A bankruptcy judge has denied a Teamsters union’s attempt to overturn a court order approving the $28 million sale of Washington state card room assets, ruling that bankruptcy courts have authority under federal law to approve sales free and clear of successor liability claims.
The United States Bankruptcy Court for the Southern District of Texas issued a memorandum opinion on January 26, 2026, denying International Brotherhood of Teamsters, Local 117’s motion for reconsideration of the court’s order approving the sale of PokerCo assets to Maverick Gaming LLC. The court rejected the union’s arguments that it lacked jurisdiction to rule on successorship under the National Labor Relations Act.
Company Background and Business Operations
RunItOneTime LLC and affiliated debtors are a privately held gaming and entertainment company founded in 2017. The debtors own and operate several card rooms in Washington state and casino hotels in Nevada and Colorado. The PokerCo assets specifically include Washington card rooms known as Aces Poker Lakewood, Aces Poker Mountlake Terrace, Caribbean Casino and Caribbean Cardroom.
As of the petition date, the debtors employed approximately 2,900 workers, with 1,250 represented by Teamsters Local Union Nos. 38, 117, 750 and 839. Approximately 350 workers are employed at the PokerCo facilities, of which approximately 220 employees are unionized and represented by Local 117. The debtors’ relationship with Local 117 is governed by a collective bargaining agreement ending February 28, 2027.
Bankruptcy Filing and Sale Process
The debtors filed voluntary Chapter 11 petitions on July 14, 2025, in the Houston Division of the Southern District of Texas bankruptcy court. The debtors continue to operate their businesses as debtors in possession.
On August 1, 2025, the debtors filed a motion for approval of a sale process and bidding procedures, describing the PokerCo assets as a segment to be sold and asserting the sale should be free and clear of liens and claims pursuant to Section 363(f) of the Bankruptcy Code. Following a hearing, the court approved the proposed sale process, noticing procedures and bidding procedures on August 28, 2025.
On September 4, 2025, interested parties including Local 117 were served a notice of sale that stated the assets would be sold “free and clear of all liens, claims, encumbrances and other interests.” The notice provided in bold typeface that parties failing to timely file objections would be “forever barred from asserting any Sale Objection, including with respect to the transfer of the Assets free and clear of all liens, claims, encumbrances and other interests.”
On September 17, 2025, the debtors filed a notice of auction, which Local 117 acknowledges receiving. The auction was held on September 19, 2025, with the objection deadline set for September 23, 2025. The sale hearing occurred on September 24, 2025, and the court entered the sale order approving the PokerCo sale on that date.
The Insider Sale Transaction
Maverick Gaming LLC was determined to be the successful bidder at the auction with a bid of $28 million in total cash and non-cash consideration. The manager of Maverick Gaming was the debtors’ pre-petition chief executive officer and majority shareholder. The sale was considered a sale to an insider.
Given the insider relationship, the debtors took steps to ensure fairness in the sale process. The former chief executive officer was screened from the sale process, was represented by independent counsel, and the entire process was overseen by the Special Committee of the Board and the Unsecured Creditors Committee.
The sale order entered by the court included a provision stating that the buyer is not an “alter-ego of, or a successor to, or a mere continuation of or substantial continuation of” any debtor or its estate, and that there is no continuity of enterprise between the buyer and the debtors as a result of the sale transaction. The order further provided that the buyer would not be deemed a “successor employer” for purposes of the National Labor Relations Act or other federal or state labor laws.
Union’s Motion for Reconsideration
On October 8, 2025, Local 117 filed a motion seeking reconsideration of the sale order, specifically contesting the paragraph providing that the buyer is not an alter-ego or successor to any debtor. The union argued it did not object earlier because it did not know the debtors and purchaser were seeking a determination on successorship.
The union advanced three arguments for reconsideration. First, it contended the court exceeded its jurisdiction by ruling on successorship under the National Labor Relations Act. Second, it alleged the court erred in finding that the purchaser is not an alter ego without conducting a factual analysis. Third, it argued that denying its motion would cause manifest injustice by contravening public policy and Section 1113 of the Bankruptcy Code.
The debtors and purchaser objected to the union’s motion, arguing that Local 117 waived its ability to object because it received sufficient notice of the sale and hearing. The court held a hearing on the motion on November 19, 2025.
Court’s Jurisdiction Analysis
The court began its analysis by addressing whether it had jurisdiction to approve a sale free and clear of successor liability, noting that subject matter jurisdiction cannot be waived by a party’s failure to challenge it earlier in proceedings.
The court determined the sale order is a core matter under 28 U.S.C. §§ 157(b)(2)(A) and (N) because an order approving a sale under Section 363 of the Bankruptcy Code can only arise in a bankruptcy case. The Bankruptcy Code gives debtors in possession a substantive right to sell property of the estate, and Section 157(b)(2) explicitly lists “order approving the sale of property” as a core proceeding.
The court found that under Section 363(f), it had authority to approve sales free and clear of successor liability. Although the statute refers only to a sale free and clear of “interests” in property being sold, the court noted that courts have interpreted this provision to more broadly extinguish claims that arise from the property being sold.
The court cited case law from multiple circuits supporting the interpretation that Section 363(f) permits bankruptcy courts to approve sales free and clear of successor liability claims. Sister courts have held that an “interest” under Section 363(f) might encompass various successor liability claims including obligations under labor laws, travel vouchers from discrimination settlements, and licenses for intellectual property.
Sale Order Interpretation and Effects
The court clarified that the sale order does not foreclose liability for the purchaser’s post-sale conduct. The order solely transfers assets free and clear of liability for the debtors’ pre-sale-closing actions. The court emphasized that the point of Section 363(f) is not to determine who would win or lose successor or alter ego litigation in the future, but rather to allow buyers to purchase assets without the risk of being forced into successorship or alter ego disputes.
The court distinguished cases cited by Local 117, noting that those decisions did not involve Section 363 sales but rather National Labor Relations Board proceedings and Chapter 7 bankruptcies. The court found that in the present case, the successorship determination was made in conjunction with a Section 363 sale and is a collateral issue that influences the value of the PokerCo assets.
The court noted that the sale order makes clear the buyer would not have entered into the transaction and provided the agreed consideration without receiving the assets free and clear of all interests. The court stated that granting the union’s motion would have potential negative effects, as purchasers may pay less for debtors’ assets without such protections, which runs counter to the Bankruptcy Code’s goal of maximizing value.
Court’s Ruling on Reconsideration
The court found Local 117 had notice and opportunity to object to the sale but chose not to do so. The union was served with the sale notice on September 4, 2025, as evidenced by an affidavit of service, and acknowledges receiving the auction notice on September 17, 2025. Both notices clearly outlined the debtors’ intention to sell assets free and clear of all interests and claims.
The court determined that denying the union’s motion would not result in manifest injustice because the union had notice and opportunity to object before the sale order was granted. The court also rejected the union’s argument that the ruling would undermine public policy goals of Section 1113 of the Bankruptcy Code, noting that Section 1113 has no relevance to the matter because it provides protections for workers when debtors seek to assume or reject collective bargaining agreements, not when assets are sold.
Regarding the union’s assertion that the court did not conduct a factual analysis, the court stated this argument was incorrect. At the sale hearing, the court admitted several pieces of evidence it considered in approving the free and clear sale, including declarations from the debtors’ investment banker, an independent director, and the purchaser’s manager.
Because the court granted a substantive right provided by the Bankruptcy Code under Section 363(f), and because the union had notice and an opportunity to object, the court concluded the sale order did not contain a clear error of law and denying the motion would not result in manifest injustice. The court denied Local 117’s motion for reconsideration.
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