Bienert Katzman Littrell Williams LLP partner Tony Bisconti and associate Carlos Nevarez successfully obtained an order from the U.S. District Court for the Central District of California dismissing an appeal arising from a bankruptcy court’s 2022 ruling in favor of BKLW’s clients in the chapter 11 bankruptcy case of In re Heartwise, Inc.

In the adversary action filed in the underlying bankruptcy case, the debtor’s founder and former CEO sued BKLW’s clients—the debtor’s current CEO, its majority shareholder, its main supplier, and its operations provider—alleging a civil conspiracy through which BKLW’s clients purportedly squeezed out the debtor’s founder through the bankruptcy process, which resulted in a confirmed chapter 11 plan of reorganization. The lawsuit alleged causes of action for conspiracy, equitable subordination, and declaratory relief against BKLW’s clients and sought more than $10 million in damages and control of the company.

In 2022, after the debtor confirmed its chapter 11 plan, Tony, Carlos, and the BKLW team successfully obtained dismissal of the underlying adversary proceeding with prejudice. They also defeated the plaintiff’s motion asking the bankruptcy court to reconsider the dismissal order. The plaintiff then filed an appeal of the dismissal order with the District Court in May 2022. BKLW filed a motion to dismiss this appeal on the grounds that it was constitutionally and equitably moot. BKLW also filed a separate motion to dismiss the appeal for procedural reasons.

On September 27, 2024, a judge in the District Court issued a 22-page opinion in which it agreed with BKLW’s arguments and granted BKLW’s motions to dismiss the appeal. A copy of the opinion is found here.

Following the dismissal, Tony said:

“We are very happy with Judge Keller’s decision. Our clients stepped up in the chapter 11 bankruptcy case to ensure that the debtor could confirm a plan paying 100% to creditors—a rare feat—but unfortunately were subjected to several years of frivolous litigation as a result. We’re pleased our clients can close this chapter and focus on continued success in their businesses.”

Read more:

• BKLW obtains dismissal of five involuntary bankruptcy cases commenced against client’s companies, bklwlaw.com
• BKLW obtains dismissal of civil contempt proceedings seeking a sanction against client in excess of $40 million, bklwlaw.com
• BKLW obtains judgment totaling more than $219 million for a liquidating trustee following successful motion for summary judgment, bklwlaw.com