See Sec. 323(b) at ¶ 8208.
SACHS, District Judge:
Trustee Block, representing the bankrupt estate of The Midwestern Companies, has filed a motion to enjoin other litigation. The Biben and Sullivan cases have been brought by stockholders in Midwestern, alleging essentially that they were fraudulently induced to purchase stock at excessive values because of manipulative conduct by the officers and directors of Midwestern. The MDL litigation and Burson relate to investors in ethanol plants in Louisiana and New Mexico ( Burson) and allege that the investments were lost because, among other things, the officers and directors of Midwestern acted fraudulently or negligently.
Various procedural problems are suggested by parties opposing the motion. It is unnecessary to deal with those points in order to rule the motion.
The motion to enjoin contends that Midwestern is the owner of claims against the corporate officers and directors and that others are precluded from recovering assets that will, in due course, be collected by the trustee and distributed to creditors, including, hypothetically, these claimants. The court has concluded that the trustee is clearly wrong, in his contentions relating to Biben and Sullivan. There may be more merit to the contentions relating to some aspects of the MDL litigation and Burson, but that litigation will be shaped and reshaped as a result of discovery. It is impossible at this stage to conclude that the claimants are simply seeking to recover for generalized damage to Midwestern by the officers and directors, with indirect losses to them. The MDL claimants and Burson deny that is the thrust of their claims, and the court has no basis at this time to enjoin further prosecution. When discovery is completed and the issues are more clearly formulated it will be time enough to decide whether the trustee or the original claimants have a right to pursue the officers and directors (or whether each has some claims that could go to trial).
A.
The claims of investors as purchasers of stock cannot be asserted by a bankruptcy trustee. Bloor v. Carro, Spanbock, Londin, Rodman Fass, 754 F.2d 57, 62 n. 4 (2d Cir. 1985). This is to be distinguished from claims of stockholders based on conduct after they become stockholders, which would ordinarily be derivative claims that could be prosecuted exclusively by the trustee. In re Ozark Restaurant Equipment Co., Inc., 816 F.2d 1222, 1225 (8th Cir. 1987).
Even in that situation, there are occasional claims that can be made by individual stockholders, as where they assert events resulting in a fraudulent sale of their stock. Grogan v. Garner, 806 F.2d 829 (8th Cir. 1986).
The court is aware of nothing at this time that would take Biben and Sullivan outside the context of the Bloor case. If the investors should attempt to base their claims in whole or in part on post-purchase conduct of the defendant directors and officers, some limitation on the issues to be tried can be established.
B.
Claims of creditors can be asserted against the bankrupt estate but cannot be recharacterized as estate assets, to be pursued by the trustee in bankruptcy. Ozark Restaurant Equipment, supra, at page 1225. The Missouri case of Craig v. Stacy, 50 S.W.2d 104 (Mo. 1932), sets forth principles that will doubtless govern the development of the MDL and Burson litigation. In that case a depositor in an insolvent bank sought to proceed directly against the officers and directors of the bank, and the Missouri court dismissed the case. The depositor suffered a loss in the same manner as all others who dealt with the bank suffered a loss. The depositor's claim was too indirect to be pursued separately. The court noted, however, that "depositors who have been individually wronged, by any of the officers or directors or by all of them together . . . have their remedy against such officers and directors. . ." 50 S.W.2d at 107. Further, "where a creditor has suffered a wrong not common to all other creditors, he may recover of the officers and directors reponsible for it. . . ." Id.
For present purposes I accept as sound the trustee's contention that only he "has standing to sue Midwestern fiduciaries for the precarious financial posture they imposed upon Midwestern" (Doc. 728, pp. 24-5). But the trustee has not made a satisfactory showing that all is involved here is the general mismanagement of Midwestern. While such general mismanagement may later be treated as an appropriate bankruptcy claim, on which the claimants in MDL and Burson could not recover, the present showing is entirely inadequate, and certainly does not fairly constitute a comprehensive description of the pending cases.
The motion to enjoin is therefore DENIED.