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Debtor-Creditor — receivership

By: WISCONSIN LAW JOURNAL STAFF//January 31, 2013//

Debtor-Creditor — receivership

By: WISCONSIN LAW JOURNAL STAFF//January 31, 2013//

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Wisconsin Court of Appeals

Civil

Debtor-Creditor — receivership

When this appeal was filed, the central dispute was whether the circuit court properly prohibited Daniel Virnich and Jack Moores, the de facto owners of Communications Products Corporation (CPC), from filing a derivative action on behalf of CPC against American Trust and the receiver, Daniel Polsky. After our review of the record suggested that the appeal might be moot, we held oral argument.

At oral argument, the parties agreed that this case is moot as it relates to the circuit court’s decision to deny Virnich and Moores leave to file a derivative action on behalf of CPC against American Trust and Polsky. The appeal is moot in this respect because, during the pendency of this appeal, the receivership was terminated. Thus, Virnich and Moores, in their ownership role, no longer need the receivership court’s permission to act with respect to bringing a derivative claim because, simply put, there is no longer a receivership.

Turning from the question of a potential derivative action by Virnich and Moores to the portion of the circuit court’s order that purports to prohibit CPC from filing a direct action against American Trust and Polsky, it does not appear to us that the circuit court actually intended to prohibit CPC itself from filing a direct action against any party. However, at oral argument the parties agreed that the circuit court’s decision does prohibit CPC from filing suit against American Trust and Polsky and, therefore, we will assume that that is true for purposes of this opinion.

Consequently, we work from the premise that the circuit court’s order prohibits CPC from suing American Trust and Polsky, and we address the propriety of that part of the order. In this respect, we conclude that the order incorrectly decides that CPC has forfeited its right to bring a suit for damages against either American Trust or Polsky.

Accordingly, we deem this appeal moot as to appellants Virnich and Moores, and that portion of the appeal is dismissed. As to appellant CPC, we reverse the order. Not recommended for publication in the official reports.

2011AP1234 American Trust & Savings Bank et al. v. Communications Products Corporation et al.

Dist IV, Grant County, Van De Hey, J., Lundsten, P.J.

Attorneys: For Appellant: Bradbury, Philip J., Madison; Baumbach, Devon R., Madison; For Respondent: Gibeault, Patricia M., Madison; Clarkowski, Andrew J., Madison

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