., 223 B.R. at 659 (internal quotations omitted).
Such would be the case here if the Debtor were required to conduct the inquiry proposed by
13 Transcript Of Hearing Held On December 6, 2007, Re: Debtor’s Motion To Approve Bidding Procedures And
Auction Process [hereinafter the “2007 Hearing Transcript”] (Dkt. No. 144).
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Bancorp because the Sale involved hundreds of assets, only one of which was the UL Policy.
See PacifiCorp v. W.R. Grace, No. 05-CIV-764, 2006 WL 2375371, at *10 (D. Del. Aug. 16,
2006) (finding a debtor was not required to conduct title searches of more than thirty relevant
properties because “the breadth of such a search is not insignificant” since “the debtor would be
obligated to search for numerous current and prior owners at numerous sites”). 	Furthermore,
Bancorp fails to cite even one case supporting the imposition of such an inquiry. 	Instead,
Bancorp relies only on cases involving creditors who appeared in the debtor’s books and records
or creditors who were obvious or known to the party defending the notice provided, neither of
which was the case here. 	See, e.g., U.S. v. Nat’l Westminster Bank USA (In re Q-C Circuits
Corp.), 231 B.R. 506, 512 (E.D.N.Y. 1999) (IRS was entitled to notice authorizing subsequent
use of cash collateral, having filed a proof of claim in the debtor’s case); Walker v. Lee (In re
Rounds), 229 B.R. 758, 763, 764 (Bankr. W.D. Ark. 1999) (the creditor claiming inadequate
notice was inadvertently omitted from the debtor’s mailing matrix and was a “known party in
interest”).
3. 	Constructive Notice Of The Sale Was Adequate.
As an unknown creditor, Bancorp was entitled to only constructive notice of the Sale,
which was sufficient. 	A court determining the sufficiency of notice focuses on whether it was
reasonable given all the facts and circumstances of the case. 	See Weigner, 852 F.2d at 649;
DePippo, 335 B.R. at 295. 	With respect to constructive notice, publication of relevant
information in a newspaper is sufficient, especially where “it is not reasonably possible or
practicable to give more adequate warning.” 	Mullane, 339 U.S. at 317; see, e.g., In re XO
Commc’ns, 301 B.R. 782, 794-795 (Bankr. S.D.N.Y. 2003) (finding publication notice in The
Wall Street Journal satisfied due process rights of unknown creditors).
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On behalf of Bancorp, Braverman argues that the Debtor did not provide adequate
constructive notice of the Sale because neither the Wall Street Journal Notice, nor any of the
documents filed on the docket, listed the specifics of the UL Policy. Here, however, “given all
the facts and circumstances of the case,” the Debtors’ omission of these specifics is “reasonable”
in light of the relevant privacy concerns, the language included in the Wall Street Journal Notice,
and the corresponding docketed information. 	Specific insurance information was barred from
publication by basic privacy rights, which also mandated filing the names of the insureds and the
policy owners under seal. 	See, e.g., Sale Order, ¶ N; Sale Procedures Order, ¶ 8. 	The Wall
Street Journal Notice and the docket provided more than enough information to apprise a party
with an insurance policy issued by Banner, and who knew the Debtors had an interest in that
asset, of the potential relevance of the Sale to that party’s rights. That Notice specified that the
assets to be sold “comprise all right, title and interest of the Debtors in and to life insurance
policies as specified in the APA,” see Hutchinson Decl., Ex. BB, and the docket listed insurance
policies by identification number and specified their carriers, in more than one case providing
Banner as the issuer, see Asset Schedule,14 Schedule B-9. 	In fact, courts in this district and
others have consistently allowed free and clear sales to proceed with notices containing far less
specificity than Bancorp demands. See, e.g., In re Boston Generating, LLC, Case No. 10-14419,
(Bankr. S.D.N.Y. Oct. 12, 2010) [Dkt. No. 268], Ex. D (defining and describing assets as only
“all or substantially all of the Debtors’ assets”); In re Hartford Computer Hardware, Inc., Case
No. 11-49744, (Bankr. N.D. Ill. Feb. 9, 2012) [Dkt. No. 160] (same). 	Taking the above in
tandem, this Court finds that the Debtor provided adequate constructive notice of the Sale.
* * *
14 Schedules of Assets and Liabilities for Ritchie Risk-Linked Strategies Trading (Ireland) II, Ltd. [hereinafter the
“Asset Schedule”] (Dkt. No. 41).
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It appears Bancorp’s real grievance is that it was not aware Ritchie Risk had an interest in
the UL Policy in the first place, which resulted in the loss of Bancorp’s lien. 	Had Bancorp
known the Debtor owned the UL Policy, the Wall Street Journal Notice and the Asset Schedule
would have sufficiently apprised Bancorp of the Sale and its effect on Bancorp’s rights,
especially as Bancorp is a sophisticated commercial bank with assets totaling over $3 billion, and
discovering the status of the Policy would not have required much more than a phone call to
Banner, BDK, Coventry, Daniels, the Daniels Trust, Ritchie Risk, or U.S. Bank. 	As such,
although the Court is not persuaded that strained notice theories should serve as a basis for
Bancorp’s finding recourse in the hide of a free and clear purchaser, see In re Oyster Bay Cove,
Ltd., 161 B.R. 338, 342 (Bankr. E.D.N.Y. 1993), the Court is not foreclosing Bancorp’s further
pursuit of any claim it may have in connection with its loss against any of the non-Purchaser
parties potentially responsible for Bancorp’s ignorance, some of whom may already be familiar
to Bancorp’s counsel.
CONCLUSION
For the reasons set forth above, the Motion is GRANTED. Specifically, pursuant to the
Sale Order, Bancorp is (i) directed to immediately withdraw, in all forms, any asserted lien or
interest of any kind in the UL Policy or its proceeds and (ii) enjoined from litigating, prosecuting
or otherwise pursuing the Bancorp Claim (including in the Delaware Court) against the UL
Policy and any of the other assets purchased by Nutmeg pursuant to the Sale Order, in any
fashion or in any forum whatsoever.
IT IS SO ORDERED.
Dated: New York, New York 	/s/ Burton R. Lifland 	.
May 22, 2012 	United States Bankruptcy Judge
07-11906-brl Doc 410 Filed 05/22/12 Entered 05/22/12 16:57:49 Main Document
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