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International Union v. Meridian Automotive Systems-- Composites Operations

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS


March 30, 2009

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, ITS LOCAL 1766, AND RANCE CASTELLANI, PLAINTIFFS,
v.
MERIDIAN AUTOMOTIVE SYSTEMS-- COMPOSITES OPERATIONS, INC., DEFENDANT.

The opinion of the court was delivered by: Herndon, Chief Judge

ORDER

On November 7, 2008, the Court held a telephonic status conference regarding the bankruptcy stay in this matter (Doc 107).*fn1 During the status conference, the Court directed the parties to inform the Court in writing on or before February 7, 2009 as to the status of this case. Because neither party provided the Court with the required report, the Court entered a Show Cause Order directing the parties to address whether this case should not be dismissed or should be dismissed (depending on the respective point of view) pursuant to the bankruptcy disposition (Doc. 108).*fn2 On March 13, 2009, both parties filed their briefs. Plaintiffs' report states that the recovery on their claims will be 1% to 2% of their value; that the Trust established to pay these claims has accumulated sufficiently to pay some claims and that the Trust intends to make an additional distribution in the next few months (Doc. 109).*fn3 Plaintiffs ask the Court to set this for another status on June 30, 2009. Defendants maintain that the Court should dismiss this action as the continued prosecution would be a violation of the discharge injunction embodied in Section 524(a) of the Bankruptcy Code, 11 U.S.C. § 524(a). (Doc. 110).

The Court agrees with Defendants. Section 1141(a) of the Bankruptcy Code provides that a confirmed plan binds any creditor whether or not the claim or interest of such creditor is impaired under the plan and whether or not such creditor has accepted the plan. See 11 U.S.C. § 1141(a). The confirmation of a plan discharges the debtor from any debt that arose prior to the date of confirmation. Id. at § 1141(d)(1)(A). Such debts are discharged regardless of whether a proof of claim on such debt was filed or whether the claimant accepted the plan. Id. Furthermore, the Bankruptcy Code provides that a discharge operates as an injunction against the commencement or continuation of an action to collect a discharged debt. See 11 U.S.C. § 524(a)(2).

Here, the Bankruptcy Court confirmed a Fourth Amended Plan of Reorganization on December 6, 2006. Thereafter, on April 17, 2007, the Bankruptcy Court entered an Order granting the reorganized debtors' objection to the Claim as priority and reclassified the Claim to a general unsecured Claim. Thus, pursuant to the Bankruptcy Court's Order, dismissal of Plaintiffs' cause of action is proper. Therefore, the Court DISMISSES without prejudice Plaintiffs' cause of action. The Court will close the file.

IT IS SO ORDERED.


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