Morgan Olson L.L.C. v. Frederico (In Re Grumman Olson Industries, Inc.)
District Court, S.D. New York · 2012-03-29 · cited 41×
This case concerned a bankruptcy appeal in which Morgan Olson, having purchased assets from debtor Grumman Olson under a Section 363 sale order, sought to block a New Jersey products-liability suit brought by the Fredericos for injuries Denise Frederico suffered years after the bankruptcy closed; the suit asserted successor liability based on a truck Grumman had manufactured and sold before the bankruptcy. The district court affirmed the bankruptcy court’s grant of summary judgment to the Fredericos and dismissal of Morgan’s adversary proceeding. The court reasoned that because the Fredericos’ injury had not yet occurred when the bankruptcy proceedings ended, they had no notice or opportunity to participate and therefore could not constitutionally be bound by the sale order’s “free and clear” provisions. Enforcing those provisions to extinguish their post-closing state-law claims would violate both bankruptcy notice requirements and due process.