The Tenth Circuit Court of Appeals published its opinion in Search Market Direct, Inc. v. Jubber on Monday, July 16, 2012.
The Tenth Circuit affirmed in part and reversed in part the district court’s decision. The three cases before the Court arose from bankruptcy proceedings initiated by debtor Steve Zimmer Paige in 2005. “The parties driving the litigation are Search Market Direct, Inc. (SMDI) and ConsumerInfo.com (ConsumerInfo). Both seek control of the internet domain name “freecreditscore.com” (the Domain Name), which once belonged to Paige. SMDI purchased the Domain Name from a third party shortly after Paige filed for bankruptcy. In May 2006, the estate’s trustee instituted an Adversary Proceeding to recover it. In December 2006, the bankruptcy court entered a Sale Order approving an Asset Purchase Agreement under which, inter alia, ConsumerInfo agreed to provide funds to repay the estate’s creditors and litigate the Adversary Proceeding in exchange for the estate’s promise to give ConsumerInfo the Domain Name if it was recovered.”
“In 2007, the parties proposed competing Chapter 11 plans for the estate. The bankruptcy court denied confirmation of the plan SMDI proposed, under which the Adversary Proceeding would have been settled and SMDI would have kept the Domain Name. The court instead confirmed a Joint Chapter 11 Plan supported by ConsumerInfo and the Trustee. Under the Joint Plan, the Adversary Proceeding was transferred to a Liquidating Trust which continued to litigate it for the estate and ConsumerInfo. The bankruptcy court resolved the Adversary Proceeding in the Liquidating Trustee’s favor in 2009. The Liquidating Trustee transferred the Domain Name to ConsumerInfo and the Joint Plan was otherwise substantially consummated.”
On appeal, the Court found that the “Joint Plan was properly confirmed because it was proposed in good faith and was fair and equitable.” It also held that “the bankruptcy court did not err in denying confirmation of the SMDI Plan for lack of feasibility.” Additionally, the Court held “that the issues SMDI raises in the Adversary Appeal are not moot. Nonetheless, [it rejected] SMDI’s argument that the Trustee lacked standing to prosecute the AP and obtain turnover of the Domain Name.