18-13341 (Western District of Wisconsin)
Prior to this bankruptcy case, a Wisconsin circuit court had appointed F. John Stark, III as the supplemental receiver in a post-judgment enforcement action by creditor Erick Hallick against the Debtor. The confirmed chapter 11 plan of reorganization proposed by a creditor provided in that plan’s section 6.13(a) that several lawsuits pending against the Debtor, including the state court “Receivership Action,” are “resolved” and the judgments docketed against the Debtor and orders “affecting the Debtor’s assets in favor of Hallick” in those cases, “shall be satisfied.” After failing to timely object to the plan at confirmation, despite notice, the receiver filed a Rule 60(b) motion to vacate the confirmation order, arguing that this court lacked subject matter jurisdiction, at least as to section 6.13(a) and its treatment of the Receivership Action. The receiver further argued that section 6.13(a) did not provide for payment of his fees in the Receivership Action, which he claimed was subject to the jurisdiction of the Wisconsin circuit court. The court denied the Rule 60(b) motion, finding that it had clear jurisdiction to confirm the Plan, including section 6.13(a). Noting that vacatur under Rule 60(b) is an extraordinary remedy granted only in exceptional circumstances, the court then held that the receiver did not meet his burden. Among other things, the court found that the receiver’s fees were to be paid from the Debtor’s interest in the creditor or its proceeds, which became property of the estate when the case commenced, and that the receiver fit the definition of a “custodian” under 11 U.S.C. § 101(11) but failed to comply with section 543, under which the court could consider a request to compensate the receiver for his services.