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viii. In re TIC Memphis RI 13, LLC, 498 B.R. 831 (Bankr. W.D. Tenn. 2013)
Issue: Whether, in order to pay marketing professionals' administrative expenses, a single asset real estate debtor (SARE) can surcharge proceeds from the sale of its asset that sold for less than the amount of the debtor's debt secured by the property sold.
Holding: The bankruptcy court held that, though the marketing professionals employed by the SARE debtor to market its sole asset acted reasonably, such sales efforts were not necessary and did not confer a quantifiable benefit on the creditor, as required for surcharging. The court found that the debtor had refused to allow the secured creditor to foreclose on the property in an attempt to sell the property for more than it owed the secured creditor. Such self-serving motives were not necessary to "preserve or dispose of the property." In order to show a benefit to the secured creditor, a debtor must show the secured creditor will receive more than it would if the debtor had not intervened. The court reasoned that the secured creditor could likely have obtained similar results if it had possession of the property and sold it. The court denied the surcharge of the proceeds of the sale and ordered that such proceeds not be used to pay the debtor's marketing professionals.
i. In re Barrington Spring House, LLC, 2014 WL 1652195 (Bankr. S.D. Ohio 2014).
Issue: Whether individual debtor and single purpose limited liability company can be consolidated and whether venue can be changed.
Holding: (1) Separate Chapter 11 cases filed by individual debtor and single purpose limited liability companies (LLCs) that he owned, either directly or indirectly through another wholly- owned LLC, would not be procedurally consolidated, where each case was quite different in nature, where each debtor had different creditors, with exception of individual Chapter 11 debtor's former business partners, who had claims in all three cases, and where individual debtor's personal creditors were foreign and his case was much more complicated than either of the other cases.
(2) Factors that bankruptcy courts consider in deciding whether to transfer venue of bankruptcy case on convenience-of-the-parties theory are as follows: (1) proximity of creditors of every kind to the court, (2) proximity of debtor to the court, (3) proximity of witnesses necessary to administration of estate, (4) location of assets, and (5) economic administration of the estate; however, most important factor is administration of the estate. While debtor's selection of proper venue for bankruptcy case is initially entitled to great weight, decision whether to change venue is within bankruptcy court's discretion based on a case-by-case analysis of convenience and fairness.
©2014 William L. Norton III
