Summary:
SRCR pledged a Piper Navajo Airplane as collateral for a loan to Park Sterling. After default on the loan, Park Sterling repossessed the airplane on February 3, 2012. SRCR filed a Chapter 11 bankruptcy on February 21, 2012. When Park Sterling refused to return the airplane, SRCR filed a Motion for Contempt and Park Sterling responded with a Motion for Relief.
The bankruptcy court began by holding that if a creditor refuses to turnover property that was repossessed prior to the petition date, the creditor must ensure that the issue of rightful possession is promptly placed before the court. Despite not filing its own Motion for Relief for several weeks, the bankruptcy court found that the debtor’s motion for contempt and sanctions and the response filed by Park Sterling placed the issue of rightful possession of the airplane before the court in a timely manner.
Park Sterling asserted that it was implausible to consider the airplane necessary for an effective reorganization of the SRCR, as SRCR business does not require air travel and the airplane was more of a personal luxury for the owner of SRCR, J. Keith Stark . Stark, however, testified that the airplane was necessary for the business operations of SRCR and its leasing of equipment to its sister corporations. SRCR further showed clear evidence that the vast majority of the airplane’s flights were for business purposes.
Accordingly, the bankruptcy court denied both the motion for contempt and the motion for relief, ordering that the airplane be returned to SRCR.
For a copy of the opinion, please see:
SRCR, L.L.C.- Turnover of Airplane.pdf
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