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partner's unsupported threats to cause director to breach his fiduciary duties, and futility that was engineered by the party seeking dismissal could not be the basis for dismissal.
i. In re River East Plaza, LLC, 669 F.3d 826 (7th Cir. 2012).
Bankruptcy court did not abuse its discretion when it refused to consider the third proposed Chapter 11 plan of the single asset real estate debtor, lifted the automatic stay and dismissed the Chapter 11 case. The debtor had previously compromised its credibility by submitting two plans designed to circumvent § 1111(b), and the ninety day deadline under § 362(d)(3) had expired long ago.
ii. Meruelo Maddux Properties-760 S. Hill St., LLC v. Bank of America (In re Meruelo Maddux Properties, Inc.), 667 F.3d 1072 (9th Cir. 2012).
Issue: Whether the district court erred in concluding that the single asset real estate provisions of the Code applied to the debtor.
Holding: The court affirmed the decision of the district court. Subsidiary that owned and developed real estate should be treated as single asset real estate debtor under § 101(51B) despite the consolidated, interrelated nature of the business operations of the parent company and its fifty subsidiaries.
iii. In re SR Real Estate Holdings, LLC 506 B.R. 121 (Bankr. C.D. Cal. 2014).
Issue: Creditors moved to dismiss Chapter 11 case of alleged single asset real estate debtor as a bad-faith filing.
Holding: In determining the existence of a lack of good faith, for purposes of a motion to convert or dismiss a Chapter 11 case, courts may consider the following conditions: whether the debtor has one asset, such as a tract of undeveloped or developed real property, encumbered by liens, whether debtor has any employees other than principals, little or no cash flow, and any available resources to sustain a plan of reorganization or to make adequate protection payments, whether debtor has but a few unsecured creditors with relatively small claims, whether debtor's property has been posted for foreclosure because of debt arrearages, and whether debtor has been unsuccessful in defending state-court actions against the foreclosure. Chapter 11 debtor filed its petition in bad faith, as warranted case's dismissal; debtor was a single asset real estate debtor with an asset encumbered at least six times over which was undeveloped and generated little cash flow, debtor had no business or ongoing concern to preserve, there was no indication that debtor had any employees other than its principals, debtor had few unsecured creditors, debtor had nearly $550 million in secured debt from two deeds of trust accruing interest at 15% and
©2014 William L. Norton III
