460 B.R. 547
Bankr. D. Mont.2011Background
- Debtor is In re Hinesley Family Limited Partnership No. 1, a Montana Chapter 11 debtor.
- Plan: Debtor filed Second Amended Chapter 11 Plan on July 14, 2011; motions related to 9019 settlements and conversion were heard Oct. 4 and 12, 2011.
- Pending issues included settlement agreements with West Jordan, LLC and GCL Investments, LLC and motions to convert to Chapter 7.
- Two undisclosed facts emerged: (1) an unrecorded park easement affecting the property; (2) a Department of Environmental Quality violation/permit issue related to the Laurel Glen Subdivision Pit.
- Court determined no further time extensions would be granted and requires moving forward to resolution.
- Court ultimately denied confirmation, denied 9019 relief, granted conversion to Chapter 7, denied appointment of a Chapter 11 trustee, and denied estimation of claims without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Rule 9019 settlements should be approved | Debtor contends settlements are essential to plan. | West Jordan and GCL oppose; settlements are not binding without approval. | Settlements not approved; not binding or effective without approval. |
| Whether Debtor's Second Amended Plan should be confirmed | Plan relies on the settlements; should be confirmed if settlements approved. | Without approved settlements, plan cannot be confirmed. | Confirmation denied. |
| Whether the case should be converted to Chapter 7 | N/A or not favorable to conversion. | Failure to satisfy ongoing issues warrants conversion. | Case converted to Chapter 7; appointment of a Chapter 11 trustee denied. |
| Whether to appoint a Chapter 11 trustee or estimations of claims | Trustee appointment would aid administration. | No need for ongoing Chapter 11 administration; trustee not warranted. | Chapter 7 trustee appointed (implicit by conversion); estimations denied without prejudice. |
Key Cases Cited
- Pioneer Liquidating Corp. v. United States Trustee (In re Consol. Pioneer Mortg. Entities), 264 F.3d 803 (9th Cir. 2001) (court must convert or dismiss if cause exists, absent unusual circumstances)
- In re Henson, 289 B.R. 741 (Bankr.N.D. Cal. 2003) (discretion and standards under 1112(b) post-BAPCPA; unusual circumstances)