# PCT Litigation Trust v. Oval Labs, Inc.

> United States Bankruptcy Court, D. Delaware · July 18, 2025

URL: https://www.frixlaw.com/law-library/cases/11103707

## Case

- **Court:** United States Bankruptcy Court, D. Delaware
- **Decided:** July 18, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
J. KATE STICKLES (Gey 824 NORTH MARKET STREET
JUDGE _& 7 WILMINGTON, DELAWARE
ee OY 302-252-3820
=) Ge
Wy alla
July 18, 2025

VIA CM/ECF

David R. Hurst, Esquire William E. Chipman Jr., Esquire
McDermott Will & Emery LLP Chipman Brown Cicero & Cole, LLP
1000 N. West Street, Suite 1400 1313 North Market Street, Suite 5400
Wilmington, DE 19801 Wilmington, DE 19801
Darren Azman, Esquire Joseph D. Frank, Esquire
McDermott Will & Emery LLP Burke, Warren, MacKay & Serritella, P.C.
One Vanderbilt Avenue 300 North Wabash Avenue, Suite 2100
New York, NY 10017 Chicago IL 60611

Re: PCT Litigation Trust v. Oval Labs, Inc. and Oval Finance, LLC
Case No. 23-11161 (JKS); Adv. Pro. No. 25-50438 (JKS)
Letter Ruling on Motion of Oval Labs Inc. and Oval Finance, LLC
to Dismiss PCT Litigation Trust’s Complaint Pursuant to Fed. R. Civ. P.
12(b)(5) and (6) and Fed. R. Civ. P. 7012(b) [Adv. D.I. 7]!
Dear Counsel:
Defendants, the Oval Entities, request that this Court dismiss the complaint filed by the
Plaintiff pursuant to Rules 12(b)(5) and (6) of the Federal Rules of Civil Procedure, made
applicable to this adversary proceeding pursuant to Rule 7012(b) of the Federal Rules of
Bankruptcy Procedure, for (i) failure to serve the entire, unredacted complaint upon the Oval

' D.L. references the docket in the main case, In re Prime Core Technologies Inc., No. 23-11161. Adv. D.1.
references the docket in the adversary proceeding, PCT Litigation Trust v. Oval Labs, Inc. and Oval Finance, LLC,
Adv. Pro. No. 23-11161.

July 18, 2025
Page 2

Entities, and (ii) failure to state a claim upon which relief can be granted (the “Motion”).2
Having reviewed the pleadings3 and considered the arguments of the parties,4 and for the reasons
set forth below, the Court agrees that Plaintiff has failed to effect proper service on the
Defendants. The Court will deny the Defendants’ Rule 12(b)(5) motion to the extent it seeks
dismissal of the Plaintiff’s claims; and instead, shall afford the Plaintiff fourteen (14) days to
effect proper service on Defendants by serving the unredacted complaint on the Defendants and
filing the complaint under seal pursuant to the Local Rules. The Defendant’s Rule 12(b)(6)
motion will be held in abeyance pending a status conference to be scheduled.
Rule 12(b)(5) of the Federal Rules of Civil Procedure, applicable to this adversary
proceeding by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure, states a party may
assert insufficient service of process as a defense to a claim for relief. “In resolving a motion
under Rule 12(b)(5), the party making service has the burden of demonstrating its validity when
an objection to service is made.”5
Defendants argue the Plaintiff has failed to satisfy the requirements of Rule 4(c) by
failing to serve the Defendants with a complete, unredacted copy of the complaint.6 In filing and
serving the redacted complaint, the Plaintiff relies on a Stipulated Protective Order entered by the
Court in the main bankruptcy case.7
The Certification of Counsel Regarding Stipulation for Protective Order represents that
the Debtors and the Official Committee of Unsecured Creditors “conferred and agreed to the

2 Adv. D.I. 7 (Motion of Defendants Oval Labs, Inc. and Oval Finance, LLC to Dismiss the PCT Litigation Trust’s
Complaint pursuant to Fed. R. Civ. P. 12(b)(5) and (6) and Fed. R. Bankr. P. 7012(b)) and 8 (Memorandum of Law
of Defendants Oval Labs, Inc. and Oval Finance, LLC In Support of Their Motion to Dismiss the PCT Litigation
Trust’s Complaint Pursuant to Fed. R. Civ. P. 12(b)(5) and (6) and Fed. R. Bankr. P. 7012(b)).
3 Adv. D.I. 27 (Notice of Completion of Briefing Regarding the Motion of Defendants Oval Labs, Inc. and Oval
Finance, LLC to Dismiss the PCT Litigation Trust’s Complaint pursuant to Fed. R. Civ. P. 12(b)(5) and (6) and Fed.
R. Bankr. P. 7012(b)) sets forth the pleadings relevant to the issues before the Court.
4 Adv. D.I. 7. Defendants filed a Request for Oral Argument on May 13, 2025, the day prior to the Pretrial
Conference (Adv. D.I. 22). During the Pretrial Conference on May 14, 2025, counsel argued the Motion. The Court
finds the facts and legal arguments were adequately presented in the briefs and at the Pretrial Conference with
respect to the Rule 12(b)(5) issue, and that the decisional process with respect to this issue would not be
significantly aided by additional oral argument. This finding is without prejudice to any future request for oral
argument on a Motion under Rule 12(b)(6).
5 Pelham v. Vbit Techs. Corp., No. 23-162-JLH-SRF, 2025 U.S. Dist. LEXIS 59214, at *8 (D. Del. Mar. 28, 2025)
(citing Grand Entm’t Grp., Ltd v. Star Media Sales, Inc., 988 F.2d 476, 488 (3d Cir. 1993)).
6 According to the Defendants, after they questioned the sufficiency of serving a redacted complaint and the
necessity of including the information set forth in the redacted paragraphs, the Plaintiff sent the Oval Entities, but
did not file, a “de-designated” version of the Complaint that had removed some, but not all, of the prior redactions to
the body of the Complaint and certain of its exhibits.
7 D.I. 323.
July 18, 2025
Page 3

form of the Protective Order to govern the exchange and protection of confidential information
in connection with these Chapter 11 Cases.”8 The Protective Order states: “This stipulation (the
“Stipulation” or “Protective Order”) is entered into by and between: (a) Prime Core Technologies
Inc. and its debtor affiliates (collectively, the “Debtors”); (b) the Official Committee of
Unsecured Creditors (the “Creditors’ Committee”); and (c) any other persons or entities who
become bound by this Protective Order by signifying their assent through execution of Exhibit A
hereto (the “Acknowledgement”).”9 The Defendants were not a party to the negotiation of the
Protective Order, did not sign the Acknowledgement, nor agree to any protective order.
The redactions in the filed complaint, which seeks to avoid and recover 78 fiat currency
transfers totaling $26,644,776 and five cryptocurrency transfers allegedly made to the Oval
Entities by the Debtors during the 90 days prior to the Debtors’ bankruptcy filing, are significant.
The complaint redacts the names of certain declarants who testified to facts that make up the
basis of the claims against the Defendants. Entire sections of questions and answers from
depositions are redacted. Alleged correspondence is also redacted. The Court finds the redaction
of facts, including the identity of the declarants of such facts, in a complaint fundamentally
unfair, and if permitted, would have the effect of preventing the Defendants from knowing fully
the claims being made against them. Simply stated, it is unfairly prejudicial for a defendant to
defend itself against claims without knowing the full contents of the complaint. Not only is it
prejudicial, but the redaction of the names of the declarants will cause needless expense and
delay, with the burden shifting to the Defendants to serve discovery requests on every possible
declarant in a hunt for who said what. Under these circumstances, the Court finds service of
process was insufficient.
Upon determining that process has not been properly served on a defendant, courts
possess broad discretion to either dismiss the plaintiff’s complaint for failure to effect service or
to simply quash service of process.10 Dismissal of a complaint is inappropriate when there exists
a reasonable prospect that service may yet be obtained.11 In such instances, the court should, at
most, quash service, leaving the plaintiffs free to effect proper service.12
Here, the Plaintiff may still succeed in its attempt to serve process on the Defendants. It
can do so by serving the unredacted complaint on the Defendants, filing the complaint under seal
(together with a motion to file the complaint under seal in accordance with Del. Bankr. LR.

8 D.I. 283.
9 D.I. 323-1 at 1.
10 Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir. 1992).
11 Id.
12 Id. (citing Richardson v. Ingram Corp., 374 F.2d 502, 503 (3d Cir.), cert. denied, 389 U.S. 866 (1967); Novak v.
World Bank, 703 F.2d 1305, 1310 (D.C. Cir. 1983); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and
Procedure § 1354 at 288–92 (1990)).
PCT Litigation Trust v. Oval Labs, Inc. et al., Adv. Pro. No. 25-50438 (JKS)
July 18, 2025
Page 4

9018-1). Such service will allow the Defendants to properly answer the allegations made in the
complaint and conduct discovery knowing each of the allegations contained in the complaint, all
while protecting personal information since the unredacted complaint need not be publicly
available on the Court docket. The Court finds this strikes the proper balance of the Defendant’s
interests in litigating the complaint and the importance of keeping personal information
confidential and out of the public view.
Based on the foregoing, the Defendants’ Rule 12(b)(5) motion is denied to the extent it
seeks dismissal of the Plaintiff’s claims. The Plaintiff shall have fourteen (14) days to effect
proper service on Defendants by repleading its complaint and serving the full, unredacted
complaint on the Defendants.
The Court will hold a status conference on the Motion as it relates to dismissal of claims
under Rule 12(b)(6) within 30 days after service of the unredacted complaint.
The parties should submit an appropriate form of order under certification of counsel,
including the scheduling of a status conference on remainder of the Motion.

Very truly yours,
ii wd)
ate Stickles
United States Bankruptcy Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11103707. Public record. Not legal advice.