22 B 03672, 24 A 00229
Frank J. Kokoszka, chapter 7 trustee (the “Trustee”) for the estate of Gamal S. Naguib and Analida Naguib (the “Debtors”), filed an adversary complaint against the Debtors’ children Deborah Naguib and James Anthony and their businesses Selective Liquors LLC and Anthony Realty Incorporated, respectively, as well as Cantore Construction Company, a corporation that created a retail liquor store space for Selective Liquors (together, the “Defendants”). In his complaint, the Trustee alleged that the Debtors diverted valuable assets from their creditors through fraudulent and/or preferential transfers made to the Defendants and sought to avoid and recover those transfers. As the deadline to file avoidance actions approached, the Trustee filed a motion seeking to toll the statute of limitations imposed by section 546(a) of the Bankruptcy Code. The Court ultimately granted the motion, extending the deadline to August 1, 2024. After the Trustee filed his complaint on that date, the Defendants filed motions to dismiss the complaint, arguing, among other things, that the complaint was not timely filed and that the Court had lacked authority to extend the deadline imposed by section 546(a), under either Rule 9006(b) or the doctrine of equitable tolling. After noting that whether a statute of limitations like the one in section 546(a) can be extended under Rule 9006(b) is a matter of first impression in the Seventh Circuit, the Court agreed with and adopted the reasoning of the Eleventh Circuit’s holding in IBT International, Inc. v. Northern (In re International Administrative Services, Inc.), 408 F.3d 689 (11th Cir. 2005), and its progeny, finding both that the Court had the authority to extend the limitation period under section 546(a) and that “cause” had existed to extend the deadline prior to its expiration under Rule 9006(b). The Court also found that the Trustee diligently pursued his claims and that extraordinary circumstances prevented him from timely filing his complaint; as such, the Court held that, to the extent that the doctrine of equitable tolling was applicable, the Trustee was entitled to equitable tolling of the 546(a) statute of limitations to allow him to complete his discovery and file his avoidance action.