Vital Pharmaceuticals, Inc.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
FORT LAUDERDALE DIVISION
In re: 	Chapter 11
VITAL PHARMACEUTICALS, INC., et al., 	Case No. 22-17842-PDR
Debtors.
_________________________________________/
ORDER SUSTAINING OBJECTION TO PUTATIVE CLASS PROOF OF
CLAIM AND DECLINING TO APPLY BANKRUPTCY RULE 7023
A consumer stops at a gas station somewhere in America, reaches into a cooler,
and pulls out a can of Bang Energy drink. The label promises Super Creatine, a
proprietary compound that, according to the manufacturer, delivers the performance
benefits of creatine in a uniquely bioavailable form. The consumer pays a few dollars
more than she might for an ordinary energy drink and goes on her way. What she
does not know, and could not reasonably know, is that the product contains no actual
Peter D. Russin, Judge
United States Bankruptcy Court
_____________________________________________________________________________
ORDERED in the Southern District of Florida on May 29, 2026.
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creatine at all. She has been deceived. Under applicable consumer protection law, she
has a claim.
That consumer is a creditor of this bankruptcy estate. But she is unlikely to
see a notice published in the Wall Street Journal or the Miami Herald. She is unlikely
to retain a bankruptcy attorney. She probably will not file a proof of claim for the two
or three dollars in damages. The economics are simply not there. And she is not alone:
there are potentially millions of people just like her, small claimants scattered across
the country, each with a real but tiny grievance, each individually unlikely to seek to
vindicate it in any court. This is the defining problem of the consumer creditor in a
large bankruptcy case. Bankruptcy law addresses it in two ways. Understanding both
is essential to resolving the matter before the Court.
The first approach is structural. A chapter 11 case is itself a collective
proceeding. The automatic stay halts the race to the courthouse. The bar date and
claims process provide a centralized mechanism through which every creditor, known
or unknown, large or small, may present a claim in a single forum, without a lawyer,
at essentially no cost. The pro rata distribution ensures that no creditor is favored
over another of equal priority. Nationwide service of process and a single supervising
court manage what would otherwise be thousands of scattered proceedings. In this
sense, bankruptcy already provides much of what a class action is designed to deliver:
aggregation, centralization, efficiency, and protection against the strategic behavior
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that race-to-judgment dynamics produce outside of bankruptcy.1 Congress designed
it this way deliberately, and the design has been proven very effective.
But the Code's structural design has limits. Publication notice in a national
newspaper may be legally adequate, and this Court has found that it was in this case,
while remaining practically invisible to a consumer who bought a gas station
beverage and has long since thrown away the receipt. The bar date, whatever its
formal adequacy, does not actually reach the dispersed consumer creditor whose
claim is too small to make the necessary effort. When the individual economic
incentive to file a claim is very low, the claims process does not aggregate those
claims, it simply allows them to expire.
This is the gap that Bankruptcy Rule 7023 was perhaps designed to fill. By
incorporating 	the 	procedures 	of 	Federal 	Rule 	of 	Civil 	Procedure 	23 	into 	the
bankruptcy claims process, Rule 7023 allows a class representative to file a single
proof of claim on behalf of all similarly situated creditors, aggregating small claims
that would otherwise be uneconomical to prosecute individually.2 The Eleventh
Circuit recognized the legitimacy of this device in In re Charter Co., holding that a
1 The Gentry court enumerated these structural advantages: “(1) established mechanisms for notice,
(2) established mechanisms for managing large numbers of claimants, (3) proceedings centralized in a
single court with nationwide service of process, and (4) protection against a race to judgment since all
of the debtor's assets are under control of the bankruptcy court.” Gentry v. Siegel, 668 F.3d 83, 92-93
(4th Cir. 2012); see also In re Ephedra Prods. Liab. Litig., 329 B.R. 1, 9 (S.D.N.Y. 2005) (“[S]uperiority
of the class action vanishes when the ‘other available method’ is bankruptcy, which consolidates all
claims in one forum and allows claimants to file proofs of claim without counsel and at virtually no
cost.”).
2 The Seventh Circuit captured this dynamic with characteristic directness in In re Am. Reserve Corp.,
840 F.2d 487, 489 (7th Cir. 1988): “The combination of contingent claims … and the effort needed to
decide whether to pursue an identified claim means that for many small claims, it is class actions or
nothing.”
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class proof of claim is not categorically impermissible and that a motion to apply Rule
7023 is not ripe until a claim objection creates a contested matter under Rule 9014. 3
The logic is sound: class treatment in bankruptcy serves the same function as class
treatment outside it, and the bankruptcy process has no structural objection to
accommodating it.
But Rule 7023 is not self-executing. It is not a right. It is a tool, and like any
tool it must be used in the right way at the right time. Bankruptcy Rule 9014 provides
that the court may direct application of Rule 7023 to a contested matter. 4 That word
reflects a considered judgment that the class mechanism, whatever its virtues in
aggregating consumer claims, carries costs in the bankruptcy context that the court
must weigh against its benefits. The same structural features that make bankruptcy
a collective proceeding, the centralized forum, the bar date, the claims administration
process, mean that the justifications for class treatment that are compelling outside
bankruptcy are sometimes diminished within it. And the timing of a Rule 7023
request matters enormously, because bankruptcy cases do not stand still. Plans
confirm. Estates are administered. Creditors who filed timely claims make decisions,
about voting, treatment, and settlement, in reliance on what the claims pool looks
3 The Eleventh Circuit embraced similar reasoning in In re Charter Co., 876 F.2d 866, 871 (11th Cir.
1989).
4 Fed. R. Bankr. P. 9014(c). The permissive language is deliberate and consequential: “may” signals
discretion, not obligation. See MSPA Claims 1, LLC v. Kingsway Amigo Ins. Co., 950 F.3d 764, 773–
74 (11th Cir. 2020) (“’may’ cannot, by any rendering, mean ‘must’”). The application of Rule 7023 is
accordingly a two-step inquiry: first, whether to apply it at all; second, if yes, whether the proposed
class satisfies Federal Rule 23. See Ephedra, 329 B.R. at 5.
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like at any given moment. Every day that passes after confirmation is a day that
reliance interests deepen and the cost of disruption grows.
Against that backdrop, this case presents a precise and difficult question:
whether Rule 7023 should be applied to a $500 million putative class claim filed on
behalf of the very consumers (the Bang Energy drink purchasers) when no class was
ever certified in any forum, when the case has been pending for three and a half years,
when the Liquidating Trustee has determined to make an initial distribution to
general 	unsecured 	creditors, 	and 	when 	the 	claims 	reconciliation 	process 	is
substantially advanced. The Court concludes that the answer is no.
The result is not without equitable cost. A jury in the Central District of
California has found that the Vital Pharmaceuticals’ Super Creatine advertising
deceived 	consumers 	and 	that 	the 	deception 	was 	material 	to 	their 	purchasing
decisions. The Liquidating Trust has invoked that same consumer harm in its
prosecution of the Owoc adversary proceeding. 5 The irony that corporate creditors
will recover while the deceived consumers do not is not lost on the Court.6 	But the
equities cannot override the procedural framework the Bankruptcy Rules establish,
and that framework, faithfully applied to the facts of this case, yields the result that
follows.
5 Adv. Pro. No. 24-1009-PDR
6 The Liquidating Trust recently obtained a partial summary judgment in the Owoc adversary
proceeding on Count III (breach of fiduciary duty), with the underlying California jury verdict finding
that the Debtors' Super Creatine advertising “deceive(d) or (was) likely to deceive consumers” and was
“material to consumers' purchasing decisions.” Order Granting Liquidating Trust's Motion for Partial
Summary Judgment (Adv. Pro. No. 24-1009-PDR, Dkt. No. 435, at 4).
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Background
Vital Pharmaceuticals, Inc. and its affiliated debtors (the “Debtors”) filed
voluntary petitions for chapter 11 relief on October 10, 2022 (“Petition Date”). Prior
to the Petition Date, two putative class action lawsuits had been filed against Vital
Pharmaceuticals in Missouri state court alleging that its Bang Energy products were
marketed 	as 	containing 	Super 	Creatine, 	a 	compound 	the 	complaints 	alleged
contained no actual creatine, in violation of consumer protection statutes. Both
actions were removed to the Eastern District of Missouri and were automatically
stayed upon the Petition Date, still at the motion to dismiss stage.7 No motion for
class certification was filed in either action at any point.
On December 19, 2022, the general bar date ran. The Debtors provided actual
notice to the Putative Class Claimants8 and their counsel, and constructive notice via
publication in the Wall Street Journal, Miami Herald, and Sun-Sentinel. 9 This
Court's Bar Date Order10 found that publication notice was adequate. Despite that
notice, not a single individual member of the putative class filed a proof of claim.
7 The Fischer Action (Fischer v. Vital Pharms., Inc., Case No. 22-CV-00136 (MTS) (E.D. Mo.)) was filed
in Missouri state court in October 2021 and removed to federal court in February 2022. The Abbott
Action (Abbott v. Vital Pharms., Inc., Case No. 22-CV-00587 (CPD) (E.D. Mo.)) was filed in April 2022
and removed in May 2022.
8 The Putative Class Claimants are Brendan Abbott and Peter Fischer (the prepetition class
representatives) and Carlton Harris (the postpetition class representative), individually and on behalf
of all others similarly situated (collectively, the “Putative Class Claimants” or “Claimants”).
9 Bar Date Order (Dkt. No. 114); Notice of Commencement (Dkt. No. 132). The general bar date was
December 19, 2022. Publication notice appeared in the Wall Street Journal, Miami Herald, and Sun-
Sentinel on October 21 and November 11, 2022. See Notice of Filing Aff. of Publication (Dkt. No. 339).
Bar Date Order ¶ 11.
10 Dkt. No. 114 (the “Bar Date Order”).
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The Putative Class Claimants filed Proof of Claim No. 617 on December 19,
2022, asserting a claim of not less than $500,000,000 on behalf of a putative
nationwide class of Bang Energy consumers.11 At the same time, Carlton Harris filed
an application for an administrative expense claim based on postpetition purchases
of Bang products. The Debtors objected, and on October 25, 2023, more than a year
after the Petition Date, the parties entered into the Administrative Claim Stipulation
(the “Admin Stipulation”), which resolved the administrative claim. It provided that
the parties would take no action to “allow or disallow, or liquidate” the Putative Class
Claim until the Liquidating Trustee determined to make an initial distribution to
holders of allowed General Unsecured Claims.12
The Plan of Liquidation (the “Plan”) was confirmed on November 8, 2023, and
became effective on November 21, 2023 (the “Effective Date”). 13 It was accepted by all
voting classes. Following the Effective Date, the Liquidating Trustee began the work
of administering the estate: prosecuting the Owoc adversary proceeding, resolving
claims, and working toward a distribution to general unsecured creditors. By the time
of the hearing on this matter, the Liquidating Trustee had reduced the general
11 The Putative Class Claim was originally filed as Proofs of Claim Nos. 86 and 87 on November 9,
2022, and subsequently supplemented by Proof of Claim No. 617 in the amount of not less than
$500,000,000 on December 19, 2022 (collectively, the “Putative Class Claim”).The $500 million
Putative Class Claim represents approximately 29.9% of the total general unsecured claims pool of
$1,671,183,289.78. Messenger Decl. ¶ 8.
12 Admin Stipulation (Dkt. No. 2117) ¶ 5. The Administrative Claim Order (Dkt. No. 2170) approved
the stipulation and granted an administrative expense claim of $500,000, with the funds held in trust
by class counsel pending further order because no certified class existed.
13 Confirmation Order (Dkt. No. 2258); Notice of Effective Date (Dkt. No. 2291). The Plan was accepted
by all voting classes.
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unsecured claims pool by more than $300 million and had resolved all but one of
thirty-two administrative claims.
Having determined to make an initial distribution to holders of Class 3 Allowed
General Unsecured Claims, the triggering condition under the Admin Stipulation,
the 	Liquidating 	Trustee 	filed 	the 	objection 	to 	the 	Putative 	Class 	Claim 	(the
“Objection”) on January 23, 2026, 14 seeking to disallow and expunge the claim in its
entirety. The filing of the Objection created a contested matter under Bankruptcy
Rule 9014. The Putative Class Claimants timely filed their response on March 9,
2026, 15 	opposing 	the 	Objection 	and 	simultaneously 	moving 	for 	application 	of
Bankruptcy Rule 7023 and certification of a nationwide consumer class. The parties
agreed to a revised briefing schedule limiting the initial briefing to the threshold Rule
7023 question, with class certification under Federal Rule 23 deferred pending this
Court's ruling. Briefing concluded with the Liquidating Trustee's Reply16 and the
Putative Class Claimants’ Sur-Reply.17
Legal Standard
There is no inherent right to file a putative class claim in bankruptcy. 18 Before
a putative class claim may proceed, the bankruptcy court must first determine, in its
14 Dkt. No. 2988.
15 Dkt. No. 3001.
16 Dkt. No. 3042.
17 Dkt. No. 3054.
18In re GAC Corp., 681 F.2d 1295, 1299 (11th Cir. 1982) (“[I]n the absence of such application a class
proof of claim could not properly be permitted”); In re Musicland Holding Corp., 362 B.R. 644, 650
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discretion, whether to apply Bankruptcy Rule 7023 to the contested matter. Only if
it does so does the court proceed to analyze whether the proposed class satisfies the
certification requirements of Federal Rule 23. This sequencing reflects a substantive
judgment that the class mechanism, however appropriate in some cases, is not suited
to every bankruptcy, and that the court, not the parties, determines when it applies.
The Eleventh Circuit established the procedural framework for this inquiry in
In re Charter Co., holding that a motion to apply Rule 7023 in a contested matter is
premature until an objection to a proof of claim creates the contested matter under
Rule 9014. 19 Once a contested matter exists, the court exercises its discretion guided
by the factors articulated in In re Musicland Holding Corp.: (1) whether the class was
certified prepetition; (2) whether members of the putative class received adequate
notice of the bar date; and (3) whether application of Rule 7023 would adversely affect
the administration of the estate. 20 These factors focus the court's inquiry on the
features of the specific case that determine whether the class device, which carries
genuine benefits and genuine costs, serves the interests of the bankruptcy process in
the circumstances presented.
The Court applies that framework to the facts of this case in three steps: first,
whether the motion is timely; second, if so, whether to exercise the discretion Rule
(Bankr.S.D.N.Y. 2007) (While class proofs of claim in bankruptcy are not prohibited, the right to file
one is not absolute.)
19In re Charter Co., 876 F.2d at 873–74.
20In re Musicland Holding Corp., 362 B.R. at 654–55. The Musicland framework has been applied by
bankruptcy courts within the Eleventh Circuit. See In re Wildwood Vills., LLC, No. 3:20-BK-02569-
RCT, 2021 WL 1784408, at *3 (Bankr. M.D. Fla. May 4, 2021.
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9014 reserves to the Court; and third, if discretion is exercised against application,
whether any alternative relief is warranted for the class representatives individually.
The first question favors the Claimants. The second and third do not.
Analysis
The 	Liquidating 	Trustee 	leads 	with 	the 	argument 	that 	the 	motion 	is
procedurally defective, that the failure to seek application of Rule 7023 at any point
during three-plus years of active case administration is itself fatal to the motion,
independent of any discretionary analysis. The Court addresses that threshold
argument first.
I. 	The Rule 7023 Motion Is Timely.
The threshold question is whether the Putative Class Claimants’ motion is
procedurally 	timely. 	The 	Liquidating 	Trustee 	argues 	that 	the 	failure 	to 	seek
application of Rule 7023 at any point during the three-plus years these cases have
been pending is itself fatal. The Court disagrees, and the disagreement is compelled
by binding circuit authority.
In Charter, the Eleventh Circuit held that, absent an adversary proceeding,
the first opportunity to seek application of Rule 7023 occurs when an objection to a
proof of claim creates a contested matter under Rule 9014. Before that point, the
motion is not ripe.21 The Liquidating Trustee filed the Objection on January 23, 2026,
21Charter, 876 F.2d at 874 (“[A]bsent an adversary proceeding, the first opportunity a claimant has to
move under Bankruptcy Rule 9014, to request application of Bankruptcy Rule 7023, occurs when an
objection is made to a proof of claim. Prior to that time, invocation of Rule 23 procedures would not be
ripe, because there is neither an adversary proceeding nor a contested matter.” The Bankruptcy Rules,
the court added, “impose no time requirement” for such a motion, and “the Code contains no other
instance where a claimant must perfect a claim prior to objection.”).
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creating the contested matter. The Putative Class Claimants filed their Rule 7023
motion in their timely response, on the court-ordered deadline. Under Charter, the
motion is not late.22
The Liquidating Trustee's reading of In re Bicoastal Corp., arguing that a Rule
7023 motion must be filed “as soon as practicable” after the filing of the proof of claim
itself, regardless of whether any objection has been made, would place Bicoastal in
direct conflict with Charter. The better and only permissible reading of Bicoastal is
that the obligation to move promptly is triggered by the objection that creates the
contested matter, not by the filing of the claim. The Bicoastal claimants lost because
they failed to act even after the objection. These Claimants acted on the court-ordered
response deadline.23
The Admin Stipulation reinforces this conclusion. The parties agreed in
writing to defer all action to “allow or disallow, or liquidate” the Putative Class Claim
until distributions to general unsecured creditors were forthcoming. The resolution
of whether Rule 7023 applies is necessarily part of the process of determining how
the Putative Class Claim will be allowed or disallowed. The Liquidating Trustee
22 The Liquidating Trustee's attempt to distinguish Charter on the ground that the class there was
certified postpetition before the bankruptcy court considered Rule 7023 is factually accurate but legally
irrelevant to Charter's procedural ripeness holding. That holding is articulated as a general rule of
bankruptcy procedure and does not turn on the existence of prior class certification. Charter, 876 F.2d
at 874–75.
23In re Bicoastal Corp., 133 B.R. 252, 256 (Bankr. M.D. Fla. 1991). 	The Bicoastal claimants lost
because they waited months after the objection, missed the hearing, allowed the claim to be disallowed,
and still did not seek Rule 7023 relief for months thereafter. These Claimants moved on the court-
ordered response deadline. 	Whatever Bicoastal means by “as soon as practicable,“ moving on the
court-ordered deadline satisfies it.
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agreed to that deferral and received its benefit: two-plus years of unimpeded estate
administration during which no Rule 7023 fight disrupted that work.24 . Having
received that benefit, the Liquidating Trustee cannot now characterize the agreed
inaction as evidence of the Claimants' procedural default.25
The Court therefore holds that the Rule 7023 motion is timely. That holding,
however, does not end the analysis. Charter's word is “may.” Timeliness establishes
that the Court has the authority to apply Rule 7023. It does not require that the Court
do so.
II. 	The Court Declines to Apply Bankruptcy Rule 7023.
With timeliness resolved in the Claimants’ favor, the Court turns to the
dispositive question: whether to exercise its discretion to apply Rule 7023. Before
turning to the three Musicland factors, it is useful to identify the organizing principle
that makes those factors cohere. Rule 7023 in the bankruptcy context exists to
perform a specific function: to convert illusory individual claims into aggregate
claims, giving dispersed small creditors an economically viable path to recovery they
24 The Court is careful to distinguish the two periods of inaction. From the Petition Date through the
Admin Stipulation (October 2022 – October 2023), there was no agreement of any kind between the
parties regarding the Putative Class Claim. The Claimants simply did not move during this
approximately one-year period, despite having full visibility into the case — Fischer was a member of
the Creditors' Committee. From the Admin Stipulation through the filing of the Objection (October
2023 – January 2026), both parties agreed to defer all action on the Putative Class Claim. The
Liquidating Trustee cannot treat the second period as evidence of the Claimants' disregard for the
process when the Liquidating Trustee itself agreed to the standstill and received its benefit. The pre-
stipulation inaction, while noted, is addressed more fully in the cost-benefit analysis under Factor 3.
25 The Claimants' reliance on In re Quantegy, Inc., 343 B.R. 689 (Bankr. M.D. Ala. 2006), for the
proposition that a consensual deferral may support later Rule 7023 application is well-taken but
limited. In Quantegy, the class representatives filed an adversary proceeding seeking Rule 7023 relief
nine days after the petition date — a posture of affirmative early action that contrasts with the one-
year pre-stipulation period here during which no such action was taken.
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could not achieve on their own. The Musicland factors, and the broader discretionary
inquiry they structure, all point toward the same underlying question: on these
specific facts, can the class mechanism actually perform that function? For the
reasons that follow, it cannot.
A. 	Lack of Prepetition Certification — Weighs Against Application.
No court has ever certified the putative class. Not the Missouri state courts
where the actions were first filed. Not the Eastern District of Missouri where they
were removed and later stayed. The class actions were at the motion-to-dismiss stage
when the automatic stay halted them in October 2022, and they have not moved since.
The Court acknowledges the circumstances. The Fischer and Abbott actions
were not neglected prepetition; they were mid-litigation when the bankruptcy
intervened. Counsel did not ignore a certified class; the certification process was
interrupted by the automatic stay before it could begin. This context matters to the
tone of the analysis. But it does not change the legal significance of the factor.
Prepetition certification — whatever the reason for its absence — is what would have
given individual class members a reasonable basis to believe they need not comply
with the bar date, because a court-appointed representative was already protecting
their interests. Without that certification, no such expectation existed.26
26Charter, 876 F.2d at 873 n.8 (“[I]n the case of a class that has already been certified by the district
court, it seems backwards to then require the individual class members to file separate proofs of claim
in bankruptcy court.”). That logic, as the court acknowledged, does not apply where no certification
has ever occurred. See also In re Wildwood Vills., LLC, 2021 WL 1784408, at *4–5 (Bankr. M.D. Fla.
May 4, 2021) (declining to apply Rule 7023 even where a state court had certified the class prepetition,
finding class treatment would adversely affect estate administration, and noting that Rule 7023 should
be used “sparingly”).
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Courts have consistently treated the absence of prepetition certification as the
single most important factor in the Musicland analysis, and the majority have denied
Rule 7023 application on this ground alone.27 Notably, even courts that have applied
Rule 7023 despite the absence of prepetition certification have done so where other
factors (early action, a defined class universe, compelling equities) more than
compensated. None of those features are present here. This factor weighs against
application.
B. 	Notice to Putative Class Members — Neutral.
The legal standard for bar date notice is whether it was reasonably calculated,
under all the circumstances, to apprise interested parties of the pendency of the
action. 28 This Court's Bar Date Order made that finding in 2022, and no one has
challenged it in the three-plus years since. The Putative Class Claimants and their
counsel received actual service. Unknown class members received constructive notice
through publication in three newspapers of general circulation including the Wall
Street Journal.
The Claimants respond that zero individual filings proves the notice failed as
a practical matter. The Court acknowledges the force of this point. A consumer who
bought a can of Bang Energy at a gas station in Indiana and never read a legal notice
in the Wall Street Journal did not receive notice in any meaningful experiential sense.
27 See In re USA Gymnastics, Case No. 18-09108-RLM-11, 2020 WL 1932340, at *4 (Bankr. S.D. Ind.
Apr. 20, 2020); In re Jamesway Corp., 1997 WL 327105, at *10 (Bankr. S.D.N.Y. June 12, 1997); In re
Bally Total Fitness of Greater N.Y., Inc., 402 B.R. 616, 620 (Bankr. S.D.N.Y. 2009).
28Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). See also Alderwoods Grp.,
Inc. v. Garcia, 682 F.3d 958, 972 (11th Cir. 2012).
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The gap between legal adequacy and practical effectiveness is real, and it is precisely
the gap that Rule 7023 exists to address.
But identifying the gap is not the same as filling it, and the function of the
second Musicland factor is not to resolve whether the class mechanism should fill it.
That question belongs to the third factor. The second factor asks whether notice was
legally adequate, and it was. Scoring this factor against the Claimants on adequacy
grounds, while simultaneously acknowledging that Rule 7023 exists precisely to
bridge the gap between legal adequacy and practical reach, would conflate the two
factors' distinct analytical functions. Factor 2 establishes that the gap exists. Factor
3 determines whether filling that gap with the class mechanism, at the cost this
record presents, serves the interests the rule was designed to advance. The Court
therefore treats this factor as neutral.
C. 	Impact 	on 	Estate 	Administration 	— 	Weighs 	Heavily 	Against
Application.
The 	third 	factor 	is 	where 	the 	analysis 	is 	most 	firmly 	grounded. 	The
fundamental inquiry under this factor is not simply whether class litigation would
disrupt the estate; disruption alone is insufficient. The inquiry is whether the benefit
that Rule 7023 application would deliver to the class members justifies the cost it
would impose on the estate and on the creditors who have participated in the process.
On the cost side of the ledger, the disruption is concrete and substantial. This
case has been pending for more than three and a half years. The Plan has been
confirmed and substantially consummated. The Liquidating Trustee has reduced the
general unsecured claims pool by more than $300 million and resolved all but one of
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thirty-two administrative claims. The Liquidating Trustee has determined to make
an initial distribution to general unsecured creditors, a determination that, under the
Admin Stipulation, was the precondition for this very objection. Into this posture,
applying Rule 7023 would inject a $500 million class claim (approximately 30% of the
entire 	GUC 	pool), 	requiring 	class 	certification 	proceedings, 	discovery 	into 	the
purchasing patterns of potentially millions of consumers across thousands of retail
locations nationwide, and the adjudication of an entirely unliquidated claim in a
substantially consummated liquidation. 29 	This is precisely the “gumming up the
works” that courts have consistently identified as grounds to deny Rule 7023
application. 30
On the benefit side of the ledger, the picture is more complicated than the
Claimants acknowledge, and more complicated than a simple invocation of the class
action's small-claimant rationale suggests. The class mechanism is designed to
deliver something to the individual consumer that she cannot obtain for herself: an
economically viable path to recovery. But in this case, that path leads somewhere
29In re Ephedra Prods. Liab. Litig., 329 B.R. at 5 (“[T]he potential interference with timely distribution
in itself presents sufficient grounds to expunge the class claims” and “[a]pplying Rule 23 to the class
claims now would initiate protracted litigation that might delay distribution of the estate for years.”);
In re Tarragon Corp., No. 09-10555-DHS, 2010 WL 3842409, at *4–5 (Bankr. D.N.J. Sept. 24, 2010)
(“[])pplying Rule 23 at this late stage would be wholly inconsistent with the efficiency goals of the
Bankruptcy Code.”); In re Wildwood Vills., LLC, 2021 WL 1784408, at *7 (“[W]ay too much time and
money have already been spent to now interpose an additional layer of procedures and fees that a class
claim represents.”).
30 The Claimants invoke In re Am. Reserve Corp., 840 F.2d 487, 489 (7th Cir. 1988), for the proposition
that creditors “have no right to the higher share of the debtor's assets they can achieve by excluding
rival creditors at the threshold.” True. But the prejudice at issue here is not mere dilution — every
allowed claim dilutes every other. It is the concrete cost of injecting large-scale class litigation into a
substantially consummated liquidation at a time when the claims reconciliation process is essentially
complete.
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close to nowhere.
Consider the actual position of the gas station consumer who bought a Bang
Energy drink. The Court infers from the nature of the product and its retail context
that her price premium claim (the difference between what she paid for a product
represented as containing Super Creatine and its actual value) amounts to a few
dollars at most. Bang Energy products were canned beverages sold at gas stations
and 	convenience 	stores, 	and 	the 	putative 	class 	encompasses 	consumers 	who
purchased “as little as one can.”31 A price premium attributable to a single-ingredient
representation on a gas station beverage purchase is, as a matter of reasonable
inference from the product and its retail price point, a few dollars. The Court further
infers, from the distribution chain the record establishes, that her claim is unprovable
as a practical matter. The Debtors sold through distributors to retailers, “countless
retailers who did not receive product directly from the Debtors, but from numerous
distributors,” with no consumer purchase record created or retained at the debtor
level. 32 On the consumer side, a canned beverage purchased at a gas station or
convenience store is the kind of anonymous retail transaction that generates no
documentation on either end. Class treatment does not solve this problem; it
aggregates 	it, 	pushing 	the 	proof 	difficulty 	into 	the 	certification 	and 	claims
administration process rather than eliminating it.
31 Dkt. No. 2988, at 27.
32 Id.
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And even if she could prove her claim, the Liquidating Trust Agreement
imposes a $100 minimum distribution threshold (no distribution is required on any
allowed claim of less than $100).33 No individual Bang Energy consumer claim
approaches that threshold. The practical consequence is that applying Rule 7023 here
would not put money in the pockets of deceived consumers. It would produce a
certified class, generate class counsel fees, and result in a distribution to class
members that rounds to zero. The class device is not serving its core function; it is
serving only its structural form.
The same analysis applies to the deterrence rationale the Claimants implicitly
invoke. Outside of bankruptcy, class actions serve two functions: compensatory
(delivering money to harmed parties) and deterrent (forcing defendants to internalize
the full cost of their misconduct, discouraging future conduct of the same kind). Both
functions fail here. The compensatory function fails for the reasons already stated.
The deterrent function fails for a separate and equally decisive reason: the Debtors’
assets were sold to Blast Asset Acquisition LLC, an affiliate of Monster Beverage
Corporation. 34 Monster is not a disinterested successor with no view on the Super
33 Section 4.7 of the Liquidating Trust Agreement provides that the Liquidating Trustee shall not be
required to make any payment to any holder of an allowed claim of less than $100.00. Given that
individual consumer claims for Bang Energy drinks involve a few dollars of price premium at most,
virtually no individual consumer claim would survive this threshold.
34 The Debtors' assets were sold to Blast Asset Acquisition LLC, an affiliate of Monster Beverage
Corporation. Sale Order (Dkt. No. 1658); Notice of Sale Closing (Dkt. No. 1750). That Monster is not
a disinterested successor is a matter of record: the Putative Class Claim itself describes the Orange
Bang arbitration (VPX Sports v. Orange Bang, Inc., Case No. 5:20-cv-1464 (C.D. Cal.)), in which
Monster and Orange Bang prevailed against the Debtors on the theory that CLL is not creatine and
the Super Creatine label is deceptive, with the arbitrator awarding $175 million against VPX. Dkt.
No. 2988, Ex. A ¶¶ 35–38.
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Creatine representation. Monster is the party that established, in prior litigation
against the Debtors, that the representation was false. The Putative Class Claim
itself describes the Orange Bang arbitration (filed by the Debtors against Monster)
in which the arbitrator found that CLL is not creatine, has none of creatine’s benefits,
and that the Debtors owed Monster and Orange Bang $175 million. Having prevailed
on that theory for $175 million, there is every reason to infer that Monster will not
turn around and perpetuate the same false claim it just finished litigating against.
The deterrent function presupposes a going enterprise with future conduct to
influence. The enterprise whose conduct is at issue has been liquidated, and the
successor is institutionally committed to the opposite position. Both rationales for the
class device fail simultaneously, and their simultaneous failure makes the case for
Rule 7023 application uniquely weak.
The Claimants have not pursued a cy pres argument in their briefing with any
particularity, but the possibility lurks in the background whenever individual
recovery 	is 	implausible. 	The 	Court 	addresses 	it 	briefly. 	Courts 	have 	grown
increasingly skeptical of cy pres as a substitute for direct class member recovery.35 In
the bankruptcy context, the concern is equally acute: cy pres redirects the recovery
away from the very people the class action is meant to serve, the Bang Energy
consumers, and toward third parties whose connection to the litigation is attenuated.
More fundamentally, a cy pres argument acknowledges, rather than answers, the
35 See Marek v. Lane, 571 U.S. 1003, 1003–04 (2013) (Roberts, C.J., respecting the denial of certiorari)
(noting “fundamental concerns” about cy pres arrangements and calling for future examination of
whether they are consistent with the requirement that a class action settlement be “fair, reasonable,
and adequate”).
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problem this Court has identified. Cy pres presupposes a functioning class mechanism
that cannot deliver individual recovery in the ordinary course; it is a mechanism for
redistributing 	surplus, 	not 	for 	creating 	class 	value 	where 	none 	exists. 	Where
individual consumer claims are unprovable, the distribution threshold eliminates
residual recovery, and both the compensatory and deterrent functions of the class
device are absent, cy pres is a workaround, not a justification.
The Claimants counter that denying Rule 7023 application means consumers
receive nothing at all, whereas applying it at least creates the possibility of some
recovery. That argument has surface appeal but proves too much. The relevant
comparison is not between Rule 7023 application and an imagined world of individual
claim filing. It is between Rule 7023 application and the claims process that was
actually provided: a process that included adequate notice, a bar date, and the full
protection of the Code's collective structure. That process ran its course. The
Claimants’ argument, taken to its logical end, would require application of Rule 7023
in every consumer product bankruptcy regardless of timing, certification history, or
administrative posture, because absent class treatment, small consumer claimants
always face individual claim economics that make filing irrational. That cannot be
the law, and it is not.36
36 The Court is aware that the same result might apply in any consumer product bankruptcy where
the debtor sold a small-dollar product to millions of customers and the class was not certified
prepetition. The opinion should not be read to foreclose Rule 7023 application in all such cases. The
result here reflects the specific conjunction of factors discussed.
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The third Musicland factor weighs heavily against application of Bankruptcy
Rule 7023. The cost to the estate and to creditors who have participated faithfully in
this process is concrete. The benefit to the individual consumers the class device is
meant to serve is, on these specific facts, largely illusory. The cost-benefit analysis
resolves the discretionary question clearly.
Alternative Relief
The Court's three-step framework requires one further step: determining
whether the class representatives individually retain any viable path to recovery. The
Court addresses this because the analytical framework the legal standard establishes
contemplated this inquiry, and the briefing left it open.
Carlton Harris's postpetition administrative expense claim was separately
resolved by the Admin Stipulation. The Order approving that stipulation37 granted
an administrative expense claim of $500,000, with funds held by class counsel
pending further order. It is presently unclear what will become of this administrative
claim or what the further order will provide.
Abbott and Fischer stand differently. Each has individual prepetition claims
arising from his own Bang Energy purchases. The briefing record, focused on the
threshold Rule 7023 question, was not constructed to adjudicate individual claims,
and the Court does not purport to do so here. What the record does establish is that
no purchase documentation was submitted in connection with this proceeding,
consistent with the Court's inference, applicable to the class generally, that purchases
37 Dkt. No. 2170.
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of canned beverages through the distribution chain established by the record
generate no consumer-side documentation. And for the reasons stated above, any
individual consumer claim, even if provable, would not approach the $100 minimum
distribution threshold under the Liquidating Trust Agreement. The Court therefore
concludes only that alternative individual relief does not alter the disposition of the
motion before it.
The Court does not by this ruling resolve the rights of individual putative class
members, whose bar date claims may have been tolled by the timely-filed Putative
Class Claim under applicable tolling principles.38 Those questions (whether any
individual claim is timely, provable, or above the distribution threshold) are not
before the Court and are not decided here.
Conclusion
The Bang Energy consumer at the heart of this case has a real grievance, and
the law designed Rule 7023, at least in part, for her. The rule applies when it can
actually serve that function: when aggregation converts illusory individual claims
into real recoveries for real people. On this record, it cannot. The distribution chain
leaves individual claims unprovable as a practical matter. The distribution threshold
makes individual recoveries impossible even if proven. And the deterrent rationale
that sometimes justifies class treatment even where individual recovery is modest is
38 The Claimants argue that the timely filing of the Putative Class Claim tolled the bar date as to
individual putative class members under American Pipe principles. See Am. Pipe & Constr. Co. v.
Utah, 414 U.S. 538, 554 (1974). Whether individual class members may seek to file claims in light of
this ruling, and whether any such claims would be timely, provable, or above the distribution
threshold, are questions not resolved by this order.
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absent here: the enterprise has been liquidated, and its successor is the party that
established in prior litigation that the Super Creatine representation was wrong. The
class device, faithfully applied to this record, serves only its form.
The motion is timely, and the Court gives the Claimants that. The cost-benefit
analysis is not close. The Objection is sustained.
Accordingly, it is ORDERED that:
1. 	The Objection of the Liquidating Trustee (Dkt. No. 2988) is SUSTAINED.
2. 	The Motion for Application of Bankruptcy Rule 7023 (Dkt. No. 3001) is
DENIED.
3. 	Proof of Claim No. 617, filed by Brendan Abbott, Peter Fischer, and Carlton
Harris, 	individually 	and 	on 	behalf 	of 	all 	others 	similarly 	situated, 	is
DISALLOWED in its entirety.
###
Copies to: all parties in interest
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