Bank. E.D.N.C.: In re Smithville Crossings- Equity Auction requires Consummation of Chapter 11 Plan by the Highest Bidder

Summary: Smithville Crossings’ Chapter 11 plan was confirmed wherein the Richardsons, the Debtor’s sole equity owners, agreed to grant a lien to creditor Rialto of unencumbered real estate, if the Richardsons were able to retain their ownership in Smithville Crossings.  The plan provided that the Richardsons would pay $10,000 to purchase that ownership interest and invited competing bids.  The highest bidder, however,   was neither the Richardsons nor Rialto, but a subsidiary of Rialto. The bankruptcy court held that such an equity auction following confirmation was permitted.  The court continued that the highest bidder was then required to consummate the plan.  If the Richardsons may no longer wish to pledge their unencumbered collateral, the plan will no longer be feasible and the stay terminated. Smithville Crossings- Equity Auction requires Consummation of Chapter 11 Plan by the Highest Bidder.PDF   This case was previously discussed in a posting at http://ncbankruptcyexpert.com/?p=411.