  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
iii. In re WM Six Forks, LLC, 502 B.R. 88 (Bankr. E.D. N.C. 2013)
Issue: Matter came before court on order directing Chapter 11 debtor to appear and show cause why its case should not be dismissed, or sanctions imposed, based on its failure to pay the appropriate quarterly fee to the United States Trustee and dispute arose as to just what transactions were included in the "disbursements" upon which the UST's quarterly fee was calculated.
Holding: The Bankruptcy Court, A. Thomas Small, J., held that term "disbursements," as used in federal statute requiring Chapter 11 debtors to pay quarterly fees to the United States Trustee based on disbursements in case had to be interpreted broadly to include court-approved sale of deed of trust property on $37.1 million credit bid submitted by creditor whose claim this property secured. Accordingly, when this court-approved sale was included with other disbursements that were made during the quarter, debtor was obligated for maximum $30,000 quarterly fee, and not just the $975 that it had paid based on monetary disbursements during the quarter.
iv. In re Quad-C Funding LLC, 496 B.R. 135 (Bankr. S.D.N.Y. 2013)
Issue: Who bears the burden of proof on a motion to dismiss a petition for lack of authority to file.
Holding: The bankruptcy court held the burden is on the movant to show that the debtor did not have authority to file a bankruptcy petition. In this case, a member of the debtor limited liability company moved to dismiss the Chapter 11 case because the debtor did not properly abide by the debtor's operating agreement in conducting a vote to authorize the petition. The court found conflicting case law on the topic, with courts placing the burden in three different context: 1) on the movant, 2) on the debtor, and 3) on the debtor after the movant establishes a prima facie showing of lack of authority. The court disapproved of the latter two options, reasoning that the purpose of bankruptcy is to allow debtors to "protect creditors and/or start rehabilitation immediately" and "in an orderly fashion" without placing much burden on the debtor by "expend [ing] its diminished resources litigating over" its right to do so. Furthermore, the court previously held that "[b]ecause the Court does not take the issue of dismissal lightly, the Court will place the burden of proof entirely on the Movants to demonstrate by a preponderance of the evidence that the Debtors' bankruptcy cases were unauthorized." Lastly, the court held that the movant in this case did not carry its burden of proving the bankruptcy filing was unauthorized because the record supported the conclusion that the debtor followed customary procedures for filing and that wasting time investing the "collateral issue" of whether new members diluted the movant's ownership before the vote would "possibly doom a chance at rehabilitation."
v. In re Triumph Christian Center, Inc., 493 B.R. 479 (Bankr. S.D. Tex. 2013)
Issue: Whether debtor's second consecutive Chapter 11 case should be dismissed for filing in "bad faith" after debtor defaulted on the plan confirmed in its prior Chapter 11 case.
©2014 William L. Norton III
