Summary:
In Celebration Cottage AB, LLC, the bankruptcy court denied the motion by BIP Canton, LLC to designate Celebration Cottage AB, LLC as a Single Asset Real Estate (SARE) entity, despite assertions that the real property constituted a single project that generated most of the debtor’s income. Designation as a SARE would require expedited creditor protections and alter the debtor's Chapter 11 restructuring process.
Celebration Cottage owns four properties: a cottage, two adjacent vacant lots in Atlantic Beach, NC, and a property in Morehead City, NC. The court found that these properties did not function as a single economic project since only the three Atlantic Beach properties were occasionally used together for events, while the Morehead City property was used separately for short-term rentals and as a residence. As a result, the court concluded that the properties did not meet the criteria for SARE designation and could proceed under subchapter V of Chapter 11, which is designed for small business reorganization.
The court also noted that Celebration Cottage’s listing of the Atlantic Beach properties for sale and continued use of the Morehead City property as a rental showed that the properties were not being held solely as passive real estate investments. Consequently, the court denied the motion to designate Celebration Cottage as a SARE entity and held BIP’s motion for relief from the automatic stay in abeyance for further hearing.
With proper attribution, please share this post.
To read a copy of the transcript, please see:
Blog comments