In 2011, Montana joined with the Idaho State Tax Commission and the California Franchise Tax Board against Blixseth, however, those two states had settled agreements and withdrew from the petition, according to court documents.
Nakagawa noted that as of the hearing date, close to a decade has passed since the Involuntary Petition was filed. He said that since April 20, 2011, only Montana has continuously pursued this issue against Blixseth.
He said Yellowstone Club Liquidating Trustee apparently was interested in pursuing the involuntary proceeding against Blixseth, but gave up nearly two years before the 9th Circuit mandate was received by this bankruptcy court.
“Montana maintains that it has ‘vigorously prosecuted’ this Involuntary Proceeding,” Nakagawa wrote. “There is no question that Montana has been on the defensive more than the offensive throughout this proceeding. No doubt the prospect of defending the alleged debtor’s likely claim under Section 303(i) adds to Montana’s vigor.”
He said Montana has offered no evidence that any unsecured creditors eligible to join the action “have been prohibited from doing so or have even expressed an interest in doing so.”
“Under these circumstances, dismissal of this nearly decade-long case serves the public interest in the expeditious resolution of bankruptcy proceedings,” Nakagawa wrote.