Several of the Missouri Defendants filed motions to dismiss these Missouri state court actions because Popular failed to name Norvergence as a “necessary and indispensable party” under Missouri law. On April 11, 2005, a three-judge panel (“Panel”) granted the Missouri Defendants’ motions to dismiss for failure to name Norvergence as an indispensable party, but granted Popular sixty (60) days to join Norvergence as a party. Popular sought reconsideration of the Panel’s decision, which was denied.

Popular’s only alternative, after being denied reconsideration, was to petition the Bankruptcy Court for the District of New Jersey for relief from the automatic stay to enable it to name Norvergence as a “party” in each of the 500+ Missouri state court actions. Popular’s petition can be found by clicking here. On behalf of all of our clients who advised us that they were obligated to Popular, we filed a Response in Opposition to Popular’s Motion, which can be found by clicking here. In addition, the Norvergence Trustee filed an opposition to Popular’s motion, which can be found by clicking here.

The hearing for the “lift stay” motion took place on Monday, August 22, 2005 at 10:00 a.m. before Chief Judge Rosemary Gambardella.

Judge Gambardella denied Popular’s requested relief, and did not lift the stay. As such, assuming Popular does not seek an appeal of the Missouri Panel’s decision holding that Norvergence is a necessary and indispensable party, it appears that the 500+ collection actions in Missouri may soon be dismissed.

While that is terrific news to those Missouri Defendants, please be aware that Popular still has the following options left: (1) Popular could bring legal actions against the Missouri Defendants in the various home states of the Missouri Defendants, rather than in Missouri; (2) Popular could bring counterclaims against those Missouri Defendants who are Plaintiffs in the Adversary Proceeding where we will undertake the representation of that counterclaim in the bankruptcy court pursuant to our existing flat-fee arrangement; (3) Popular could appeal the Missouri three-judge Panel’s decision finding that Norvergence is a necessary and indispensable party, which cannot happen until after those cases are actually dismissed; or (4) Popular could theoretically do nothing, but, given its voracity in bringing the 500+ actions, coupled with its brazenness in seeking the Bankruptcy Court’s assistance to prosecute those 500+ baseless actions, we highly doubt that Popular will simply take no action.

1The filing of a bankruptcy petition by Norvergence triggered the application of the “automatic stay,” which gives the debtor (i.e., Norvergence) protection from its creditors (i.e., any party owed money by Norvergence, including each of you as well as the leasing companies), subject to the oversight of the bankruptcy judge, and brings all of the debtor's assets and creditors into the same forum where the rights of all concerned can be balanced. Thus, the automatic stay prohibits any actions being taken by Popular against the debtor (Norvergence) without first seeking, and being granted, relief from the automatic stay.

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