573 B.R. 197
Bankr. W.D.N.C.2017Background
- GDP and GDH filed two related Chapter 11 cases in Charlotte, North Carolina, challenging venue as improper under 28 U.S.C. § 1408 or, alternatively, seeking transfer under § 1412.
- Fact record shows GDP and GDH’s primary assets and operations are located in Dickinson, North Dakota.
- Cibix Management, Merlin Holdings, and Stephen Barker control the Debtors and have substantial North Carolina ties but day-to-day hotel operations are managed on-site in North Dakota by Kinseth Hospitality.
- Most creditors and contract counterparties are located in North Dakota, with the hotel revenue and assets concentrated there.
- Debtors’ principal places of business are in North Carolina, but the majority of assets, creditors, witnesses, and operations are in North Dakota.
- The bankruptcy court granted transfer of venue to North Dakota under § 1412, but denied dismissal under § 1408 for improper venue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether venue is proper in the Western District of North Carolina under § 1408. | GDP/GDH contend NC is proper because principal place of business is in Charlotte. | Bankruptcy Administrator argues venue should be transferred for convenience/justice under § 1412. | No; venue proper in NC under § 1408. |
| Whether the cases should be transferred to North Dakota under § 1412. | Transfer unnecessary as venue is proper in NC and management ties to NC persist. | Transfer to North Dakota serves convenience of parties and justice given assets, witnesses, and creditors in ND. | Granted; transfer to North Dakota affirmed. |
Key Cases Cited
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (defines principal place of business for § 1408 analysis)
- Old Delmar Corp., 45 B.R. 883 (S.D.N.Y. 1985) (location of income-producing asset supports transfer to venue near asset)
- Pavilion Place Assocs., 88 B.R. 32 (Bankr. S.D.N.Y. 1988) (real estate asset locality favors venue near asset)
- Pinehaven Assoc., 132 B.R. 982 (Bankr. E.D.N.Y. 1991) (proximity of day-to-day operations favors transfer)
- Rehoboth Hospitality, LP, 2011 WL 5024267 (Bankr. D. Del. 2011) (asset location and witnesses support transfer (official reporter not available))
- Commonwealth Oil Ref. Co., 596 F.2d 1239 (5th Cir. 1979) (six-factor test for convenience of parties analysis)
- Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y. 2012) (disjunctive § 1412 standard: convenience or interest of justice)