SO ORDERED. Dated: March 31, 2020 1 2 Daniel P. Collins, Bankruptcy Judge _________________________________ 3 4 5 UNITED STATES BANKRUPTCY COURT 6 DISTRICT OF ARIZONA 7 In re: ) Chapter 11 Proceedings ) 8 SWIFT AIR, LLC, ) Case No.: 2:12-bk-14362-DPC 9 ) Reorganized Debtor. ) Adversary No. 2:14-ap-00534-DPC 10 MorrisAnderson & Associates, Ltd., ) Litigation Trustee for the Reorganized ) UNDER ADVISEMENT ORDER 11 Debtor, ) 12 ) Plaintiff, ) 13 ) [NOT FOR PUBLICATION] v. ) 14 ) 15 Redeye II, LLC, A Connecticut limited ) liability company; Briad Development ) 16 West, LLC, a New Jersey limited liability ) company; Jerry Moyes and Vickie Moyes, ) 17 husband and wife; Jerry and Vickie Moyes ) 18 Family Trust; Swift Aircraft Management, ) LLC; Interstate Equipment Leasing, LLC, ) 19 a Delaware liability company; SME Steel ) Contractors, Inc., a Utah corporation; Swift ) 20 Aviation Group, Inc., an Arizona ) 21 corporation; Swift Aviation Management, ) Inc., an Arizona corporation; Swift ) 22 Aviation Sales, Inc., an Arizona ) corporation; Transjet, Inc., a North ) 23 Carolina corporation; and J. Kevin ) 24 Burdette, ) ) 25 Defendants. ) 26 1 Table of Contents 2 INTRODUCTION......................................................................................................................... 1 3 I. JURISDICTION .................................................................................................................... 3 4 II. BACKGROUND.................................................................................................................... 3 5 A. Moyes’ Business Interests................................................................................................... 3 6 B. Moyes Enters the Air Transportation Business .................................................................. 4 7 C. The Business of Moyes’ Affiliates and Amounts They Owed Swift at the Transaction 8 Date............................................................................................................................................. 5 9 1. Moyes Trust .................................................................................................................... 5 10 2. Swift................................................................................................................................ 6 11 12 3. SAVM............................................................................................................................. 6 13 4. SME ................................................................................................................................ 7 14 5. Transjet and Transjet Subsidiaries.................................................................................. 7 15 6. Services........................................................................................................................... 8 16 7. Sales ................................................................................................................................ 9 17 8. SAM................................................................................................................................ 9 18 9. SAG................................................................................................................................. 9 19 10. Transpay .................................................................................................................... 10 20 11. Risk ........................................................................................................................... 10 21 22 12. Redeye and Briad ...................................................................................................... 10 23 13. Legacy ....................................................................................................................... 12 24 D. Summary of Debts Owed to Swift by It’s Affiliates at the Transaction Date .................. 12 25 E. Debts Owed by Swift to Affiliates at the Transaction Date.............................................. 12 26 1 1. Moyes ............................................................................................................................ 13 2 2. Services ......................................................................................................................... 13 3 3. Sales .............................................................................................................................. 13 4 4. Transjet and Transjet Subsidiaries ................................................................................ 14 5 F. Summary of Debts Owed by Swift to Its Affiliates at the Transaction Date .................... 15 6 III. THE TRANSACTION ........................................................................................................ 15 7 A. Lead Up to the Transaction ............................................................................................... 15 8 B. The LOI ............................................................................................................................. 17 9 10 C. Ehrlich’s Role in the Transaction ..................................................................................... 18 11 D. Ehrlich’s Red Flag Email .................................................................................................. 20 12 E. Swift’s Financial Statements Just Before the Transaction ................................................ 23 13 F. Summary of the Transaction ............................................................................................. 24 14 G. Transaction Documents .................................................................................................... 28 15 H. The Legacy Transaction .................................................................................................... 33 16 IV. NEW SWIFT AFTER THE TRANSACTION BUT BEFORE THE BANKRUPTCY 33 17 V. SWIFT’S BANKRUPTCY .................................................................................................. 35 18 A. Executory Contracts .......................................................................................................... 36 19 20 B. Post-Petition Financing ..................................................................................................... 38 21 C. Saipan Air ......................................................................................................................... 40 22 D. Bankruptcy Claims Filed by Moyes’ Affiliates and Others ............................................. 41 23 E. Motion Seeking Conversion to Chapter 7 ......................................................................... 42 24 F. Confirmation of Plan of Reorganization ........................................................................... 43 25 VI. THE ADVERSARY PROCEEDING................................................................................. 44 26 1 A. Procedural History ............................................................................................................ 44 2 1. The Complaint and Dismissal of Causes of Action ...................................................... 44 3 2. Denial of Motion for Leave to File Fourth Amended Complaint ................................. 46 4 3. Discovery Disputes ....................................................................................................... 46 5 4. Motions for Summary Judgment .................................................................................. 48 6 5. Bankruptcy Court Jurisdiction and/or Authority .......................................................... 50 7 6. Motions in Limine......................................................................................................... 51 8 B. The Trial............................................................................................................................ 53 9 10 1. Plaintiff’s Witnesses ..................................................................................................... 53 11 a. Spindler ..................................................................................................................... 53 12 b. Moyes ........................................................................................................................ 53 13 c. Burdette ..................................................................................................................... 54 14 d. Huska ........................................................................................................................ 55 15 e. Forry .......................................................................................................................... 58 16 f. Cahill ......................................................................................................................... 59 17 2. Defendants’ Witnesses .................................................................................................. 59 18 a. Conry......................................................................................................................... 60 19 20 b. Huska ........................................................................................................................ 64 21 c. Penrod ....................................................................................................................... 66 22 d. Burdette ....................................................................................................................