In a recent decision by U.S. Bankruptcy Judge Peter J. Walsh of the District of Delaware, Forman v. Mentor Graphics (In re WorldSpace), Adversary Proceeding No. 10-53286, the court took issue with the “strategic use of motions to extend time to serve process coupled with a lack of proper notice thereof.” In so doing, the court dismissed a complaint to avoid and recover certain preferential transfers that the defendant, Mentor Graphics Corp., allegedly received.
In WorldSpace, the debtor, and later the Chapter 7 trustee, filed a total of nine motions (which were subsequently granted by the court) seeking to extend the time to serve process on defendants in certain adversary proceedings. In particular, the first motion was filed on or about Feb. 11, 2011, and the ninth motion was filed on or about Sept. 23, 2013. Following the ninth motion to extend the time to serve process, the defendant was ultimately served with the complaint on or about Dec. 12, 2013 (more than three years following the filing of the initial complaint). However, instead of serving the defendant actually named in the complaint, Mentor Graphics (Ireland) Ltd. (Mentor Ireland), the trustee served the complaint and summons upon Mentor Graphics Corp. As noted by the court, this was the first time that Mentor Graphics Corp. was “mentioned as a (potential) defendant by either [the Chapter 11 debtor] or the trustee.”
