UNITED STATES BANKRUPTCY COURT
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NORTHERN DISTRICT OF CALIFORNIA
MTC TELEMANAGEMENT CORP., et al., No. 97-12893
Memorandum on Curry Claim
Claimant Thomas F. Curry is a creditor, former employee and minority shareholder of a defunct
corporation known as Ranger Telecommunications Corporation ("RTC"). According to his claim,
which the court takes as true for these preliminary matters, in 1988 RTC owned a California Certificate
of Public Necessity, a Carrier Identification Code, and a Carrier Access Code, all of which are necessary
for a telecommunications company to do business in California. Curry alleges that debtor MTC
Telemanagement Corporation entered into a conspiracy with officers of RTC whereby MTC was
allowed to use RTC's certificate and codes without "fair and adequate consideration."
In 1997, some nine years after the transfer of the assets to MTC, involuntary Chapter 11
petitions were filed against MTC and its related companies in this court. A trustee operated its business
until early 1999, when its customer base was sold and the case converted to Chapter 7. Curry, claiming
that he has a right to assert a claim on behalf of RTC, has asserted a priority administrative claim for
the time the business was operating in Chapter 11. He also asserts the right to a surcharge against the
principal secured creditor. The Chapter 7 trustee objects.
Curry bases his claim on his alleged right, as a shareholder of RTC, to bring a derivative action
on behalf of the corporation. The reason for the tortured procedural basis of Curry's claim is clear.
The claim does not allege that MTC came into possession of RTC's assets through theft or other non-consensual means. He concedes that MTC used these assets with the permission of RTC's CEO, and
alleges nothing more wrongful than the fact that RTC was not fairly compensated. The claim states a
cause of action for a fraudulent conveyance which Curry, as a creditor of RTC, can assert under his
own name. Unfortunately for Curry, under California law fraudulent transfer actions must be
commenced within three years of the transfer. 16 Cal.Jur3d, Creditor's Rights and Remedies, § 436.
Even if the statute of limitations had not long since passed Curry would be limited to a general
unsecured claim, as his cause of action had fully accrued when the bankruptcy petition was filed. See
section 101(5)(A) of the Bankruptcy Code.
In substance, all Curry has is a fraudulent conveyance claim which has been lost due to the
applicable statute of limitations and, even if not so barred, would be nothing more than a general
prepetition claim. No procedural machinations in the form of the claim or the way it is asserted can
increase Curry's rights. It is the substance of a claim, not its form, which governs how it is to be treated
in bankruptcy proceedings. Pepper v. Litton
, 308 U.S. 295, 305 (1939). Accordingly, the trustee's
objection will be sustained and the claim disallowed. Counsel for the trustee shall submit an appropriate
form of order.
Dated: November 8, 1999 ____________________________
United States Bankruptcy