U.S. District Court, WDNY
Eastman Kodak Company v. Collins Ink Corporation
Background: The defendant provided ink to the plaintiff for use in its commercial ink-jet printers for over a decade. After the parties’ most recent three-year agreement, the defendant unilaterally terminated the agreement. The plaintiff brought an action for breach of contract and the defendant answered, counterclaiming that the plaintiff failed to provide customer records that used the defendant’s ink. After the plaintiff filed for bankruptcy, the defendant moved to compel the plaintiff to produce “end-user history data” identifying the plaintiff’s customers and to audit the plaintiff’s books and records pursuant to the underlying agreement. The plaintiff opposed the motion on the grounds that the motion was subject to the automatic stay under Section 362 of the Bankruptcy Code.
Ruling: The District Court denied the defendant’s motion. The court found that the motion was subject to the mandatory stay provision found in the Bankruptcy Code. Specifically, the stay did not apply to the defense of a claim initiated by a plaintiff who later becomes a bankruptcy debtor, but it did apply to counterclaims asserted against a debtor plaintiff, even if the plaintiff initiated the suit.
Brian Marc Feldman, Francis Paul Greene and Fred G. Aten Jr. of Harter Secrest & Emery LLP for the plaintiff; Edward P. Hourihan Jr. and Joseph S. Nacca of Bond Schoeneck & King PLLC, Anthony G. Covatta, Joel M. Frederic and Robert M. Smythof the Drew Law Firm Co., Donald J. Rafferty of Cohen Todd Kite & Stanford LLC