467 B.R. 427
Bankr. E.D. Mich.2012Background
- Debtor D & W Ltd., LLC, an LLC operating a Detroit-area business, filed a voluntary Chapter 7 petition on January 21, 2012.
- Secured Creditors acquired the Bank’s interest and related judgments, securing liens against all Debtor assets totaling over $2.7 million.
- State Court appointed a Receiver in 2010 with expanded powers in 2011 to operate the business and later transfer assets, including liquor licenses, to the purchaser.
- September 9, 2011, executed ASPA and related documents assigned voting rights to Nevada Saad and appointed Saad as sole managing member for sale and operation pending MLCC approval.
- Kevin Ditmore, claiming authority, filed the bankruptcy petition as President and Managing Member without contemporaneous corporate authorization.
- Authority to file was subsequently questioned; petition lacked the required filing authorization form until two weeks after filing, dated after the Petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the petition was filed with authority | Ditmore had authority as President/Managing Member to file. | Authority was transferred to Nevada Saad; Ditmore lacked authority to file. | Yes; lacks authority to file; case dismissed |
Key Cases Cited
- In re ComScape Telecommunications, Inc., 423 B.R. 816 (Bankr. S.D. Ohio 2010) (filing by unauthorised party is improper and dismissable)
- In re Real Homes, LLC, 352 B.R. 221 (Bankr. D. Idaho 2005) (unauthorised filing undermines bankruptcy standing)
- Price v. Gurney, 324 U.S. 100 (1945) (authority questions bar relief when lacking proper authorization)