In Re Middleton Arms, Limited Partnership
Bankr. L. Rep. P 74,014
In re MIDDLETON ARMS, LIMITED PARTNERSHIP; Haystack,
Limited; Maple Canyon, L.P.; Cinnamon Ridge, L.P., Debtors,
E. Franklin CHILDRESS, Plaintiff-Appellee,
v.
MIDDLETON ARMS, L.P.; Haystack Ltd.; Maple Canyon, L.P.;
Cinnamon Ridge, L.P., Defendants-Appellants.
No. 90-6292.
United States Court of Appeals,
Sixth Circuit.
Argued May 6, 1991.
Decided June 6, 1991.
Martha L. Davis, Thomas P. Tinker, U.S. Dept. of Justice, Office for U.S. Trustees, Washington, D.C., Beth Roberts Derrick (argued), Nashville, Tenn., for E. Franklin Childrеss, Jr., United States Trustee, Region VIII.
E. Franklin Childress, Jr., pro se.
Diane S. Kuhn, James R. Kelley (argued), Dearborn & Ewing, Nashville, Tenn., for defendants-appellants.
Before KENNEDY and MARTIN, Circuit Judges, and SPIEGEL, District Judge.*
KENNEDY, Circuit Judge.
The defendants, Middleton Arms, L.P., Haystack, Ltd., Maple Canyon, L.P., and Cinnamon Ridge, L.P., (debtors) appeаl the District Court's order reversing the Bankruptcy Court's decision which had approved the debtors' applications for authority to employ a real estate agent, Jacques-Miller, Inc., for the sale of debtor property. For the following reasons, we AFFIRM the District Court's order.
I.
Each of the debtors owns apartment projects at different locations in the South and Midwest. Each debtor is a limited partnership in which Freeman Properties, Inc. is a cоrporate general partner and there are one or more individual general partners. Each debtor has entered into management сontracts with Jacques-Miller Properties, Inc. (Jacques Properties) to manage its apartment projects and the partnership affairs. Jaсques Properties is a subsidiary of Jacques-Miller, Inc. (Jacques Inc.). Jacques Inc. has a disposition department that arranges for the sale of aрartment projects that are owned by partnerships in which Freeman or Jacques Inc. affiliates are involved. Two of the debtors owe pre-petition debts to Jacques Inc. Haystack owes $814 and Maple Canyon owes $2,234.
Each debtor filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code and operates its respective business as debtor in possession under
The Trustee appealed to the District Court, which reversed the Bankruptcy Court's decision, holding that the Bankruptcy Court's equity powers could not be used to disregard language within the Code that is unambiguous.
II.
The debtors raise two issues on appeal: (1) whether the District Court erred in finding that the Bankruptcy Court improperly used its equity powers; and (2) notwithstanding the equity powers issue, whether the debtors are entitled to employ Jacques Inc. pursuant to section 1107(b).
The equity powers of section 105 allow the Bankruptcy Court to "issue any order, process or judgment that is necessary or appropriate to carry out the provisions of this title."
The debtors admit that Jacques Inc. is not a disintеrested person. The debtors argue, however, that because the Bankruptcy Court found that the debtors would be best served if they were able to emрloy Jacques Inc., the Bankruptcy Court's equitable powers allow it to give approval.
The debtors nеxt raise the issue of whether the Bankruptcy Court could permit the debtors to employ Jacques Inc. under section 1107(b), which provides:
(b) Notwithstanding
The debtors correctly point to
The parties agree that Jacques, Inc. is not a disinterested party. If Jacques Inc. were not disinterested merely because of prior employment by the debtors, then
Accordingly, the District Court's decision reversing the Bankruptcy Court is AFFIRMED.
Notes
The Honorable S. Arthur Spiegel, United States District Judge for the Southern District of Ohio, sitting by designation
The Trustee argues that the debtors' pre-filing debt to Jacques Inc. also prevents Jacques Inc. from qualifying as a disinterested person. We need not decide in this case whether a pre-filing debt that arises out of prior employment alone prevents a person from qualifying as a disinterested person