United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
Peter Wojtkun appeals from a ruling by the bankruptcy court
that granted the Trustee's “Motion for
Authorization to Take Action as Sole Shareholder and Director
of Corporation Owned Solely by the Debtor and for Order in
Aid Thereof.” For the reasons set forth below, the
Court affirms the ruling.
filed a voluntary petition for Chapter 7 bankruptcy
protection in the Bankruptcy Court for the District of
Massachusetts on May 7, 2013. The court granted Wojtkun a
discharge on August 13, 2013. At the time he filed his
petition, Wojtkun was a practicing dentist and the sole
shareholder of Peter Wojtkun DMD P.C., a Massachusetts
professional corporation. Neither party has alleged that the
corporation's articles of organization or its by-laws
contain provisions concerning stock redemption or transfer,
nor do the parties claim the existence of any shareholder
agreements to that effect. When Wojtkun filed his petition,
his shares in the corporation transferred to the Trustee.
February 25, 2016, the Trustee moved the bankruptcy court for
authorization to take certain action as the sole shareholder
and director of the professional corporation, including
appointing himself as general manager in order to liquidate
the corporation's assets for the benefit of Wojtkun's
estate. Wojtkun opposed the motion. On April 12, 2016, ruling
from the bench, the bankruptcy court granted the
Trustee's motion. The court determined that “the
only consequence of the failure of the disqualified person
from achieving . . . one of the three requirements of
[Section 13(a)] is that the corporation shall cease rendering
professional services.” The court further explained
that “[i]t does not say anywhere that the disqualified
person does not get to continue to try to achieve one of
those three events. And I find that [the Trustee] can
continue to do that under the statute . . . .” Wojtkun
appeals this ruling.
Court reviews the bankruptcy court's conclusions of law
de novo, and its factual findings for clear error. In re
Cambridge Biotech Corp., 212 B.R. 10, 14 (D. Mass.
1997). “Where, as here, the core dispute is over a
question of law, engendering de novo review, ” the
Court is not “wedded to the bankruptcy court's
rationale, but, rather, may affirm its decision on any
independently sufficient ground made manifest by the
record.” In re Carvalho, 335 F.3d 45, 49 (1st
the Massachusetts statute governing professional
corporations, individuals who are licensed to perform certain
professional services, including dentists, may organize or
hold shares in a professional corporation. Mass. Gen. Laws
ch. 156A, §§ 2(b), 7, 10. The list of professionals
who are permitted to operate a professional corporation
includes attorneys, but does not include bankruptcy trustees.
Id. § 2(b). The statute defines two categories
of individuals, “qualified” and
“disqualified.” Id. A “qualified
person” is an individual or corporation who is eligible
to own shares issued by a professional corporation.
Id. A “disqualified person, ” by
contrast, is ineligible to own shares in a professional
statute recognizes that shares in a professional corporation
may be transferred from a qualified person to a disqualified
person when one of several events occurs: the shareholder
dies; the shareholder is unable to perform the professional
service for six months or longer; the shareholder becomes
incompetent or permanently disabled; the shares are
“transferred voluntarily or by operation of law to a
disqualified person;” or any other event specified in
the corporation's articles of organization or by-laws.
Id. § 12(a).
of these events occurs “with respect to the sole
shareholder of a professional corporation, ” one of
three actions must be taken: the corporation must be (1)
liquidated or dissolved; or (2) merged or consolidated into
another professional corporation that provides the same type
of services; or (3) merged, consolidated, or changed into a
business corporation organized under Chapter 156D.
Id. § 13(a). “In the event that such
action has not been taken within such twelve month period,
the corporation shall cease rendering any professional
service until all its shares are owned by one or more
qualified persons and the corporation is otherwise in
compliance with the terms of this chapter.”
Id. In addition, if one of the actions has not been
taken within twelve months, the state secretary may dissolve
the corporation. Id. § 15.
case, when Wojtkun filed his bankruptcy petition on May 7,
2013, ownership of his shares in the professional corporation
were transferred, by operation of law, to the Trustee.
Wojtkun was the sole shareholder, so the provisions of
Section 13 apply. The Trustee did not take any of the actions
listed in Section 13(a) within the twelve-month period that
ended on May 7, 2014. The parties agree that the Trustee is a
contends that, because the Trustee did not take one of the
specified actions before May 7, 2014, he thereafter lost the
power to do so. He interprets Section 13(a) to require
that the actions listed in that section must occur within the
twelve-month period or not at all, and he argues that any
other interpretation of this section would render the
twelve-month period meaningless, and thus superfluous.
See Wheatley v. Mass. Insurers Insolvency Fund, 925
N.E.2d 9, 14 (Mass. 2010) (“[A] statute must be
construed so that ‘effect is given to all its
provisions, so that no part will be inoperative or
superfluous.'” (quoting Bankers Life & Cas.
Co. v. Comm'r of Ins., 691 N.E.2d 929, 932 (Mass.
1998))). Wojtkun argues that the consequence of a failure to
act within the twelve-month period is that the corporation
must cease rendering professional services and the state
secretary may dissolve the corporation-and, impliedly, that
the disqualified person holding the shares loses the power to
perform any other actions. He also claims that the bankruptcy
court's interpretation of the statute created a new
property right not found in Chapter 156A, in violation of
bankruptcy law. See Butner v. United States, 440
U.S. 48, 55 (1979) (“Property interests are created and
defined by state law. Unless some federal interest requires a
different result, there is no reason why such interests
should be analyzed differently simply because an interested
party is involved in a bankruptcy proceeding.”).
Court disagrees with Wojtkun's reading of Section 13. It
appears that there are no published cases discussing this
particular statute,  so the question is solely one of textual
interpretation. The statute plainly states that, if one of
the three actions laid out in Section 13(a) has not occurred
within twelve months, “the corporation shall cease
rendering any professional service until all its shares are
owned by one or more qualified persons and the corporation is
otherwise in compliance with the terms of this
chapter.” Mass. Gen. Laws ch. 156A, § 13. This is
all the statute has to say on the matter, aside from granting
the state secretary the authority to dissolve the
corporation, as set forth in Section 15. Nowhere does the
statute say that the disqualified person holding shares in
the corporation loses the power to perform the actions listed
in Section 13(a) after the twelve-month period has expired.
Further, nothing in the statute reasonably suggests that the
loss of these powers should be implied.
contrast to Wojtkun's interpretation, it appears that the
purpose of the statute is to afford a professional
corporation that has come under the control of a disqualified
person a twelve-month grace period to continue operating
while it gets its affairs in order. Once the grace period is
up, the corporation must cease offering services until it has
made the necessary modifications to the corporate form to
comply with the law. This is a reasonable scheme, and reading
the statute in this way does not render any language
superfluous. Thus, the Court agrees with the bankruptcy
court's conclusion ...