ARROW ELECTRONICS v JUSTUS, 9955206
U.S. 9th Circuit Court of Appeals
ARROW ELECTRONICS v JUSTUS
9955206
In re KAYPRO,
Debtor.
No. 99-55206
ARROW ELECTRONICS, INC.,
BAP No.
Appellant,
SC-97-01183-RiJRy
v.
HOWARD JUSTUS, Trustee,
Appellee.
In re KAYPRO,
Debtor.
No. 99-55210
ARROW ELECTRONICS, INC.,
successor-in-interest to SCHWEBER BAP No.
ELECTRONICS, INC., SC-97-01182-RiJRy
Appellant,
OPINION
v.
HOWARD JUSTUS, Trustee,
Appellee.
Appeals from the Ninth Circuit
Bankruptcy Appellate Panel
Riblet, Jones, and Ryan, Judges, Presiding
Argued and Submitted
June 9, 2000--Pasadena, California
Filed July 13, 2000
Before: Stephen Reinhardt and Richard A. Paez,
Circuit Judges, and William L. Dwyer,1 District Judge.
Opinion by Judge Dwyer
Kaypro filed for bankruptcy under Chapter 11, which was
converted to a Chapter 7 liquidation. Kaypro's trustee sued
Arrow and Schweber to avoid alleged preferential transfers.
All parties moved for summary judgment. The bankruptcy
court awarded partial summary judgments to the trustee,
determining that Kaypro's payments to the two creditors were
not made in the ordinary course of business.
A trial was held on the insolvency issue.
Peter Griesbach, Arrow's credit manager for five years,
stated in a declaration that restructuring agreements, like the
one between Kaypro and Arrow, were common to the indus-
try and routinely used by Arrow. Andrew Kay, Kaypro's prin-
cipal, testified that he signed personal guarantees or
promisory notes in the ordinary course of his business.
The experts agreed that Kaypro was insolvent by Septem-
ber 1, 1989. The trustee's expert allocated Kaypro's decline
in net worth between September 1988 and September 1989
using three alternative methods: straight-line, cost of sales,
and sales. Each of these methods showed Kaypro insolvent as
of March 1, 1989.
The Bankruptcy Appellate Panel (BAP) held that the issue
of whether payments under a restructuring agreement are
made in the ordinary course of business was a question of fact
that depended on the parties' dealings and industry practice.
The BAP gave Griesbach's testimony no weight because it
found it was a self-serving declaration, which provided no
foundation establishing his personal knowledge or experience
in the industry. The BAP affirmed the partial summary judg-
ment rulings on the basis that the evidence of record failed to
raise a triable issue.
Following a Ninth Circuit ruling that clarified an earlier
holding that had foreclosed the trustee's statute of limitations
defense, the bankruptcy court granted a motion to reconsider
its earlier ruling that the trustee's complaints were barred by
the statute of limitations.
The district court determined that certain payments made to
two of the Kaypro's suppliers were avoidable under 11 U.S.C.
S 547(b) as preferential transfers. Judgments were entered for
the trustee against Arrow and Schweber.
Arrow appealed.
[1] To avoid a transfer under S 547(b), the trustee must
prove by a preponderance that the transfer was (1) made to or
for the benefit of a creditor, (2) on account of an antecedent
debt, (3) made while the debtor was insolvent, and (4) made
within one year of the petition, and (5) enabled the creditor to
receive more than it would have had the transfer not been
made and the case liquidated pursuant to the provisions of
chapter 7 of the bankruptcy code. If, however, the creditor
proves that the transfer was (1) in payment of a debt incurred
by the debtor in the ordinary course of business or financial
affairs of the debtor and the transferee; (2) made in the ordi-
nary course of business or financial affairs of the debtor and
the transferee; and (3) made according to ordinary business
terms, the transfer may not be avoided.
[2] To apply the ordinary course of business exception, the
court must look to those terms employed by similarly situated
debtors and creditors facing the same or similar problems. If
the terms in question are ordinary for industry participants
under financial distress, then that is ordinary for the industry.
[3] Griesbach's five-year tenure as Arrow's credit manager
lends support to his claim of personal knowledge of industry
practice. Kay's testimony about his own firm's business prac-
tices was clearly based on personal knowledge and could be
read to mean that the restructuring agreements with Arrow
and Schweber comported with Kaypro's ordinary methods of
doing business.
[4] When viewed most favorably to the non-moving par-
ties, the record raised genuine issues of material fact as to the
disputed ordinary course of business exception, and neither
side was entitled to summary judgment. Remand for trial was
warranted.
[5] The methods used to apportion Kaypro's fiscal decline
were reasonable, and each method resulted in a showing of
insolvency by March 1, 1989. The bankruptcy court's finding
of insolvency as of that date was not clear error.
_________________________________________________________________
COUNSEL
Gary E. Scalabrini, Gibbs, Giden, Locher & Turner, Los
Angeles, California, for the appellant.
Cheryl L. Stengel and Michael T. O'Halloran, Law Office of
Michael T. O'Halloran, San Diego, California, for the appel-
lee.
_________________________________________________________________
OPINION
DWYER, District Judge:
I. INTRODUCTION
In these consolidated appeals from orders of the Ninth Cir-
cuit Bankruptcy Appellate Panel ("BAP"),2 we must decide
whether the United States Bankruptcy Court for the Southern
District of California erred in determining that certain pay-
ments made to two of the debtor's suppliers were avoidable
under 11 U.S.C. S 547(b) as preferential transfers. The bank-
ruptcy court ruled that the ordinary course of business excep-
tion, under 11 U.S.C. S 547(c)(2), did not apply as a matter
of law to debt restructuring agreements, and granted partial
summary judgment on that basis. The BAP disagreed, holding
that the issue of whether payments under a restructuring
agreement are made in the ordinary course of business is a
question of fact that depends on the parties' dealings and
industry practice. The BAP nevertheless affirmed the partial
summary judgment rulings on the basis that the evidence of
record failed to raise a triable issue. We hold that the evidence
was sufficient to create genuine issues of material fact as to
whether the challenged payments qualified under the ordinary
course of business exception, and therefore reverse and
remand for a trial on that issue. In all other respects -- the use
of a fact-dependent test, the sufficiency of the evidence to
show the debtor's insolvency, and the propriety of the bank-
ruptcy court's having granted a motion for reconsideration on
the statute of limitations issue -- we affirm the BAP's rul-
ings.
II. BACKGROUND
Kaypro Corporation ("Kaypro"), the debtor, was a manu-
facturer of personal computers and precision instruments.
Arrow Electronics, Inc. ("Arrow") and Schweber Electronics
Corporation ("Schweber") supplied electronic parts and com-
ponents to Kaypro. Arrow is Schweber's successor-in-
interest.
In March 1989, when Kaypro owed Schweber $227,837.96,
the parties restructured the debt. Kaypro executed a promis-
sory note requiring monthly payments of about $15,000, and
Andrew Kay, Kaypro's president, personally guaranteed the
note. Between April and August 1989, Kaypro made five pay-
ments as required by the note, although the payments were
between nine and sixteen days late. Kaypro also made a num-
ber of payments after September 1, 1989.
Also in March 1989, Kaypro and Arrow restructured a
$117,290.06 past due debt by means of a personally guaran-
teed promissory note. That note required monthly payments to
Arrow of $9,774.17. Between March and August 1989, Kay-
pro made six payments, between ten and twenty-eight days
late, under the note.
Kaypro restructured its debts with other creditors at about
the same time, but failed to recoup its fortunes and filed for
bankruptcy protection on March 1, 1990. The Chapter 11 pro-
ceeding was converted to a Chapter 7 liquidation in June
1992.
In the fall of 1993, Howard Justus, Kaypro's trustee in
bankruptcy, sued Arrow and Schweber to avoid alleged pref-
erential transfers. All parties moved for summary judgment.
The bankruptcy court awarded partial summary judgments to
the trustee, determining that Kaypro's payments to the two
creditors were not made in the ordinary course of business. A
trial was held on the insolvency issue, and the court found that
Kaypro was insolvent at least as of March 1, 1989. In light of
then-new Ninth Circuit authority, the court granted a motion
to reconsider an earlier ruling that the trustee's complaints
were barred by the statute of limitations. Judgments were
entered for the trustee in the amounts of $58,645.02 against
Arrow and $98,519.26 against Schweber. Arrow, as to its own
transactions and as Schweber's successor, has timely
appealed. We have jurisdiction pursuant to 28 U.S.C.
S 158(d).
III. STANDARDS OF REVIEW
This court reviews decisions of the BAP de novo , and thus
reviews the bankruptcy court's decisions under the same stan-
dards used by the BAP. See In re Vasseli, 5 F.3d 351, 352
(9th Cir. 1993). The rulings on the parties' motions for partial
summary judgment are reviewed de novo. See In re Bakers-
field Wester Ambulance, Inc., 123 F.3d 1243, 1245 (9th Cir.
1997). Findings of fact, such as the finding of insolvency, are
reviewed for clear error. See In re Parker, 139 F.3d 668, 670
(9th Cir. 1998). Whether the bankruptcy court properly con-
sidered and granted the trustee's motion for reconsideration is
reviewed for an abuse of discretion. Cf. In re Pintlar Corp.,
133 F.3d 1141, 1145 (9th Cir. 1997) (lower court exercises
discretion in deciding whether to apply amended rule to pend-
ing matter).
IV. THE ORDINARY COURSE OF BUSINESS
EXCEPTION
Summary judgment may be ordered only if the record
shows that "there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter
of law." Fed. R. Civ. P. 56(c). The evidence, and all reason-
able inferences therefrom, must be viewed in the light most
favorable to the non-moving party. T.W. Elec. Serv., Inc. v.
Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th
Cir. 1987).
[1] To avoid a transfer under 11 U.S.C. S 547(b), the
trustee must prove by a preponderance that the transfer was
(1) made to or for the benefit of a creditor, (2) on account of
an antecedent debt, (3) made while the debtor was insolvent,
and (4) made within one year of the petition, and (5) enabled
the creditor to receive more than it would have had the trans-
fer not been made and the case liquidated pursuant to the pro-
visions of chapter 7 of the bankruptcy code. Id. If, however,
the creditor proves that the transfer was "(A) in payment of
a debt incurred by the debtor in the ordinary course of busi-
ness or financial affairs of the debtor and the transferee; (B)
made in the ordinary course of business or financial affairs of
the debtor and the transferee; and (C) made according to ordi-
nary business terms," the transfer may not be avoided. 11
U.S.C. S 547(c)(2). This is commonly referred to as the ordi-
nary course of business exception.3
We agree with the BAP that the bankruptcy court erred in
holding that payments made pursuant to a restructuring agree-
ment are per se outside the ordinary course of business cate-
gory. The better rule, as the BAP stated, is that "such
determination is a question of fact that depends on the nature
of industry practice." Kaypro, 230 B.R. at 406. The Second
Circuit has explained why in In re Roblin Industries, Inc., 78
F.3d 30 (2d Cir. 1996):
It is not difficult to imagine circumstances where fre-
quent debt rescheduling is ordinary and usual prac-
tice within an industry, and creditors operating in
such an environment should have the same opportu-
nity to assert the ordinary course of business excep-
tion. See, e.g., [In re] U.S.A. Inns, 9 F.3d [680,] 685
[8th Cir. 1993] (regular practice in savings and loan
industry to adopt payment plans for delinquent cus-
tomers); Armstrong v. John Deere Co. (In re Gilbert-
son), 90 B.R. 1006, 1012 (Bankr. D. N.D. 1988)
(deferral agreements common in retail farm imple-
ment sales industry). Indeed, if the industry practice
is to restructure defaulted debt, it would make little
practical sense to require creditors to comply with
any other standard in order to meet the requirement
of S 547(c)(2)(C).
Id. at 42. The ordinary course of business exception, the Sec-
ond Circuit noted,
benefits all creditors by protecting payments
received by those creditors who remain committed to
a debtor during times of financial distress while at
the same time affording a measure of flexibility to
creditors in dealing with the debtor, provided that the
steps taken are consistent with customary practice
among industry participants.
Id. at 41.
[2] Thus, to apply Section 547(c)(2)(C), the court must
look to "those terms employed by similarly situated debtors
and creditors facing the same or similar problems. If the terms
in question are ordinary for industry participants under finan-
cial distress, then that is ordinary for the industry." Id. at 42.
The determination requires "a factual inquiry that is appropri-
ately left to the bankruptcy court." Id. at 41.4
Here, after holding that the ordinary course of business
exception requires fact-specific analysis, and that the bank-
ruptcy court had erred in ruling otherwise, the BAP neverthe-
less affirmed the partial summary judgment rulings because
"the record is devoid of any competent evidence as to whether
restructuring agreements and personal guarantees were uti-
lized within the industry in the ordinary course of business,"
and because the debtor "deviated from its customary business
practice by executing the promissory note[s] and making
monthly payments." Kaypro, 230 B.R. at 407. Our de novo
review of the record leads us to a different conclusion.
The relevant evidence came chiefly from Peter Griesbach,
Arrow's credit manager, and Andrew Kay, the principal of
Kaypro. Griesbach stated in a declaration (emphasis added):
As part of its ordinary course of business, ARROW
routinely enters into workout or debt restructuring
agreements with creditors who are unable to meet
their obligations. As part of a debt restructuring
agreement, ARROW routinely requires the creditor
to consolidate its outstanding debt and execute a
Promissory Note promising to repay ARROW the
consolidated debt, in monthly installments. These
types of agreements are common in the industry and
are routinely used by ARROW. Often, in the ordinary
course of ARROW's business, ARROW would
require security for a promissory note in various
forms, including, but not limited to, asset liens, per-
sonal guaranties [sic] and purchase money security
agreements. When personal guarantees are
employed, the guarantees are executed at the same
time the Promissory Note is executed by the corpora-
tion. Said restructuring agreements are normally
used in the ordinary course of ARROW's business.
Kay testified by deposition (emphasis added):
Q. Mr. Kay, how long have you been in the elec-
tronics industry?
A. Depending how it's defined, 40 or 50 years.
Q. And you've been running a company during
that time as well?
A. No, I started my own company in 1952.
* * *
Q. In your opinion, do vendors generally require
personal guarantees and promissory notes for
debts incurred by a company that they sell prod-
uct to when there's a risk that the company
might not pay the debt?
A. I don't know how it is with other people, but I
had been asked for it many times.
Q. Would you consider that an ordinary require-
ment by your vendors, to ask you to sign prom-
issory notes and personal guarantees, from
your experience?
A. Sometimes it is.
Q. So back in, I guess, 1988, 1989 when they were
requesting you to sign these, that didn't seem
out of the ordinary for you.
A. No.
* * *
Q. And so part of the or the reason why you did
this [sign a personal guarantee or promissory
note for outstanding debt] in order to keep your
credit going with these certain entities is so that
you could continue to buy products; is that
right?
A. Yes.
Q. And then that is when they required you, in
order to keep buying, purchasing products --
A. Yeah.
Q. -- that you were to sign a personal guarantee
or promissory note.
A. Yes.
Q. Is that something that's in the ordinary course,
in your opinion, of what went on in the indus-
try?
A. No. I very specifically tried to avoid saying
what was going on in the industry because I
didn't know. All I know is what happened to
me.
Q. But that was in the ordinary course of how you
were operating?
A. That's right.
[3] The BAP gave Griesbach's testimony no weight
because it was a "self-serving declaration [which] provided no
foundation establishing his personal knowledge or experience
in the industry." Kaypro, 230 B.R. at 407. But the "self-
serving" nature of the testimony would not disqualify it under
Fed. R. Civ. P. 56(e), and the foundation was adequate. Gries-
bach had held his position for five years before the declaration
was signed. He stated: "I am the credit manager of ARROW
. . . . I have personal knowledge of the following facts, and
. . . I could and would competently testify thereto. " Personal
knowledge may be inferred from a declarant's position. See
Self-Realization Fellowship Church v. Ananda Church of Self-
Realization, 206 F.3d 1322, 1330 (9th Cir. 2000) ("As a cor-
porate officer of SRF, Ananda Mata could be expected to
know the identity of SRF employees and their tasks."); Bar-
thelemy v. Air Line Pilots Ass'n, 897 F.2d 999, 1018 (9th Cir.
1990) (CEO's personal knowledge of various corporate activ-
ities could be presumed). Griesbach's five-year tenure as
Arrow's credit manager lends support to his claim of "per-
sonal knowledge" of industry practice. Kay's testimony about
his own firm's business practices was clearly based on per-
sonal knowledge and can be read to mean that the restructur-
ing agreements with Arrow and Schweber comported with the
debtor's ordinary methods of doing business.
The trustee argues that other factors -- unusual collection
efforts by the two creditors, lateness of payments under the
notes, and an inadequate showing of a continuing business
relationship with the debtor -- place these transfers outside
the ordinary course of business. Arrow contends that these
arguments were not raised in the bankruptcy court and are
waived. We need not decide the waiver question because
these assertions by the trustee merely list factors to be consid-
ered on remand; they do not justify an award of summary
judgment.
The BAP rejected Arrow's argument that a genuine issue
of material fact was present for the additional reason that
Arrow had not made that contention in bankruptcy court, but
had argued only that the evidence in the record "is enough to
resolve the entire case." Kaypro, 230 B.R. at 408 (internal
quotations omitted). "The Panel," it held,"may only review
matters that were properly raised and decided by the bank-
ruptcy court." Id. But the long-established rule is that when
opposing parties move for summary judgment, each seeking
judgment in its favor, neither is barred from contending later
that issues of material fact precluded the entry of summary
judgment against it. See Hotel del Coronado Corp. v. Food-
service Equip. Distribs. Ass'n, 783 F.2d 1323, 1325 n.1 (9th
Cir. 1986). Arrow was not required to state explicitly a fall-
back position that was implicit in its motion papers, and it did
not waive its right to argue that genuine issues of material fact
precluded summary judgment for the trustee.
[4] Whether the evidence was, or should be, sufficient to
persuade the trier of fact is not before us. The record, when
viewed most favorably to the non-moving parties as Rule 56
requires, raises genuine issues of material fact for trial as to
the disputed Section 547(c)(2) elements, and neither side was
entitled to summary judgment. Accordingly, on remand those
issues will be for trial.
V. SUFFICIENCY OF THE EVIDENCE AS TO
INSOLVENCY
All other elements of Section 547(b) having been resolved
by summary judgment in the trustee's favor, the bankruptcy
court conducted a trial as to the insolvency issue, and found
that Kaypro was insolvent at the time of the contested trans-
fers (March 1, 1989 to August 30, 1989). Arrow contends that
this finding constituted clear error.
To prove insolvency, the trustee must show by a preponder-
ance of the evidence that the debtor's liabilities exceeded its
assets. See In re Kourbourlis, 869 F.2d 1319, 1321 (9th Cir.
1989). See also 11 U.S.C. S 101(32)(A) (defining insolvency
as a "financial condition such that the sum of[the debtor's]
debts is greater than all of [its] property, at a fair valuation"
exclusive of certain exempted or fraudulently transferred
property).
There is no generally accepted accounting principle for
analyzing the insolvency of a company. See Sierra Steel, Inc.
v. Totten Tubes, Inc., 96 B.R. 275, 278 (B.A.P. 9th Cir. 1989).
The evidence presented at trial consisted of (1) an audited
September 1988 annual financial report which showed a valu-
ation of approximately $3.2 million; (2) three subsequent 10-
Q statements indicating that the company's assets were
greater than its liabilities; (3) an audited September 1989
annual financial report5 showing an approximate valuation of
negative $16.2 million; (4) 10-Q statements and annual
reports from prior years showing that Kaypro routinely under-
stated its inventory mid-year; and (5) the testimony of two
experts called by the parties. No additional financial informa-
tion was presented because the remainder of Kaypro's books
and records were destroyed before the trustee was appointed.
The experts agreed that at least by September 1, 1989, the
date of the last audited financial report, Kaypro was insolvent.
The trustee's expert, David Marston, conceded that, given the
paucity of financial information, he could not determine
exactly when insolvency had begun. However, in light of the
historic inventory patterns Marston concluded that the decline
in Kaypro's net worth of about $19.5 million between Sep-
tember 1988 and September 1989 probably occurred through-
out the fiscal year. Marston allocated the decline through the
year using three alternative methods: straight-line, cost of
sales, and sales. These methods resulted in an insolvency
range of $1.5 million to $7.7 million as of March 1, 1989.
The creditors' expert, Lester Schwartz, described Marston's
methods as "imaginative" and "based on mere speculation."
He opined that absent source documentation and a market
analysis, it was impossible to determine either the cause or the
time of the loss in inventory value, and that it was "plausible
that the write-down items contained in Marston's report,
including inventory, occurred in the fourth quarter of 1989."
Schwartz added, however, that he did not "have any reason to
believe [Kaypro's $19 million decline] was not throughout the
year."
[5] While it may have been "plausible" that the adjustments
were correctly booked in the fourth quarter, the evidence sup-
ported a finding that the loss of value occurred throughout the
fiscal year. The methods used to apportion the decline were
reasonable, and each method resulted in a showing of insol-
vency by March 1, 1989. The bankruptcy court's finding of
insolvency as of that date was not clear error.
VI. MOTION FOR RECONSIDERATION
On December 20, 1995, the bankruptcy court dismissed the
case on statute of limitations grounds based on In re IRFM,
Inc., 65 F.3d 778 (9th Cir. 1995). On December 29, 1995, the
Ninth Circuit clarified its holding in IRFM in In re Hanna, 72
F.3d 114 (9th Cir. 1995), which, the parties agree, foreclosed
the statute of limitations defense in this case. The trustee
moved for reconsideration of the dismissal under Fed. R. Civ.
P. 59(e),6 serving his motion on January 2, 1996, and filing it
on January 3, 1996. Until December 1, 1995, Rule 59(e)
required service within ten days of the order of dismissal. The
rule was amended, however, to provide that, as of December
1, 1995, filing of the motion was required within ten days. In
this case, the tenth day was January 2, 1996, making the
motion timely under the old rule but untimely under the new.
Arrow contends that the motion was untimely and that the
bankruptcy court therefore lacked jurisdiction to grant it. See
Fed. R. Civ. P. 6(b). See also Scott v. Younger , 739 F.2d
1464, 1467 (9th Cir. 1984) (time period specified in Rule 59
"is jurisdictional and cannot be extended by the court").
The 1995 amendment to the Rule was made effective pur-
suant to an Order of the Supreme Court which stated in part:
"That the foregoing amendments . . . shall govern all proceed-
ings in civil cases thereafter commenced and, insofar as just
and practicable, all proceedings in civil cases then pending."
April 27, 1995, Order Adopting and Amending Rules,
reprinted in Federal Civil Judicial Procedure and Rules 34
(West 2000). This case was pending on the effective date of
the amended rule. Therefore, the amendment governs "insofar
as just and practicable." The bankruptcy court found that it
would be "entirely unfair" to apply the amended rule when
the trustee served his motion on the first day that he could
(given the intervening holiday and weekend) and filed it the
next day -- in other words, that application of the new rule
would not be "just." There was no prejudice to any opposing
party. The BAP held that "[t]he bankruptcy court did not
abuse its discretion in refusing to apply the amended version
of Rule 59(e)." Kaypro, 230 B.R. at 411. We agree.
VII. CONCLUSION
For the reasons stated, the orders granting partial summary
judgment on the ordinary course of business exception under
11 U.S.C. S 547(c) are reversed, and these cases are remanded
to the bankruptcy court for trial of that issue. In all other
respects, the BAP's rulings are affirmed.
AFFIRMED IN PART, REVERSED IN PART, and
REMANDED. Each party shall bear its own costs on appeal.
_______________________________________________________________
FOOTNOTES
1 Honorable William L. Dwyer, Senior United States District Judge for
the Western District of Washington, sitting by designation.
2 The BAP order in No. 99-55206 is published as In re Kaypro, 230 B.R.
400 (B.A.P. 9th Cir. 1999). The BAP entered a virtually identical unpub-
lished order in No. 99-55210.
3 The exception "deter[s] the `race to the courthouse' and enabl[es] the
struggling debtor to continue operating its business." Union Bank v.
Wolac, 502 U.S. 151, 161 (1991). See also H. R. Rep. No. 95-595, at 373
(1977) (the exception was intended to "leave undisturbed normal financial
relations").
4 Generally in accord with Roblin are In re Healthco Int'l, Inc., 132 F.3d
104, 109-110 (1st Cir. 1997) and In re Magic Circle, 64 B.R. 269, 273
(Bankr. W.D. Okla. 1986) ("The mere restructuring of the payment terms
does not alter the fact that the underlying debt was incurred under normal
circumstances."). An opposing view is stated or implied in Clark v. Balcor
Real Estate Finance, Inc., 12 F.3d 1549, 1554 (10th Cir. 1993) (not nor-
mal financing relationship where "creditors in the industry use such an
arrangement only in extraordinary circumstances, when debtors are in
trouble").
5 While this financial report was audited, a number of deficiencies in the
information available to the auditors left them unable "to express . . . an
opinion on the financial position of Kaypro Corporation as of September
1, 1989."6 Fed. R. Bankr. P. 9023 integrates Fed. R. Civ. P. 59 into the rules of
bankruptcy procedure.