478 B.R. 73
Bankr. D. Mass.2012Background
- OneUnited Bank filed motion to dismiss CSAME's Chapter 11 case under 11 U.S.C. §1112(b)(1) for cause due to ineligibility under §109(d).
- CSAME is an incorporated congregation of the AME Church in Massachusetts, continuously in good standing with AME since 1839.
- CSAME holds real estate, operates a church, and has two default loans from OneUnited: the RRC Loan and the Church Loan.
- AMe Church Governance: Book of Discipline states property held in trust for AMEC; disputes arise over control and authority within AME polity.
- First Episcopal District guaranteed the RRC Loan; discussions at hearing about bishop authority to move funds between entities.
- Court determines CSAME is a Massachusetts corporation under §101(9) and thus an eligible debtor under §109(d); nominee-trust concerns are moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is CSAME an eligible debtor under §109(d)? | OneUnited contends CSAME is a trust, not a corporation. | CSAME argues it is a Massachusetts corporate entity with its own purposes. | CSAME is a corporation under §101(9); eligible under §109(d). |
| Does nominee-trust status render CSAME ineligible? | OneUnited claims CSAME serves as trustee of a nominee/non-business trust for AMEC. | CSAME concedes possible trustee role but maintains corporate status; trust status is not dispositive. | Nominee-trust ineligibility not reached; corporation status controls and is eligible. |
| Do AME Book of Discipline provisions create a non-business trust that affects eligibility? | Book of Discipline creates trust-like control over CSAME's assets benefiting AMEC/AME Church. | Such provisions govern internal church matters and do not deprive CSAME of corporate status. | Book provisions do not strip CSAME of corporate status; eligibility remains. |
| Would ineligibility require dismissal under §1112(b)(1)? | If CSAME were ineligible, dismissal would be proper. | CSAME is eligible, so §1112(b)(1) dismissal is not warranted. | Motion to dismiss denied; CSAME qualifies as a debtor. |
Key Cases Cited
- In re Village Green Realty Trust, 113 B.R. 105 (Bankr. D. Mass. 1990) (trustee status of nominee trust discussed in eligibility context)
- In re Pittsfield Weaving Co., 393 B.R. 271 (Bankr. D. N.H. 2008) (to show burden of proof on entity asserting cause for dismissal)