448 B.R. 729
Bankr. D.S.C.2011Background
- Forest Grove, LLC filed Chapter 11 on August 2, 2010; CLM Irrevocable Trust is sole member and Nickey Maxey is trustee.
- Debtor owns over 360 acres including an equestrian facility; Maxey occupies a residence rent-free as property manager, with future rent proposed at $2,000/month.
- Ameris Bank (former Nexity Bank) holds a 1,650,000 note secured by four parcels; BankMeridian and First South hold other secured/related interests; unsecured debt listed as $4,893.02.
- Post-petition timber cutting yielded $28,584.41; funds were deposited in DIP account and later partially reimbursed by Maxey; intent to use proceeds for administrative costs.
- Debtor proposed a plan funded by Maxey’s rent, lot sales, a hunting preserve, and timber harvest; plan contemplates conveying parcels to Ameris to satisfy its claim, with potential ongoing payments if not fully satisfied;
- Court denied approval of the Disclosure Statement and dismissed the case; Debtor moved to alter/amend and for stay, which were later denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Disclosure Statement adequate under 11 U.S.C. §1125(a)? | Ameris contends it lacks adequate information on finances and Maxey's contributions. | Debtor argues addenda cure deficiencies and information is sufficient. | Statement not adequate; information on finances and funding remains insufficient. |
| Should the case be dismissed for cause under 11 U.S.C. §1112(b)(4)(A)? | Ameris asserts ongoing loss and no feasible likelihood of rehabilitation. | Debtor contends potential plan viability and unusual circumstances exist. | Cause exists; case dismissed for lack of income and no reasonable chance of plan confirmation. |
| Does lack of insurance or inadequate insurance constitute cause for dismissal under §1112(b)(4)(C)? | Ameris argues insufficient insurance amount threatens estate. | Debtor maintains current coverage and will increase as needed. | No cause shown; insurance maintained at substantial level, with willingness to increase. |
| Are Debtor's post-judgment motions (alter/amend and stay) properly denied given Winter/Carolina Park standards? | Debtor seeks relief to prevent foreclosure and preserve estate. | No likelihood of success on merits and no irreparable harm shown. | Motions denied; Winter test unmet; no stay or alteration warranted. |
Key Cases Cited
- In re Repurchase Corp., 332 B.R. 336 (Bankr.N.D. Ill. 2005) (feasibility considerations require corroboration of funding sources)
- In re Wiston XXIV, Ltd. P'ship, 153 B.R. 322 (Bankr.D. Kan. 1993) (plan feasibility requires verifiable contributions)
- In re Travelstead, 227 B.R. 638 (Bankr.D. Md. 1998) (feasibility must show plan likely to be confirmed)
- In re Om Shivai, Inc., 447 B.R. 459 (Bankr.D.S.C. 2011) (two-step test for 1112(b)(4)(A) renewal and rehabilitation)
- In re Landmark Atl. Hess Farm, LLC, 447 B.R. 459 (Bankr.D.Md. 2011) (rehabilitation prospects and feasibility assessment in 1112 analysis)