Prendergast

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: Chapter 11

JOANN INC., et al., Case No. 25-10068 (CTG)

Wind-Down Debtors. (Jointly Administered)

JOANN INC., et al., Adv. Proc. No. 25-51022 (CTG)

Plaintiffs, Related Docket Nos. 26, 29, & 31

v.

ADVANTUS CORP., et al.,

Defendants.

ADVANTUS CORP, et al., Adv. Proc. No. 25-52463 (CTG)

Plaintiffs, Related Docket No. 6

v.

MICHAEL PRENDERGAST, et al.,

Defendants.

MEMORANDUM OPINION

Joann was an iconic national fabric and hobby retailer, with hundreds of stores

across the country.1 The company filed for bankruptcy in January 2025, less than

nine months after it had successfully emerged from a brief and fully consensual

prepackaged bankruptcy case in 2024 in which the company had restructured its

balance sheet but left its business operations largely intact. In the second bankruptcy

1 See In re Joann Inc., No. 25-10068, D.I. 5 ¶ 6 (Bankr. D. Del. Jan. 15, 2025). Debtor JOANN

Inc. along with its affiliated debtors, is referred to as “Joann.”

case, the company sold its assets to a liquidator, which proceeded to liquidate the

business.

In May 2025, a number of the company’s prepetition creditors, vendors who

had supplied goods after the first bankruptcy case but before the second, filed suit in

the Court of Common Pleas of Summit County, Ohio. They named various former

officers of Joann as defendants. The theory of the case is that the former officers

made false statements that induced the vendors to extend credit to Joann. Their

state court complaint thus asserts claims sounding in negligent misrepresentation

and common law fraud.2

As a result, two separate matters have now landed before this Court. First,

the Wind-Down Debtors – the post-confirmation entities that emerged from the

second bankruptcy case – have sued the vendors, seeking a declaration that their

state court action asserts what is actually an estate claim that was sold to the

liquidator in the sale, and is thus barred by this Court’s order approving the sale.

Second, the former officers removed the state court action to the U.S. District

Court for the Northern District of Ohio on the ground that it fell within the federal

court’s bankruptcy jurisdiction. That court then transferred the lawsuit to the

district court in Delaware, which has referred it to this Court. The vendors argue

that this Court should remand it back to the Ohio state court, both for want of subject-

2 The Ohio state court complaint is an exhibit to the Notice of Removal originally filed in the

District Court for the District of Ohio, and subsequently transferred to the District Court for

the District of Delaware. See Advantus Corp., et al. v. Prendergast, et al., No. 1:25-cv-01132,

D.I. 1-1 (D. Del. June 16, 2025).

matter jurisdiction and on equitable remand grounds. Alternatively, the vendors ask

that this Court abstain from the case, both on mandatory and permissive abstention

grounds.

On the question whether the vendors’ claim against the former officers is

barred by the sale order, the Court first addresses the question whether the Wind-

Down Debtors have standing to advance that argument. While this question is an

arguable one, the Court concludes that they do.

Analysis of the merits of that issue requires the Court to take into account the

Third Circuit’s recent decision in Whittaker Clark & Daniels.3 While that case may

have expanded the scope of the kinds of claims that are estate property under § 541

of the Bankruptcy Code, even under that standard the vendors’ claims here are not

the estate’s property. The vendors’ claims all require a showing that each vendor

relied on a false statement by each defendant. As such, those are still individual

rather than derivative claims and never became property of the estate. The vendors’

assertion of those claims is therefore not precluded by this Court’s order approving

the sale of Joann’s assets.

With respect to the various questions about jurisdiction, remand, and

abstention, the Court concludes that it has subject-matter jurisdiction over the suit

removed to the Ohio district court and transferred to Delaware. The action is not

subject to mandatory abstention. And, as an exercise of discretion, the Court will

3 See In re Whittaker Clark & Daniels Inc, No. 24-2210, 2026 WL 1131929 (3d Cir. Apr. 27,

2026).

deny the motion to abstain on permissive grounds and the motion to remand based

on equitable considerations.

Factual and Procedural Background

Joann was a national retailer of crafts and home decor products.4 It’s first

bankruptcy case in this Court, a fully consensual prepackaged case, was filed in

March 2024.5 The Court entered an order confirming that plan in April 2024, and

the plan became effective a few days later.6

Joann filed for bankruptcy again in January 2025.7 In that second case, this

Court approved a sale of substantially all of the debtors’ assets to a buyer, a

4 EA D.I. 24 ¶ 7. This Memorandum Opinion is intended to address the outstanding motions

in both (a) the adversary proceeding brought by the Wind-Down Debtors seeking to enforce

the sale order; and (b) the action brought by the vendors in Ohio state court that was removed

to federal court and transferred here. The Court will refer to the first of those cases, Joann

Inc., et al. v. Advantus Corp., et al., No. 25-51022, as the “Enforcement Action.” Items filed

on the Enforcement Action docket are cited as “EA D.I. __.” The Court will refer to the second

case, Advantus Corp., et al. v. Prendergast, et al., No. 25-52463 as the “Removed Action.”

Items filed on the Removed Action docket are cited as “RA D.I. __.”

5 Joann Inc., No. 24-10418, D.I. 1 (petition).

6 Joann Inc., No. 24-10418, D.I. 303 (confirmation order), D.I. 318 (notice of occurrence of

effective date).

7 EA D.I. 24 ¶ 14. For purposes of the Wind-Down Debtors’ motion for judgment on the

pleadings, the Court considers those facts alleged in the complaint and admitted in the

answer. See Fed. R. Civ. P. 12(c) (as made applicable hereto by Fed. R. Bankr. P. 7052); In

re Promise Healthcare Group, LLC, No. 23-50335, 2024 WL 1925902, at *5 (Bankr. D. Del.

May 1, 2024).

liquidator.8 This Court confirmed a plan in the second Joann bankruptcy case in July

2025, which became effective less than a week later.9

Meanwhile, in May 2025, certain of Joann’s vendors filed an action in the Court

of Common Pleas in Summit County, Ohio.10 The vendors named, as defendants,

various former officers of Joann.11 The basic theory of the complaint is that after the

first but before the second Joann bankruptcy case, the former officers made various

false and misleading statements about Joann’s financial condition that induced the

vendors to provide goods on credit.12 The complaint accordingly asserts claims for

common law fraud and negligent misrepresentation.

This set of events gave rise to the two adversary proceedings that are now

before this Court. First, in June 2025, the debtors (before the plan was confirmed)

sued the vendors, arguing that the claims asserted in the Ohio state court action were

actually estate causes of action, not direct claims belonging to the vendors. As a

8 D.I. 520. The buyer, a joint venture between GA Joann Retail Partnership LLC and

Wilmington Savings Fund Society, FSB, in its capacity as Prepetition Term Loan Agent, is

referred to as the “Joann Buyer.” The Court refers to the order approving that transaction,

which the parties at times describe (for complicated reasons that are not relevant here) as an

“agency agreement,” as the “sale order.”

9 Joann Inc., No. 25-10068, D.I. 1387 (confirmation order); D.I. 1416 (notice of occurrence of

effective date).

10 EA D.I. 24 ¶ 19. The plaintiffs in that lawsuit, Advantus, Corp., Fairfield Processing Corp.,

Gwen Studios, LLC, Low Tech Toy Club, LLC, Ormo Ithalat Ihracat A.S., and Springs

Creative Products Group, LLC, are referred to as the “vendors.”

11 The defendants in the Ohio state court lawsuit, Michael Prendergast, Jeffrey Dwyer,

Robert Will, Christopher DiTullio, Heather Holody, Michael Kennedy, and Melissa Bowers,

are referred to as the “former officers.”

12 EA D.I. 24-2 (Ohio state court complaint).

result, the debtors argued that those claims could only be asserted by the Joann

Buyer, not the vendors.13

The debtors – now the Wind-Down Debtors after the Joann plan had become

effective – amended the complaint in August 2025.14 After the vendors answered the

complaint, the Wind-Down Debtors moved for judgment on the pleadings.15

Thereafter, certain of the former officers filed a joinder in the motion for judgment on

the pleadings.16 The vendors then moved to dismiss the lawsuit for lack of subject-

matter jurisdiction and to strike the joinder filed by certain of the former officers.17

All of these motions are now fully briefed and ripe for decision.

Second, a few days after the debtors initiated the Enforcement Action, the

former officers removed the Ohio state court lawsuit to the United States District

Court for the Northern District of Ohio, on the ground that it was within the district

court’s “related to” jurisdiction set forth under 28 U.S.C. § 1334(b).18 That court

granted the former officers’ motion to transfer the case to the U.S. District Court for

the District of Delaware.19 The district court then referred the case to this Court.20

13 EA D.I. 1.

14 EA D.I. 24 (amended complaint).

15 EA D.I. 25 (answer); EA D.I. 26 (motion for judgment on the pleadings).

16 EA D.I. 28.

17 EA D.I. 29 (motion to dismiss); EA D.I. 31 (motion to strike).

18 Advantus Corp. v. Prendergast, No. 5:25-cv-01250, D.I. 1 (N.D. Ohio June 16, 2025).

19 Id., D.I. 25.

20 Advantus Corp. v. Prendergast, No. 1:25-cv-01132, D.I. 43.

The vendors have moved to remand this suit back to the Ohio state court on

the ground that this Court lacks subject-matter jurisdiction and have moved for this

Court to abstain from hearing it.21 The former officers have moved to stay any

consideration of the Removed Action pending the Court’s resolution of the

Enforcement Action.22 These motions are also fully briefed and ripe for decision. The

Court heard argument on all of these motions on April 6, 2026.

Jurisdiction

The Enforcement Action is brought as an action to enforce this Court’s order

approving the sale. As an action to enforce the Court’s prior order, it would typically

be within the subject-matter jurisdiction under the principle, set forth by the

Supreme Court in Travelers and by the Third Circuit in Essar Steel, that a federal

court always has subject-matter jurisdiction over a claimed violation of the court’s

prior order.23 The analysis here is not as simple as that, however, as that principle

presumes that the plaintiff has a sufficiently concrete stake in the matter that it has

constitutional standing to bring it. The law is clear that having a plaintiff with

standing is a jurisdictional requirement. And here, the vendors argue that the Wind-

Down Debtors lack the kind of stake in the enforcement of the sale order to have

21 RA D.I. 6 (remand motion); Advantus Corp. v. Prendergast, 1:25-cv-01132, D.I. 21

(abstention motion).

22 Advantus Corp. v. Prendergast, No. 1:25-cv-01132, D.I. 34 (stay motion).

23 See Travelers Indemnity Co. v. Bailey, 557 U.S. 137 (2009); In re Essar Steel Minnesota,

LLC, 47 F.4th 193, 201 (3d Cir. 2022). See also In re SunPower Corp., No. 24-11649, 2026

WL 1599285, at *7-8 (Bankr. D. Del. June 3, 2026).

standing to bring the action. In Part I of this Memorandum Opinion, the Court

concludes that the Wind-Down Debtors do have standing to enforce the sale order.

In addition, the vendors argue that this Court lacks subject-matter jurisdiction

over the Removed Action. For the reasons described below in Part III.A, however,

this Court does have jurisdiction over the Removed Action as one that falls within the

related-to jurisdiction set forth in 28 U.S.C. § 1334(b).

Analysis

I. The Wind-Down Debtors have standing to bring the Enforcement

Action.

As the Supreme Court explained earlier this Term in its decision in Bost, every

plaintiff in a lawsuit brought in federal court is required to “first answer a basic

question” that Justice Scalia posed in a 1983 law review article: “What’s it to you?”24

“For a plaintiff to get in the federal courthouse door and obtain a judicial

determination of what the governing law is, the plaintiff cannot be a mere bystander,

but instead must have a ‘personal stake’ in the dispute.”25

The vendors argue that the Wind-Down Debtors are effectively bystanders

here. If this Court’s order approving the sale of Joann’s assets to the Joann Buyer

precludes the vendors from pursuing the Removed Action, the most obvious

beneficiaries are the former officers. But while those former officers have filed a

“joinder” in the motion for judgment on the pleadings, they have not sought to

24 Bost v. Illinois State Board of Elections, 607 U.S. 71, 76 (quoting A. Scalia, The Doctrine of

Standing as an Essential Element of the Separation of Powers, 17 Suffolk U. L. Rev. 881, 882

(1983)). See also FDA v. Alliance for Hippocratic Medicine, 602 U.S. 367, 379 (2024).

25 Id.

intervene and therefore are not plaintiffs in the lawsuit. Alternatively, perhaps the

Joann Buyer, who on the Wind-Down Debtors’ theory would hold any claim that may

exist against the former officers, would have standing to enforce the sale order. The

Joann Buyer, however, has not sought to participate in this action. So why do the

Wind-Down Debtors have standing?

This Court views that question as an arguable one. As will be further described

in Part I.A.2, the Court ultimately concludes that the allegations of injury to the

Wind-Down Debtors are sufficient to clear the hurdle of standing. But before

explaining the reasons for that determination, the Court must first address the Wind-

Down Debtors’ arguments that the requirements of standing are inapplicable because

this Court is not an Article III court.

A. The Wind-Down Debtors have a sufficiently concrete stake in

the enforcement of the sale order to give rise to constitutional

standing.

1. A plaintiff in an adversary proceeding in bankruptcy must

have constitutional standing.

While the argument does not appear to be included in their briefing, at oral

argument the Wind-Down Debtors argued that the question of their standing to

assert the lawsuit need not be considered, on the theory that standing is a

requirement reflected in Article III of the Constitution, and therefore need not be

established in order for this action to proceed in this Court, which is a non-Article III

Court.26

26 See Apr. 6, 2026 Hr’g Tr. at 19 (“the better position that Article III three standing

requirements don’t apply in Bankruptcy Courts, as the Fourth and Fifth Circuits have held”);

Kiviti v. Bhatt, 80 F.4th 520, 533 (4th Cir. 2023) (“Once a case is validly referred to the

That argument rests on the Fourth Circuit’s recent decision in Kiviti. But even

if Kiviti were controlling, it would do little to help the Wind-Down Debtors here.

Kiviti did not hold that Article III standing requirements are entirely inapplicable in

bankruptcy. Recognizing that as a statutory matter a bankruptcy court can only

exercise the jurisdiction that is referred to it by a district court, and that a district

court cannot exercise jurisdiction if Article III standing is absent, Kiviti accepts that

without Article III standing at the time a case is filed, there is no “case” or

“controversy” that may be referred by the district court to the bankruptcy court.

Kiviti accordingly addresses only a narrower question – whether a bankruptcy

court must dismiss a case as moot in circumstances in which a district court would

be required to do so. It holds that a bankruptcy court need not dismiss a case that is

constitutionally moot. As this Court noted in passing in its decision in Avon, it

continues to believe, for the reasons the Tenth Circuit Bankruptcy Appellate Panel

explained in In re Pettine, that this holding of Kiviti was erroneous.27 The district

court’s authority to supervise the conduct of the bankruptcy court either through an

appeal or by withdrawing the reference at any time is an important feature that is

necessary for the bankruptcy jurisdictional scheme devised by Congress to itself

bankruptcy court, the Constitution does not require it be an Article III case or controversy

for the bankruptcy court to act.”); In re Technicool Sys., Inc., 896 F.3d 382, 385 (5th Cir. 2018)

(‘‘Bankruptcy courts are not Article III creatures bound by traditional standing

requirements.’’).

27 See In re AIO US, Inc., 672 B.R. 261, 268 n.19 (Bankr. D. Del. 2025) (citing In re Pettine,

655 B.R. 196, 206-212 (B.A.P. 10th Cir. 2023)). While the lead debtor in this case was AIO

US, Inc., the parties colloquially referred to the case as “Avon,” which is the brand by which

the debtors’ products were known. This Court will follow that convention.

comport with Article III.28 And as Pettine persuasively explained, permitting a

bankruptcy court to hear a case that could not be reviewed by the district court is

inconsistent with that statutory design.29

In any event, however, the Wind-Down Debtors have identified no authority

suggesting that a plaintiff may pursue an adversary proceeding in a bankruptcy court

if that plaintiff lacked a sufficiently concrete stake to file that case in a district court.

The Court accordingly rejects the Wind-Down Debtors’ contention that it may address

the merits of this action without a satisfactory answer to Justice Scalia’s question –

what’s it to the Wind-Down Debtors?

2. The allegations in the complaint are sufficient to establish

the Wind-Down Debtors’ standing.

While the Court views the question as a colorable one, the Court is satisfied

that the Wind-Down Debtors have an adequate answer to that question. The Third

Circuit explained in Global Industrial Technologies that the standing requirements

28 See generally Stern v. Marshall, 564 U.S. 462 (2011).

29 The Wind-Down Debtors and the Fourth Circuit opinion in Kiviti also point to the Fifth

Circuit decision in Technicool Systems as standing for the proposition that a bankruptcy court

may hear a dispute despite the absence of standing. But Technicool on its facts had nothing

to do with standing in bankruptcy court. It was addressing the requirement of a party’s

standing to bring an appeal in the district court from the bankruptcy court’s ruling. So while

the case says that “[b]ankruptcy courts are not Article III creatures bound by traditional

standing requirements,” 896 F.3d at 385, it is a vast overreading of that language to suggest

that the Fifth Circuit held that an adversary proceeding could go forward in bankruptcy court

in a case in which the plaintiff lacked standing. The case to which Technicool Systems points

as authority is Rohm & Haas Texas, Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205 (5th Cir.

1994). But that was not even a bankruptcy case. In addressing the statutory standard

required to bring a bankruptcy appeal, it commented in a footnote that “Article III is

inapplicable to bankruptcy courts.” Id. at 210 n.18. Nothing in that opinion, however,

suggests either that (a) a district court could refer a case to the bankruptcy court if the district

court lacked Article III standing or (b) Congress would have intended to permit bankruptcy

courts to hear cases in the absence of such standing.

are “very generous” and that an “identifiable trifle” of injury – perhaps analogous to

the “peppercorn” of consideration necessary to establish the formation of a contract –

will suffice to support standing.30

Here, the Wind-Down Debtors point to three specific ways in which the pursuit

of the claims in the Removed Action injure them. First, they argue that their role

under the terms of the confirmed plan is to administer the orderly liquidation of

claims against the estate, and that the vendors’ pursuit of their claims against the

former officers interferes with those efforts. The basis for this claim is that the former

officers, in defending against the vendors’ claims, may exhaust director and officers’

insurance that would otherwise be available to the Wind-Down Debtors or may assert

indemnity claims for which the Wind-Down Debtors would be liable.31

Second, they point to the language of the sale order, which authorizes them to

take all appropriate actions to enforce the terms of the sale order. And third, they

note that the vendors dispute the former officers’ standing to enforce the sale order

and argue that someone must have standing to do so. The Wind-Down Debtors, they

insist, are left as the logical parties to enforce it.

Neither the second nor the third theory is sufficient, since neither points to a

specific, concrete form of harm to the Wind-Down Debtors.32 The Wind-Down

30 In re Global Indus. Tech., Inc., 645 F.3d 201 (3d Cir. 2011) (en banc). See also Delta Health

Grp., Inc. v. Royal Surplus Lines Ins. Co., 327 F. App’x 860, 866 (11th Cir.

2009) (“Consideration is only required to rise to the level of a peppercorn.”).

31 Apr. 6, 2026 Hr’g Tr. at 24.

32 See Alliance for Hippocratic Medicine, 602 U.S. at 396 (“But even if no one would have

standing, this Court has long rejected that kind of ‘if not us, who?’ argument as a basis for

standing.”).

Debtors’ first argument, however, is sufficient to establish standing. To the extent

that the pursuit of the vendors’ claims against the former officers could potentially

consume insurance that would otherwise be available to the Wind-Down Debtors or

give rise to indemnity obligations that would increase the claims asserted against

them, that would appear to be sufficient injury to give rise to an Article III case or

controversy.

The vendors also argue that the Wind-Down Debtors lack prudential standing

to enforce the sale order. The Third Circuit explained in Wilton Armetale, however,

that the principles that were once described as “prudential standing” no longer

remain a basis for a court to dismiss a complaint for want of standing.33 The Court

will accordingly deny the motion to dismiss the adversary proceeding for lack of

standing.34

B. The former officers’ joinder will be treated as an amicus brief;

as such, it does not affect the standing analysis.

A side note on the issue of standing is the “joinder” in the motion for judgment

on the pleadings filed by the former officers and the vendors’ motion to “strike” that

33 See In re Wilton Armetale, Inc., 968 F.3d 273, 281 (3d Cir. 2020) (principles of prudential

standing simply “go to the merits” and “do not affect our constitutional jurisdiction.” See also

AIO, 672 B.R. at 272-273.

34 A case could be made that it is insufficient for the Wind-Down Debtors to have first asserted

these bases for standing at oral argument, rather than including them in the complaint. See

Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“each element must be supported in

the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with

the manner and degree of evidence required at the successive stages of the litigation”). In

the interest of the efficient disposition of this dispute, however, the Court has determined to

treat these allegations as sufficient, rather than require the Wind-Down Debtors to amend

their complaint to include these allegations more clearly and thereby delay the disposition of

the matter.

joinder.35 By way of background, in the context of an objection to the allowance of a

proof of claim, this Court has held that filing a “joinder” in another party’s claim

objection was tantamount to filing an independent objection.36 The reasoning there

was that there was little point in requiring a party that wants to raise the same

objection as another to copy and paste that party’s pleading. A “joinder” that operated

to incorporate the other party’s objection by reference ought to be able to accomplish

the same thing without creating unnecessary busywork.

But a claims allowance dispute is a “contested matter” and proceeds under

rules that are less formal than those applicable to adversary proceedings. An

adversary proceeding is governed by procedural rules that largely mirror regular civil

litigation in a federal district court. And in an ordinary civil lawsuit, specific rules

govern who is a party to the case. Civil Rule 24, made applicable to adversary

proceedings by Bankruptcy Rule 7024, sets forth a specific process, and identifies the

relevant criteria, for a party to intervene as a plaintiff or a defendant.

Unlike a contested matter, the Enforcement Action is an adversary proceeding

to which Rule 7024 applies.37 And whatever one might make of the “joinder” filed by

the former officers, it is not a motion that purports to make the kind of showing

contemplated by Rule 7024 to permit the former officers formally to intervene in the

Enforcement Action as plaintiffs.

35EA D.I. 28 (joinder); EA D.I. 31 (motion to strike).

36 In re Yellow Corp., 670 B.R. 397, 405 (Bankr. D. Del. 2025).

37 Bankruptcy Rule 7024 is not among the list of rules that are made applicable, under

Bankruptcy Rule 9014(c), to contested matters. So the filing of a “joinder” in the context of a

contested matter does not raise the same issues as those presented here.

So what, then, to make of the “joinder”? At the April 6 hearing, counsel for the

former officers who filed the joinder argued that, under the broad right to appear and

be heard in a chapter 11 case set forth in § 1109(b) of the Bankruptcy Code, the joinder

merely operates to permit a party-in-interest to argue for the same relief being sought

by another party.38 Importantly, they acknowledged that allowing their joinder would

not make them formal parties to the lawsuit and so would not affect the question of

standing. As counsel for the former officers put it, “if there is a problem with the

[Wind-Down Debtor’s] standing, I can’t solve it.”39

In substance, then, the former officers are essentially asking for the right to

participate as amici curiae. They would like the opportunity to offer their perspective

on why the Wind-Down Debtors are entitled to the relief they seek. But the Court

need only consider their points to the extent the Court finds them helpful. While the

vendors continue to oppose even that degree of participation, the law is well settled

that trial courts, which typically do not have formal rules expressly governing amicus

participation, generally have discretion to permit it.40 Because that is, in substance,

all that the joinder seeks to accomplish, the Court sees little harm or prejudice in

considering the joinder for that purpose, whether or not the former officers are correct

38 Apr. 6, 2026 Hr’g Tr. at 70 (“[T]he joinder doesn’t make me a party to this case. What the

joinder does is simply exercise my right under [section] 1109 to say this bankruptcy case is

under the auspices of another person's control … and I have a perspective and you may hear

it.”).

39 Id. at 71.

40 See Jin v. Ministry of State Security, 557 F. Supp. 2d 131, 136-138 (D.D.C. 2008).

in their assertion that § 1109(b) entitles them to that degree of participation. The

motion to strike will therefore be denied.

II. On the merits, the sale order does not bar the vendors’ suit against the

former officers.

Those conclusions accordingly tee up the merits of the Wind-Down Debtors’

motion for judgment on the pleadings. And while the Third Circuit’s decision in

Whittaker Clark & Daniels did (at least on this Court’s reading) expand the universe

of claims that become property of the estate from prior law, that expansion does

nothing to help the Wind-Down Debtors. Even under the broader formulation

adopted in Whittaker Clark & Daniels, the vendors’ claims are still direct claims that

belong to them, not claims that became property of the Joann bankruptcy estate.

This Court has twice before addressed arguments that claims being asserted

by creditors against third parties were in fact property of the bankruptcy estate and

therefore could not be asserted by the plaintiffs. In both TPC and First Guaranty

Mortgage, this Court addressed claims of that nature and resolved them by applying

what it understood to be the then-applicable Third Circuit framework. That analysis

was reasonably straightforward. Section 541(a) of the Bankruptcy Code provides that

property of the estate includes “all legal or equitable interests of the debtor in

property as of the commencement of the case.”41 An affirmative cause of action

seeking to recover money is undoubtedly “property.” And it is well settled that a

41 11 U.S.C. § 541(a)(1).

debtor’s interest in property is determined by applicable non-bankruptcy law,

typically state law.42

It therefore follows that one determines whether a particular action is property

of the debtor’s bankruptcy estate by asking whether the debtor could have asserted

that claim immediately before the bankruptcy filing under whatever law applies to

that claim. If so, the claim is property of the estate and thus within the exclusive

control of the trustee in bankruptcy. Indeed, the assertion of that claim by any other

person would be an effort to exercise control over property of the estate, and thus a

violation of the automatic stay.43

To be sure, claims for veil piercing or alter ego might raise complicated

questions. Outside of bankruptcy, if Parent Corporation dominated and controlled

the actions of Subsidiary Corporation, it is commonplace for creditors of Subsidiary

Corporation to sue Parent Corporation, arguing that Parent Corporation is the “alter

ego” of Subsidiary Corporation and therefore liable for Subsidiary Corporation’s debt.

Unsurprisingly, Subsidiary Corporation (almost by definition) is highly unlikely to

sue Parent Corporation on that claim.44 So there are not many state court decisions

that are terribly helpful in answering whether that is a claim that could also be

42 Butner v. United States, 440 U.S. 48, 55 (1979).

43 11 U.S.C. § 362(a)(3) (the bankruptcy filing “operates as a stay … of … (3) any act to …

exercise control over property of the estate”).

44 See In re Emoral, Inc., 740 F.3d 875, 881 (3d Cir. 2014) (“As a practical matter, it is difficult

to imagine a factual scenario in which a solvent Emoral, outside of the bankruptcy context,

would or could bring a claim for successor liability against Aaroma.”); Whittaker Clark &

Daniels, 2026 WL 1131929 at *12 n.17. (“as a practical matter, the debtor corporation is

unlikely to assert those claims against a controlling entity”).

asserted by Subsidiary Corporation (and would thus become property of the

Subsidiary Corporation’s estate in the event of its bankruptcy). The issue does,

however, regularly arise in the bankruptcy context.

The Third Circuit addressed this set of issues in cases such as Foodtown and

Emoral.45 This Court understood those opinions to focus on the issue whether under

applicable non-bankruptcy law the claims could be asserted by the debtor

immediately before the case. A key part of that analysis was whether the successful

prosecution of the claim would benefit all creditors. If so, the claim was viewed as

belonging to the company, with the creditors benefiting only “derivatively”.

Alternatively, if the successful prosecution of the claims would benefit only a subset

of the creditor body, the claim was likely held “directly” by that subset of creditors,

not by the company.46

The Third Circuit’s decision in Whittaker Clark & Daniels either altered this

analysis or, at the very least, suggests that this Court’s understanding of that

doctrine failed to appreciate some of the more subtle nuances. Because any “change”

45 Board of Trustees of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164 (3d

Cir. 2002); Emoral, 740 F.3d at 882.

46 Foodtown, 296 F.3d at 170 (“In order for the claim to be the legal or equitable interest of

the debtor in property, the claim must be a general one, with no particularized injury arising

from it…. On the other hand, if the claim is specific to the creditor, it is a personal one and

is a legal or equitable interest only of the creditor. A claim for an injury is personal to the

creditor if other creditors generally have no interest in that claim.”) (internal citations and

quotations omitted); Emoral, 740 F.3d at 880 (“The Diacetyl Plaintiffs fail to demonstrate

how any of the factual allegations that would establish their cause of action based on

successor liability are unique to them as compared to other creditors of Emoral. Likewise,

they fail to demonstrate how recovery on their successor liability cause of action would not

benefit all creditors of Emoral given that Aaroma, as a mere continuation of Emoral, would

succeed to all of Emoral’s liabilities. Thus, the Diacetyl Plaintiffs’ cause of action against

Aaroma is general rather than individualized.”) (internal quotations omitted).

in existing doctrine occasioned by the Whittaker Clark & Daniels decision turns out

not to make much difference to the resolution of the matter now before the Court,

that “change” is addressed only in the margins.47

47 Whittaker Clark & Daniels makes clear that “a claim may constitute property of the estate

notwithstanding whether the debtor corporation was authorized to assert it outside of

bankruptcy.” 2026 WL 1131929, at *15. That conclusion at least arguably breaks with

decisions of several other courts of appeals. See generally Koch Refining v. Farmers Union

Cent. Exch., Inc., 831 F.2d 1339, 1344 (7th Cir. 1987); Ahcom, Ltd. v. Smeding, 623 F.3d 1248,

1250 (9th Cir. 2010); In re Icarus Holding, LLC, 391 F.3d 1315 (11th Cir. 2004). The Third

Circuit states that this result follows from its decisions in Emoral and Wilton Armetale.

Whittaker Clark & Daniels, 2026 WL 1131929, at *15. Emoral does make the point that a

company does not typically pierce its own veil. This Court had not appreciated, however,

that this statement implied that the company’s right to assert the claim under non-

bankruptcy law was not dispositive of whether the claim was property of the estate.

That said, Wilton Armetale did indeed include language suggesting that a fraudulent

conveyance claim was property of the estate under § 541. Such a claim, of course, could not

be asserted by the debtor outside of bankruptcy, since the debtor itself is the party that made

the transfer. Leading bankruptcy scholars have taken the view, consistent with the statutory

text, that such a claim is controlled by the trustee by virtue of § 544 (which gives the trustee

the power to assert certain claims that creditors would otherwise have to recover on their

claims against the debtor), not § 541. See Douglas G. Baird, The Elements of Bankruptcy 118

(7th ed. 2022) (“The relationship between property of the estate under § 541 and the strong-

arm powers of § 544 is one of the most important and least appreciated in all of bankruptcy

law. The trustee enjoys the rights of the debtor under § 541. In addition, the trustee can

assert the rights that creditors could assert against the debtor’s property outside of

bankruptcy under § 544. Too often lawyers focus exclusively on § 541 and forget that § 544

does much of the work.”); Thomas H. Jackson, The Logic and Limits of Bankruptcy Law 68

(“Section 541 allows the trustee to step into the shoes of the debtor in gathering property of

the estate, and the avoiding powers (suggestively located in nearby sections) augment that

activity by giving the trustee certain other powers to bring assets into the estate.”).

In Wilton Armetale itself, the fact that the court found that the fraudulent conveyance claim

was controlled by the trustee under § 541 rather than § 544 was of relatively little

consequence, since the court went on to say that the trustee’s abandonment of the claims

returned them to the creditors who held them before bankruptcy. Wilton Armetale, 968 F.3d.

at 284-285. See also Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 463 (2017) (indicating

that upon the dismissal of a chapter 11 bankruptcy case, creditors would have the right “to

assert the fraudulent-conveyance claim themselves”); In re Interpictures Inc., 217 F.3d 74, 76

(2d Cir. 2000) (“[O]nce the debtor’s property is abandoned in bankruptcy, the property should

be treated as though no bankruptcy proceedings had occurred and therefore revert to the

party that held a pre-petition interest in it.”); In re Oldco Tire Distr., Inc., 676 B.R. 310, 316

n.27 (Bankr. D. Del. 2025) (same).

The Third Circuit’s opinion in Whittaker Clark & Daniels does set forth a clear

test, and the task of this Court, of course, is to apply it. Specifically, Whittaker Clark

& Daniels explains that the line between claims that belong to the debtor, and those

that are held by creditors individually, is drawn as follows: “claims are personal to

creditors when the theory of liability is based on a particularized injury directly

traceable to the conduct of the defendant,” while they are “property of the debtor’s

bankruptcy estate if the theory of liability is instead based on an injury to the debtor

corporation that resulted in secondary harm to all creditors.”48

Applying this rule to the claims asserted by the vendors against the former

officers in the Removed Action is straightforward. Those are claims held by the

vendors directly, not ones that became property of the Joann bankruptcy estate and

were thus sold to the Joann Buyer during the bankruptcy case. The central allegation

in the Removed Action is that former officers made false or inaccurate statements

about Joann’s financial condition on which the vendors relied in extending credit to

Joann.

Here, under Ohio law, each of the claims asserted by the plaintiffs requires a

showing that each plaintiff justifiably relied on the defendant’s statements or

omissions. The Supreme Court of Ohio made clear in Burr v. Board of County

Whittaker Clark & Daniels, however, follows this language from Wilton Armetale to its logical

conclusion, which means that claims that were held only by creditors outside of bankruptcy

become property of the bankruptcy estate under § 541. As noted above, however, even to the

extent this conclusion expands “property of the estate” under § 541 from how it is more

commonly understood, that expansion does not affect the resolution of the case at bar.

48 Whittaker Clark & Daniels, 2026 WL 1131929, at *18.

Comm’rs of Stark County that an element of fraud is the “justifiable reliance upon

the representation or concealment.”49 Indeed, the District Court for the Northern

District of Ohio, applying Ohio law, recently dismissed a fraud claim on the ground

that the plaintiff failed adequately to allege reliance.50 For that reason, under the

test set out in Whittaker Clark & Daniels, the theory of liability is necessarily based

on a particularized injury directly traceable to the conduct of the defendant. As a

result, the claims are individual claims.

In response, the Wind-Down Debtors argue that essentially any creditor could

make the same argument that the vendors who have filed the Removed Action have

made.51 In support of that contention, the Wind-Down Debtors point to the fact that

the complaint relies on the debtors’ press release and vendor presentations, and

therefore argue that the facts on which the complaint relies are “generally available

to any creditor” as that expression is used in Whittaker Clark & Daniels.52

The key point, however, is that even if it were true that any creditor could

allege that it individually relied on the former officers’ representations (and in light

of the requirements of Rule 11, it is far from clear that it is), to prevail on a claim for

fraud or negligent misrepresentation, the creditor will need to prove that reliance to

49 Burr v. Board of County Comm’rs of Stark County, 491 N.E. 2d 1101, 1105 (Ohio 1986).

50 Bibbs v. Allstate Ins. Co., No. 1:23-cv-1968, 2024 WL 4124171, at *10 (N.D. Ohio Sept. 9,

2024) (“there are no allegations concerning reliance as to the claims under Count III—a

required element for a claim of promissory fraud”).

51 Apr. 6, 2026 Hr’g Tr. at 9 (“that is theory of liability that could be made by any creditor,

certainly any trade … creditor”).

52 Id. (citing Whittaker Clark & Daniels, 2026 WL 1131929, at *14).

the satisfaction of the finder of fact. For that reason, these claims are individual

rather than general ones.

Finally, the Wind-Down Debtors argue that the kind of individual showing of

reliance that the vendors must make in order to state claims is no different from the

requirement of individual injury that the Emoral court found to be insufficient. But

that is incorrect. In Emoral, the point was that while every creditor of course had its

own claim, the theory of liability – a generalized theory of alter ego – applied equally

to every creditor. The critical difference here is that any creditor who cannot make

an individual showing of reliance is unable to establish the former officers’ liability.

The conclusion that the claims are individual rather than estate claims is therefore

entirely consistent with Emoral. The Wind-Down Debtors’ motion for judgment on

the pleadings will accordingly be denied.

III. The Court will deny the motions to remand and to abstain.

Having concluded that the Removed Action is not barred by the order

approving the sale of Joann’s assets to the Joann Buyer, the question is whether that

claim belongs before this Court. To that end, the vendors argue that the case should

be remanded because it is outside this Court’s jurisdiction; that it is subject to

mandatory abstention under 28 U.S.C. § 1334(c)(2); and that it is properly subject to

either permissive abstention and/or equitable remand. For the reasons set forth

below, the Court rejects each of these arguments and will retain jurisdiction over the

Removed Action.

A. Because this case was filed before the debtors emerged from

bankruptcy, it is within the related-to jurisdiction of § 1334(b).

The vendors have moved to remand this case back to Ohio state court on the

ground that the action is outside the scope of the related-to jurisdiction. That

argument was first presented to the District Court for the Northern District of Ohio,

which rejected it, finding that the possibility that the debtors may be required to

indemnify the defendants was sufficient for the case to fall within the “related to”

jurisdiction.53 When the case was transferred to the District of Delaware (before it

was referred to this Court), the vendors renewed that argument. The District Court

similarly rejected it, and proceeded to refer the case, under 28 U.S.C. § 157(a) and

the district court’s standing order of reference, to this Court.54 The vendors advance

the same argument here.

As an initial matter, the Court rejects the suggestion that this Court can

simply defer to the determinations on subject-matter jurisdiction made by the two

district courts to consider the issue.55 Countless cases explain that every federal court

is obligated to assure itself of its subject-matter jurisdiction.56 And the Supreme

Court decision in Christianson makes clear that the law of the case doctrine provides

no exception to that obligation.

53 Advantus Corp. v. Prendergast, No. 5:25-cv-01250, D.I. 25 at 2-4.

54 Advantus Corp. v. Prendergast, No. 1:25-cv-01132, D.I. 43.

55 See generally Christianson v. Colt Indus. Op. Corp., 486 U.S. 800, 818 (1988).

56 See, e.g., Hartig Drug Company Inc. v. Senju Pharmaceutical Co. Ltd., 836 F.3d 261, 267

(3d Cir. 2016).

That said, on the merits, the Court is satisfied that subject-matter jurisdiction

is proper here. As an initial matter, it is settled law that subject-matter jurisdiction

is typically based on the facts as they existed at the time the complaint was filed.57

Because this case was filed before the effective date of the Joann plan, the scope of

the 1334(b) “related to” jurisdiction is determined by reference to Pacor’s “conceivable

effect” test, not the more restrictive test that applies to post-confirmation

jurisdiction.58

Even when the question is viewed before confirmation, Third Circuit caselaw

takes a restrictive view of the exercise of related-to jurisdiction based on the mere

possibility of an indemnification claim by the third party against the bankruptcy

estate.59 Here, however, the insurance policies, to which the Wind-Down Debtors

pointed as their basis for standing to be heard in the Enforcement Action, make the

effect on the estate far less speculative than in cases where some intervening lawsuit

needed to be brought to show an effect on the estate. There is no dispute that these

policies, in which the debtors had an interest at the time the complaint was filed,

were eroded through the defense of the Removed Action. That is sufficient to

57 Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570 (2004) (“It has long been the

case that the jurisdiction of the court depends upon the state of things at the time of the

action brought.”) (internal quotation and citation omitted).

58 See Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984). See also In re Resorts Int’l,

Inc., 372 F.3d 154, 168–69 (3d Cir. 2004) (setting forth more restrictive “close nexus” test for

post-confirmation related-to jurisdiction).

59 See Pacor, 743 F.2d at 955; In re Federal–Mogul Global, Inc., 300 F.3d 368, 381 (3d Cir.

2002); In re Combustion Engineering, Inc., 391 F.3d 190, 227 (3d Cir. 2004).

establish a conceivable effect on the bankruptcy estate. The Removed Action is

accordingly within this Court’s subject-matter jurisdiction under 28 U.S.C. § 1334(b).

B. The Removed Action is not subject to mandatory abstention.

In certain circumstances, cases that fall within § 1334(b)’s grant of subject-

matter jurisdiction are nevertheless subject to “mandatory abstention” under

§ 1334(c)(2). Here, the question of abstention was briefed by the parties to the

District Court in the Northern District of Ohio. But that Court transferred the matter

to Delaware, and the Delaware District Court referred the matter to this Court,

without ruling on these issues. In the agenda filed in connection with the April 6,

2026 hearing, the parties identify the briefs filed in the District Court for the

Northern District of Ohio as the relevant materials on which this Court should base

its ruling on the motion. No party raised any objection to having the Court proceed

on this basis during the April 6, 2026 hearing. So with the apparent consent of the

parties, this Court is comfortable ruling on that basis.

Section 1334(c)(2) provides that:

Upon timely motion of a party in a proceeding based upon a State law

claim or State law cause of action, related to a case under title 11 but

not arising under title 11 or arising in a case under title 11, with respect

to which an action could not have been commenced in a court of the

United States absent jurisdiction under this section, the district court

shall abstain from hearing such proceeding if an action is commenced,

and can be timely adjudicated, in a State forum of appropriate

jurisdiction.60

60 28 U.S.C. § 1334(c)(2).

As counsel to certain of the former officers pointed out during the April 6

argument, the vendors have failed to meet their burden of coming forward with

evidence showing that the case could be timely adjudicated in the Ohio state court.

Judge Shannon’s opinion in SemCrude explains that the party moving for mandatory

abstention has the burden of demonstrating each of the statutory elements.61 In

SemCrude, the court denied the abstention motion because the moving parties “[had]

not carried their burden to show that these actions can be timely adjudicated in state

court.”62 In so holding, the court emphasized that “a naked assertion that the matter

can be timely adjudicated in the state court, without more[,] is insufficient to satisfy

this requirement.”63 The court emphasized that the moving party “must present

evidence to show that a state court action can be timely adjudicated.”64

The same is true of the vendors here. This is not intended in any way as a

criticism of the state courts in Ohio. Under the presumption of regularity and

principles of comity, this Court would ordinarily presume that a court of competent

jurisdiction would act in a timely manner absent evidence to the contrary. But

SemCrude and the cases on which it relied all emphasize that this element of

mandatory abstention is a factual question on which the party seeking abstention has

61 In re SemCrude, L.P., 442 B.R. 258, 274 (Bankr. D. Del. 2010) (“A party moving for

mandatory abstention must meet all the requirements of mandatory abstention for relief to

be granted.’’) (internal quotation and citation omitted).

62 Id.

63 Id. (internal quotation, citation, and brackets omitted).

64 Id.

the burden of coming forward with evidence. The vendors here have presented none

and therefore have failed to meet their burden.65

C. The Court will deny the motions for permissive abstention and

equitable remand.

The vendors also sought, as an alternative to remand for lack of jurisdiction,

equitable remand under 28 U.S.C. § 1452(b), which permits remand on “any equitable

ground.”66 In that same pleading, as well as in the Northern District of Ohio, the

vendors moved for permissive abstention under 28 U.S.C. § 1334(c)(1). The court’s

65 It bears note that in their briefing in Ohio, certain of the former officers relied on the

decision in In re Longview Power, 516, B.R. 282, 295 (Bankr. D. Del. 2014), which held that,

in light of the requirement that the state court action “is commenced … in a State forum of

appropriate jurisdiction,” mandatory abstention only applies if the state court case was filed

before the bankruptcy case was filed. Several years thereafter, however, Judge Shannon (the

author of the decision in Longview Power) concluded that Longview Power was inconsistent

with the Third Circuit’s holding in Stoe v. Flaherty, 436 F.3d 209, 213 (3d Cir. 2006). See In

re Gen. Wireless Operations Inc., No. 17-10506 (BLS), 2017 WL 6033562, at *4 (Bankr. D.

Del. Dec. 1, 2017). As Judge Shannon noted in General Wireless, Stoe does not directly

contradict the conclusion in Longview Power. General Wireless, 2017 WL 6033562, at *4

(“The Third Circuit in Stoe did not directly address whether actions commenced post-petition

satisfy [the ‘is commenced’] prong.”). Rather, Stoe is addressed to the question whether it is

implicit in the nature of abstention that there be some other state court proceeding that

remains pending and in favor of which the federal court may abstain. Because removal

operates to take the removed case out of federal court, the question in Stoe was whether

mandatory abstention is inapplicable in removed cases. The Third Circuit rejected that

argument. But in doing so, this Court does not believe the Third Circuit answered the timing

question raised by Longview Power, which asks at what point in time must the state law

action be “commenced” under § 1334(c)(2).

The Court further notes, however, that the Judge Noreika of the District Court for the

District of Delaware has persuasively concluded that, in view of the fact that § 1334(c) by its

terms says nothing about when the state action must have been commenced, the “is

commenced” language does not require that the state court action have been commenced

before the petition date. Sycamore Partners Mgmt., L.P. v. Endurance Am. Ins. Co., No. CV

18-1650 (MN), 2019 WL 3431107, at *6 (D. Del. July 30, 2019) (“the Court is persuaded by

the courts that have refused to read limitations into § 1334(c)(2) that are not apparent from

a plain reading of the statute”). Because, however, the vendors have failed to meet their

burden with respect to the timely adjudication requirement, the Court need not reach this

issue in order to find that mandatory abstention is inapplicable here.

66 See RA D.I. 7.

decision in In re Trans World Airlines recites 13 factors courts consider in deciding

motions for permissive abstention.67 As with most tests with that many factors, the

ultimate analysis boils down to a commonsense judgment about whether under all of

the circumstances of the case, it makes sense for the court to abstain. Similarly, the

district court opinion in LJM2 Co-Investment identifies eight factors courts consider

when asked to remand on equitable grounds. These eight factors are largely

overlapping with the 13 factors considered on motions for permissive abstention.68

The Court will spare the reader a discussion of each of these factors. Here, the

circumstances of the case persuade this Court that it is sensible for it to retain

jurisdiction. The lawsuit is obviously related to the bankruptcy case. At bottom, the

vendors are suing the former officers to collect on debts that were owed to them by

the debtors. Their claims against the debtors are addressed in the confirmed plan.

67 In re Trans World Airlines, Inc., 278 B.R. 42, 52 (Bankr. D. Del. 2002). The thirteen factors

are: “ (1) the effect on the efficient administration of the bankruptcy estate; (2) the extent to

which the issue of state law predominate over bankruptcy issues; (3) the difficulty or

unsettled nature of the applicable state law; (4) the presence of a related proceeding

commenced in state court or other non-bankruptcy court; (5) the jurisdictional basis, if any,

other than § 1334; (6) the degree of relatedness or remoteness of the proceeding to the main

bankruptcy case; (7) the substance rather than the form of an asserted ‘core’ proceeding; (8)

the feasibility of severing state law claims from core bankruptcy matters (9) the burden on

the court's docket; (10) the likelihood that the commencement of the proceeding in bankruptcy

court involves forum shopping by one of the parties; (11) the presence in the proceeding of

non-debtor parties; (12) the existence of the right to a jury trial; and (13) prejudice to the

involuntarily removed defendants.” Id.

68 LJM2 Co-Investment, L.P. v. LJM2 Capital Management, L.P., No. 02-1498, 2003 WL

431684, at *5 (D. Del. Feb. 24, 2003). The eight factors are: “(1) forum non conveniens; (2) a

holding that, if the civil action has been bifurcated by removal, the entire action should be

tried in the same court; (3) a holding that a state court is better able to respond to questions

involving state law; (4) expertise of the particular court; (5) duplicative and uneconomic effort

of judicial resources in two forums; (6) prejudice to the involuntarily removed parties; (7)

comity considerations; and (8) a lessened possibility of an inconsistent result.” Id.

For the reasons described above, this Court has rejected the former officers’ argument

that the claims are barred by the sale order. But that conclusion depends on the fact

that, to find the former officers liable on a theory of common law fraud, the court

hearing the Removed Action will be required to make a specific factual finding that

each plaintiff individually relied on a false statement made by a former officer. This

Court has no doubt that the state court in Ohio is more than capable of doing exactly

that. At the same time, there is a clear relationship between the adjudication of the

claim asserted in the Removed Action and the terms of this Court’s sale order. In

view of that relationship, this Court believes it appropriate for it to retain jurisdiction

over the Removed Action.

IV. The motion to stay consideration of the Removed Action is denied as

moot.

Finally, the vendors asked the Delaware District Court to stay consideration

of the Removed Action pending resolution of the Enforcement Action. The district

court found that this Court was better situated to decide that question.69 For the

reasons set forth above, the Court has denied the vendors’ motion for judgment on

the pleadings in the Enforcement Action. The Court does not believe that leaves

anything left to be decided in the Enforcement Action. The Court will accordingly

deny the motion to stay as moot.

69 Advantus Corp. v. Prendergast, No. 1:25-cv-01132, D.I. 43 at 3.

Conclusion

For the foregoing reasons, the Wind-Down Debtors’ motion for judgment on the

pleadings will be denied; the vendors’ motion to dismiss for lack of subject-matter

jurisdiction will be denied; the former officers’ motion to strike the vendors’ joinder

in the Wind-Down Debtors’ motion for judgment on the pleadings will be denied; the

vendors’ motion to remand will be denied; the vendors’ motion for abstention will be

denied; and the vendors’ motion for a stay pending resolution of the Enforcement

Action will be denied as moot. The parties are directed to settle appropriate orders

consistent with this decision. To the extent these rulings resolve all issues in the

Enforcement Action such that it is appropriate for that action to be dismissed, the

orders should so state.

Dated: June 11, 2026 Cx JAM

CRAIG T. GOLDBLATT

UNITED STATES BANKRUPTCY JUDGE

30