Proposed Dismissal of the Bankruptcy

I checked the docket on the bankruptcy today and there’s been some activity.  The receiver (well, the attorneys for the receiver) filed a stipulation for dismissal of the bankruptcy case, with approval of the creditors involved in the case as well as a lodgment. To sum up the document, the receiver states that:

• The TRO has a clause which prevents creditors and other victims from trying to recoup their losses through any non-SEC actions.
• That neither NASI nor the creditors could have known about the TRO when the bankruptcy case was filed.  And that neither party knew about the TRO when NASI agreed to go into bankruptcy.
• That it is in the best interests of the victims for there to be only one proceeding against NASI.  The overlap in the two cases would cause duplicate work which in turn would cause added expenses.
• If the two cases were to exist concurrently, the trustee would basically have to redo a ton of work that the receiver has already done or is in the process of doing.
• The creditors’ attorney had reservations about agreeing to dismiss the bankruptcy case because the bankruptcy would have “avoiding powers” that the receiver does not have.  But, the cost of maintaining the bankruptcy in addition to the receivership was also another concern.
• Because the creditors did not know about the TRO and filed their IB in good faith, NASI shouldn’t be able to go after the creditors for costs related to the IB.  Also, the creditors should recoup their costs and fees associated with the IB via the receivership, as a priority unsecured claim.

So, the bankruptcy is on life support and is just waiting for the judge to pull the plug.