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reorganization and prepare adequate information; (3) whether there has been good faith progress toward reorganization; (4) whether debtor is paying its bills as they become due; (5) whether debtor has demonstrated reasonable prospects for filing a viable plan; (6) whether debtor has made progress in negotiations with its creditors; (7) amount of time which has elapsed in case; (8) whether debtor is seeking extension of exclusivity period in order to pressure creditors to submit to debtor's reorganization demands; and (9) whether some unresolved contingency exists. "Cause" did not exist to extend exclusivity period when debtor alone could propose a Chapter 11 reorganization plan, though debtor had not previously sought an extension, where debtor, a non- operating company whose sole business was to manage portfolio of stock in three technology companies, had no other assets that it had to decide whether to keep or sell, no unexpired leases or executory contracts that it had to decide whether to assume or reject, and no business to restructure, where debtor, despite having more than adequate time to do so, had not even commenced plan negotiations with its principal creditor and had no prospects of confirming a plan without this creditor's support. Debtor, despite having minimal operations, was not paying its bills and was sliding deeper into insolvency, and where only reason that debtor sought an extension was a belief, not shared by its principal creditor, that value of one of its holdings was about to dramatically increase and that it would be imprudent to liquidate its assets to pay its debts at present time. Court found that debtor was attempting to use motion to extend as tactical weapon in its ongoing dispute with its one major creditor.
ii. In re Charles Street African Methodist Episcopal Church of Boston, 499 B.R. 126 (Bankr. D. Mass. 2013)
Issue: Chapter 11 debtor sought award of attorney fees as well as equitable subordination of secured creditor's claims through a separately filed plan of reorganization, arguing that, by prematurely filing and circulating a plan of its own through an attachment to its unsuccessful motion to terminate debtor's exclusivity period, secured creditor violated debtor's right of exclusivity and improperly solicited votes against debtor's plan.
Holdings: The Bankruptcy Court, Frank J. Bailey, J., held that:
(1) secured creditor violated debtor's right of exclusivity and improperly solicited votes against debtor's plan without authorization; and
(2) the proper remedy for secured creditor's misconduct was not subordination, which in this case would be disproportionate to the harm caused, but was to prohibit secured creditor from filing a plan in this case, to award debtor attorney fees, and to require secured creditor to fund the cost of the examiner to be appointed in this case, up to $50,000.
iii. In re Marble Cliff Crossing Apartments, LLC, 488 B.R. 355 (Bankr. S.D. Ohio 2013)
Issue: Whether cause existed for the court to extend the debtor's exclusivity period to file a plan for a fourth time to the maximum eighteen months allowed by the Bankruptcy Code.
©2014 William L. Norton III
