Ruben Perales v. TerraVia Holdings, Inc. et al

Filing 57

ORDER by Judge James Donato granting 50 Motion to Lift Stay. (jdlc1S, COURT STAFF) (Filed on 10/4/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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IN RE TERRAVIA HOLDINGS, INC.,
SECURITIES LITIGATION

Case No.16-cv-06633-JD
ORDER RE MOTION TO LIFT STAY

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Re: Dkt. No. 50

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United States District Court
Northern District of California

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In this putative class action on behalf of purchasers of securities in TerraVia Holdings,

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Inc., the defendants are TerraVia Holdings, Inc., its former CEO, its current CEO, and its

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CFO/COO. On August 2, 2017, the corporate entity filed a voluntary bankruptcy petition under

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Chapter 11 of the United States Bankruptcy Code on behalf of itself and two affiliated companies

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not named in this action. The individual defendants have not filed for bankruptcy.

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“As a general rule, the automatic stay of section 362(a) protects only the debtor, property

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of the debtor or property of the estate. It does not protect non-debtor parties or their property.” In

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re Chugach Forest Products, Inc., 23 F.3d 241, 246 (9th Cir. 1994) (internal quotation marks

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omitted). This Court does not have jurisdiction to extend the automatic stay to a non-debtor party.

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Boucher v. Shaw, 572 F.3d 1087, 1093 n.3 (9th Cir. 2009). That is entrusted to the bankruptcy

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court. “Such extensions, although referred to as extensions of the automatic stay, are in fact

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injunctions issued by the bankruptcy court [under Section 105] after hearing and the establishment

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of unusual need to take this action to protect the administration of the bankruptcy estate.” Id.

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(internal quotation marks and citation omitted); In re Ripon Self Storage, LLC, 2011 WL 330087,

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at *6 (9th Cir. BAP 2011) (“[A]ny extension of the automatic stay to nondebtors does not occur

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automatically but requires the filing of an adversary proceeding requesting the bankruptcy court to

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act under [Section] 105(a).”).

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The Court has not been advised that the bankruptcy court has extended the stay.

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Consequently, this case may proceed against the non-debtor defendants and the previously entered

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stay is modified to that extent.

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IT IS SO ORDERED.

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Dated: October 4, 2017

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JAMES DONATO
United States District Judge

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United States District Court
Northern District of California

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