Summary:
The Debtor filed a voluntary Chapter 11 case, but PNC Bank, the largest unsecured creditor, moved to dismiss the bankruptcy. The Debtor moved to convert to Chapter 7. The Bankruptcy Administrator supported dismissal.
The Bankruptcy Court first found that und 11 U.S.C. § 1124(b)(4) there were sufficient grounds to convert of dismiss the case. In determining whether conversion or dismissal would be in the best interest of the estate, the Bankruptcy Court held, based on the Debtor’s admissions, that it would require at least six months to market and sell its assets, during which time a Chapter 7 Trustee would need to manage, rent and maintain the property, and based on PNC’s unwillingness to consent to the use of cash collateral, a Chapter 7 Trustee would have no funding to adminster such assets and would be forced to liquidate quickly. Even though the Debtor’s principals could be subject to preference actions following a conversion, the weight of the evidence did not support conversion. Following a dismissal, however, PNC indicated it would seek appointment of a receiver to manage the property under state law, which would have a better chance of obtaining a greater return on the Debtor’s property.
For a copy of the opinion, please see:
Clayton Professional Center, L.L.C.- Dismissal or Conversion of Chapter 11 Case.pdf
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