In Re Rainbow Magazine, Inc., Debtor. Craig E. Caldwell v. Unified Capital Corp.

Opinion by Judge HUG.

This case requires us to define the authority of a bankruptcy court to sanction an individual that is not a party, an attorney, or a signatory to any documents filed before the court. Craig Caldwell appeals the district court’s order affirming the bankruptcy court’s sanctions against him in the Chapter 11 bankruptcy proceedings of debtor Rainbow Magazine, Inc. The Bankruptcy Appellate Panel (“BAP”) reversed a prior award of sanctions against Caldwell noting that he could not be sanctioned under the bankruptcy court’s inherent power. The BAP remanded for further consideration of possible sanctions against Caldwell for signing an inaccurate Statement of Affairs for Rainbow Magazine under Bankruptcy Rule 9011. On remand, the bankruptcy court imposed sanctions under Rule 9011 for the inaccurate statement and also resanctioned Caldwell under the court’s inherent powers. Caldwell asserts that the sanctions are against the ruling of the BAP, exceed the authority of the bankruptcy court, and are not supported by the facts.

FACTS

Caldwell does not dispute the facts as presented by the bankruptcy court in its unpublished memorandum which are as follows:

In re…