In re Raejean S. Bonham dba World Plus
Bankruptcy No. F95-00897
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This is one of two recent decisions affecting creditors. Please see the Order and Table of even date for more information.

Please note the DEADLINE imposed by this order.

HERBERT A. ROSS
U.S. Bankruptcy Judge

In re RAEJEAN BONHAM, aka Jean Bonham, aka Jeannie Bonham, dba World Plus; WORLD PLUS, INC., an Alaska corporation; and ATLANTIC PACIFIC FUNDING CORP., a Nevada corporation, Debtor(s)	Case No. F95-00897-HAR In Chapter 7
In re BONHAM RECOVERY ACTIONS, a proceeding to jointly administer certain pre-trial issues in numerous related adversary proceedings.	ADV PROC NO F95-00897-168-HAR (BANCAP No. 96-4281) MEMORANDUM DECISION GRANTING MOTION TO WITHDRAW PROOFS OF CLAIM

1. INTRODUCTION- A number of defendants in the Bonham Recovery Actions (the BRA) have filed motions under FRBP 3006 to withdraw their proofs of claim to obtain a jury trial on the trustee's fraudulent transfer and preference avoidance action in district court. The motions will be granted.

2. BACKGROUND- Many BRA defendants seek to withdraw their proofs of claim so their adversary proceedings can be tried before a jury in the U.S. District Court. The motions were made relatively soon after the filing of the individual BRA adversary proceedings. There is a principle motion filed for one of the adversary defendants,⁽¹⁾ and many other BRA defendants have joined in. A table listing all of them and the docket entry where the motions and joinders are filed - main case, the BRA, or their individual adversary proceeding, is attached to the order filed concurrently with this memorandum.

The matter is being considered in the BRA since it involves common issues of fact and law raised in a number of individual adversary proceedings.

The motions to withdraw claims were subject to several conditions:

• that the claimants be allowed to file claims against World Plus, Inc. (WPI) or Atlantic Pacific Funding Corp. (APFC), if those entities were substantively consolidated, and
• that the claimants be permitted to file subsequent claims under 11 USC ß 502(h) and FRBP 3002(c)(3).

The first condition no longer presents a problem. The court has consolidated the RaeJean Bonham case with the two corporate nondebtors, WPI and APFC. The order of consolidation provides that the proofs of claim filed against Bonham will be deemed to be filed against the consolidated estates of RaeJean Bonham, WPI, or APFC. Also, the claims bar date was extended to allow the filing of any new claims until June 22, 1998.⁽²⁾

The second condition also creates no problem. The BRA defendants have cited the statute and related rule which will allow any BRA claimant to file a new claim based upon the avoidance of any transfers which the trustee may obtain.⁽³⁾ There should be no objection to allowance of such new claims which are properly filed. The trustee does not object to withdrawal of the claims, provided the claimants are barred from refiling their present proofs of claim in the bankruptcy proceedings.

The trustee has no objection to the filing of new claims under ß 502(h) by anyone whose present claims are being withdrawn and who has to pay a judgment to the trustee under one of the avoidance actions.⁽⁴⁾ These prospective claims are not the same as the claims being withdrawn by the pending motion.

3. LEGAL ANALYSIS- FRBP 3006 allows a creditor that filed a proof of claim to withdraw that claim under certain circumstances. The rule provides:

A creditor may withdraw a claim as of right by filing a notice of withdrawal, except as provided in this rule. If after a creditor has filed a proof of claim an objection is filed thereto or a complaint is filed against that creditor in an adversary proceeding, or that creditor has accepted or rejected the plan or otherwise has participated significantly in the case, the creditor may not withdraw the claim except on order of the court after a hearing on notice to the trustee or debtor in possession, and any creditors' committee elected pursuant to ß 705(a) or appointed pursuant to ß 1102 of the Code. The order of the court shall contain such terms and conditions as the court deems proper. Unless the court orders otherwise, an authorized withdrawal of a claim shall constitute withdrawal of any related acceptance or rejection of a plan.

The case law generally supports the right of a claimant, at least at the early stages of the adversary litigation, to withdraw a proof of claim when no legal prejudice will accrue to the other party. The fact that the party withdrawing the proof of claim will gain the right to a jury trial is not considered to be legal prejudice.⁽⁵⁾

If the movants had requested that the right to reassert the claims being withdrawn at a later date under the authority of In re Lowenschuss,⁽⁶⁾ the court would have granted the request. The facts of Lowenschuss are different than the BRA situation.

In Lowenschuss, it would have been futile to continue a litigation in the bankruptcy court because, the court had ruled that the property which was the subject of the lawsuit, was not deemed to be property of the estate. The results of any such litigation would have been a nullity at that time, or at least a very costly exercise for little benefit. But, the appellate court said the claimant should be allowed to refile the claim which it was withdrawing if it were later ruled that the subject property was property of the estate. Withdrawal of that claim, by the way, had nothing to do with obtaining the right to a jury trial.

In the present case, the debtors want to have a jury trial in federal district court. All the money available to pay creditors in this estate, with some insignificant exceptions, is coming from the trustee's avoidance actions. The trustee has, to date, recovered over two million dollars.

Had the BRA claimants failed to withdraw their proofs of claim, they would have lost their right to a jury trial before the U.S. District Court.⁽⁷⁾ If they are willing to give up their present claims to buy the right to a jury trial, they will be allowed to do so.

4. CONCLUSION- A separate order will be entered to implement this Memorandum Decision. That order will have a lengthy table identifying the approximately 200 entities who are withdrawing their previously filed proofs of claim.

Because the posture of the case has changed, the movants will be allowed to withdraw their motions to withdraw their proofs of claim by Friday, January 15, 1999. In such case, the right to a jury trial will be waived, and a trial will be held in the bankruptcy court, unless the district court rules otherwise.

Also, to facilitate settlement of BRA proceedings, any portion of a claim being withdrawn may be reinstated as part of a settlement with the trustee.

Dated: December 21, 1998

______________________________
HERBERT A. ROSS
U.S. Bankruptcy Judge

Serve:

RaeJean Bonham, Debtor

Cabot Christianson, Esq., for Trustee

Larry D. Compton, Trustee

John Burns/David G. Parry, Esqs., for Joint Defense Committee

Rebecca Copeland, Esq., for Joint Defense Committee

Brad Ambarian, Esq., for Various Adversary Defendants

Mark Davis and George Goerig, Esq, for Various Adversary Defendants

Ron Goss, Esq., for Gerard Uphues, et al

Michael MacDonald, Esq., for Various Adversary Defendants

Greg Oczkus, Esq., for Various Adversary Defendants

William Satterberg, Esq., for Various Adversary Defendants

Barbara Schuhmann, Esq., for Various Adversary Defendants

Gary Sleeper, Esq., for Various Adversary Defendants

Chris Zimmerman, Esq., for Various Adversary Defendants

Kammer, George & Wilberta, pro se (POC 1064)

Clemens, Roger, et al pro se (POCs 641,1016 )

Apukka, Sondra K., pro se (POC 229)

Rehbein, Dorothy, pro se (POC 517)

Richardson, James & Nikki, pro se (POC 183)

Tuescher, Christina, pro se (POC 617)

Hendren, David, pro se (POC 104)

Golsan, Virginia, pro se (No Claim )

Fiala, Frank, pro se (POCs 825,826, 827,828)

Janet Stafford, Adversary Proceeding Manager

Maia Weber, Deputy Clerk, Fairbanks

Clerk of Court D3635

1. See, Motion to Withdraw Proofs of Claim, filed by Brad E. Ambarian for various BRA defendants, Docket Entry 146 in the BRA, filed April 21, 1997.

2. Order Granting Trustee's Motion for Substantive Consolidation of World Plus, Inc. and Atlantic Pacific Funding Corporation With Debtor, Docket Entry 1545 in the main case, filed April 30, 1998.

3. 11 USC ß 502(h) and FRBP 3002(c)(3).

4. See, 11 USC ß 502(h) and FRBP 3002(c)(3).

5. In re Lowenschuss, 67 F3d 1394, 1399 (9^th Cir 1995), cert den 116 SCt 2497 (1966); In re County of Orange, 203 BR 977, 980 (Bankr CD Calif 1996); In re 20/20 Sport, Inc., 200 BR 972, 978-979 (Bankr SD NY 1996).

6. See, Footnote 4.

7. Langenkamp v Culp, 111 SCt 330 (1990); In re Hooker Investments, Inc., 937 F2d 833, 838-39 (2^nd Cir 1991). See, also, Granfinanciera, S.A. v Nordberg⁽⁸⁾

8. 492 US 33, 109 SCt 2782 (1989).

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