In re: Décor Holdings, Inc., et al., No. 23-60 (2d Cir. 2023)
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Plaintiff, in his capacity as Litigation Administrator of the post-confirmation estates (the “Litigation Administrator”) of Post-Confirmation Debtor Décor Holdings, Inc. (“Décor Holdings”), appeals the district court’s order, vacating the bankruptcy court’s entry of default judgment against Defendant Sumec Textile Company Limited (“Sumec”) and remanding the case for further proceedings. The district court’s order re-opened an adversary proceeding that the Litigation Administrator initiated against Sumec to avoid preferential payments of $694,048.84 that Décor Holdings and its affiliated debtors (collectively, the “debtors”) made to Sumec in the ninety-day period before it filed for bankruptcy.
The Second Circuit dismissed for lack of jurisdiction. The court explained that notwithstanding the Litigation Administrator’s practical concerns regarding his ability to effectuate service on Sumec and ultimately collect on any judgment, the court sees no basis to apply the collateral order doctrine to hear an appeal challenging the vacatur of a default judgment which can be reviewed, if necessary, upon the entry of a final judgment in the adversary proceeding. Further, the court explained that this is not a situation where the only remaining questions involve relief and enforcement of the holding; rather, the adversary proceeding is at its infancy, with issues of service of process and the actual merits of the action (assuming service is effectuated) still to be resolved on remand. Thus, the dicta in Stone regarding the general rules of appealability has no application to the circumstances in this appeal.
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