Judge Directs Government Intervention in "Buck Rogers" Bankruptcy

A Chapter 11 Trustee will come in to manage the Dille Family Trust after a bankruptcy court raises red flags in an attempted auction of questioned intellectual property.
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The audacious plan to use a bankruptcy court to auction off "Buck Rogers" rights despite lingering ownership challenges appears to have backfired on those ostensibly serving the interests of heirs of John Dille, who published the fictional space hero in magazines in the early-to-mid 20th century. On Wednesday, a Pennsylvania bankruptcy court issued an extraordinary decision that faulted the Dille Family Trust with a number of sins. As a result, the Office of the U.S. Trustee has been directed to appoint a Chapter 11 Trustee in what could ultimately result in a long anticipated film adaptation of Armageddon 2419 A.D., the 1929 novella by Philip Francis Nowlan that introduced the Buck Rogers character.

The background of what happened is detailed much more extensively here, but in November 2017, the Dilles declared bankruptcy in the midst of litigation with Nowlan's heirs about trademark rights and in the middle of fighting with producer Don Murphy about whether Armageddon 2419 A.D. was in the public domain. Filing for bankruptcy meant a pause on litigation, and the Dilles wanted to liquidate their interests in Buck Rogers rights — whatever those might be — through Heritage Auctions. Since the filing of bankruptcy, Murphy and the Nowlans have pounded the table that this proceeding was all a farce.

Now, U.S. Bankruptcy Judge Jeffery Deller has seen enough.

In a memorandum opinion (read here), he writes that it is undisputed that the Dille Family Trust has no business operations, has no meaningful income, is liquidating as opposed to reorganizing, has incurred administrative expenses with no liquid assets available to satisfy these debts, and has invoked the automatic stay for the primary purpose of avoiding a trial regarding an alleged interest in various intellectual property.

Deller further slams the Dille Family Trust with "obfuscat[ing] lawful discovery requests" from those challenging the ability to sell disputed property interests, with "provid[ing] affidavits which are evasive or incomplete or misleading," ignoring court directives, having no ability to pay monetary sanctions, and on and on.

Despite the challenges to its IP ownership, the Dilles have "improperly sought to pursue a 'free and clear' sale of the disputed or alleged rights" and have "listed on the Internet various assets for sale without first obtaining prior approval of this Court," the judge continues, adding that "one 50% beneficiary [John Dille's grandson] received no notice and did not consent to the filing of the instant bankruptcy."

The judge says this all constitutes "cause" supporting the appointment of a Chapter 11 Trustee, who with the government's assistance, will now come in and take over management of the debtor's estate. The judge also points to the Murphy and the Nowlans as "noting that such appointment could have the salutary effect of promoting the possibility of settlement for the benefit of all constituencies."

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