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broad authority to the managing member and provided "illustrative" examples, such as maintain the LLC's value and further business operations. On the other hand, the court found that actions requiring the consent of both members were "narrow and specific" and did not include filing for bankruptcy. The court concluded that the operating agreement was unambiguous and clear in not requiring the consent of both members to file for bankruptcy on the LLC's behalf.
vii. Synovus Bank v. Brooks (In re Brooks), 488 B.R. 483 (Bankr. N.D. Ga. 2013)
Issue: Whether a secured creditor, whose foreclosure of its collateral satisfied its lien, had standing to move the court to dismiss or convert the debtor's case. Whether a creditor, whose claim had been disallowed in bankruptcy but still existed outside of bankruptcy in the event the case was dismissed before discharge, had standing to move the court to dismiss or convert the debtor's case.
Holding: The court held that a secured creditor, whose claim was not wholly satisfied by its foreclosure on its collateral, still retained its creditor status to move for dismissal. The court also found that even if the secured creditor's claim was deemed entirely satisfied by foreclosure, it would still retain its status as creditor because the court found the creditor would have a right under state law to pursue additional collateral securing its lien. Such a claim is sufficient for creditor status to move the court to dismiss the debtor's case. In so holding, part of the court's analysis determined that even if a creditor's claim is disallowed in bankruptcy, but it survives outside of bankruptcy in case the bankruptcy is dismissed prior to discharge, the creditor "holds a satisfactory interest for the purposes of seeking dismissal."
viii. In re Marble Cliff Crossing Apartments, LLC, 485 B.R. 849 (Bankr. S.D. Ohio 2013)
Issue: Whether efforts by a debtor's insiders to facilitate the sale of claims to friendly creditors to ensure an accepting impaired class constituted bad faith warranting conversion or dismissal of the case. Whether such claims transferred to creditors friendly with the debtor's insiders should be designated.
Holding: The court held that the actions taken by the debtor's insiders to have claims transferred to friendly creditors who would accept the debtor's plan did not warrant conversion or dismissal on bad faith grounds. The court also held that it could not designate claims of creditors who were friendly to the debtor's insiders. Though the debtor's insiders, in an effort to facilitate the transfer of claims to friendly creditors, promised such friendly creditors the opportunity for future work and reimbursement for legal fees, the court found that the actual terms of the claims purchase agreement were negotiated at arms' length by parties with counsel and the purchase of the claims was not conditioned on voting such claims in a particular manner. Therefore, the court did not find bad faith and denied the motion to convert or dismiss the case.
©2014 William L. Norton III
