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For the same reasons, the court also refused to designate the claims purchased by friendly creditors.
i. In re LHC, LLC, 497 B.R. 281 (Bankr. N.D. Ill. 2013)
Issue: Whether an inherent conflict existed for cause to appoint to a trustee in a Chapter 11 case.
Holding: The court held that the fact that the debtor, as owner and operator of an ice rink, was controlled by a hockey club that was also debtor's customer or licensee for ice time at the rink, or that the debtor's board consisted entirely of the hockey club's members, did not rise to the level of an inherent conflict of interest to warrant the appointment of a trustee. The court found that there was no landlord/tenant relationship between the debtor and the hockey club because the hockey club was at best a customer or licensee. Additionally, the court found a "unity of interests" between the hockey club and debtor because the hockey club guaranteed the debtor's bond debt. Also, because the interests of the hockey club and the debtor aligned, the court found that the actions of the hockey club as to the debtor's operations benefited both the debtor and the hockey club. The court concluded that there was not clear and convincing evidence of a conflict of interest detrimental to the debtor warranting the appointment of a trustee.
ii. In re Grasso, 490 B.R. 500 (Bankr. E.D. Pa. 2013)
Issue: Whether the court should remove its factual findings on "cause" under 11 U.S.C. § 1104 (a)(1) from its order to appoint a trustee in an individual Chapter 11 case based on the debtor's grounds that such facts would impair his ability to reorganize.
Holding: The court held that it would not remove its factual findings on "cause" from its order to appoint a trustee in an individual Chapter 11 case based on the debtor's argument that such facts would impair his ability to reorganize, but it would remove a single paragraph of facts that were not argued before the court. The individual Chapter 11 debtor moved the court to reconsider its motion to appoint a trustee in the case, seeking the removal of the findings of fact indicating "cause" under 11 U.S.C. § 1104(a)(1). The debtor did not contest that the appointment of the trustee was warranted, but simply sought to have the order grant the appointment in the interest of the creditors under 11 U.S.C. § 1104(a)(2). The court found cause to appoint a trustee based on the debtor's dishonesty in testimony before the court, failure to file certain operating reports, and mishandling of estate property, in addition to it being in the interest of the creditors to appoint a trustee. The debtor's primary argument for removing the findings of fact to justify cause was that such facts would hurt his reputation with his business connections, thereby impairing his ability to reorganize and creating a "manifest injustice." The court found that manifest injustice requires a showing of "indisputable error," which was not present in the findings of fact. Additionally, the court stated that "this Court doubts its powers include the
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