In re Citadel Properties, Inc., Bankruptcy No. 88-708-BKC-6P1.

• Decision Date: 11 May 1988
• Docket Number: Bankruptcy No. 88-708-BKC-6P1.
• Parties: In re CITADEL PROPERTIES, INC., Debtor.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida

86 B.R. 275 (1988)

In re CITADEL PROPERTIES, INC., Debtor.

Bankruptcy No. 88-708-BKC-6P1.

United States Bankruptcy Court, M.D. Florida, Orlando Division.

May 11, 1988.

Raymond Rotella, Orlando, Fla., for debtor.

Gregg W. McClosky, Boca Raton, Fla., for Southern Floridabanc.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

GEORGE L. PROCTOR, Bankruptcy Judge.

This case is before the Court on the motion of Southern Floridabanc Federal Savings & Loan Association ("Southern Floridabanc") for relief from the automatic stay. 11 U.S.C. Section 362. A hearing on the motion was held May 9, 1988, and upon the evidence presented, the Court enters the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. This contested motion involves the request by a secured creditor for relief from automatic stay under section 362(d) to enforce a final judgment of foreclosure entered in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida.

2. The debtor, Citadel Properties, Inc. ("Citadel") filed a voluntary petition pursuant to Chapter 11 of the Bankruptcy Code on March 31, 1988, immediately prior to the judicially scheduled foreclosure sale of debtor's real property.

3. Citadel's sole asset is approximately 6.5 acres of real property located in Orange County, Florida.

4. Southern Floridabanc is a secured creditor pursuant to its mortgage lien and final judgment of foreclosure entered February 5, 1988.

5. Citadel defaulted under its obligations to Southern Floridabanc in mid-1985. The parties subsequently entered into a settlement agreement in which Citadel agreed in return for forbearance in enforcing the foreclosure judgment that Southern Floridabanc would be entitled to immediate relief from the automatic stay should Citadel file for protection under the Bankruptcy Code. The agreement did not, however, prohibit the debtor from filing a bankruptcy petition. The Court pauses to suggest that a total prohibition against filing for bankruptcy would be contrary to Constitutional authority as well as public policy.

6. Citadel has no income, no bank accounts, no employees, no cash flow and no local address.

7. Citadel has been unable to obtain refinancing with respect to the subject real property despite Southern Floridabanc's forbearance in enforcing its foreclosure judgment.

CONCLUSIONS OF LAW

1. Southern Floridabanc suggests that it is entitled to relief by virtue of the terms of the Settlement Agreement entered between the parties in which Citadel agreed to allow Southern Floridabanc immediate relief from the stay should Citadel file for protection under the Bankruptcy Code. The Court agrees.

In Matter of International Supply Corp., 72 B.R. 510 (Bkrptcy.M.D.Fla.1987); B.O.S.S. Partners I, 37 B.R. 348 (Bkrptcy. M.D.Fla.1984); and In re Gulf Beach Development Corp., 48 B.R. 40 (Bkrptcy.M.D. Fla.1985), Judge Paskay confronted similar issues and determined that pre-petition agreements regarding relief from the stay were enforceable in bankruptcy. Thus, this Court holds that the terms of the pre-petition stipulation are binding upon the parties and that sufficient cause exists to lift the automatic stay pursuant to section 362(d)(1).

2. Southern Floridabanc also argues that Citadel filed this petition for reorganization in bad faith and that bad faith constitutes cause for lifting the automatic stay under section 362(d)(1). Following the lead of the 11th Circuit Court of Appeals in In re Albany Partners Ltd., 749 F.2d 670 (11th Cir.1984), this Court has previously recognized that a bad faith filing is cause for relief from the automatic stay. In re Bell Partners, Ltd., 82 B.R. 593 (Bkrptcy. M.D.Fla.1988); In re Sar-Manco, Inc., 70 B.R. 132 (Bkrptcy.M.D.Fla.1986); In re Phoenix-Piccadilly, Ltd., 84 B.R. 843 (Bkrptcy.M.D.Fla.1988); and In re RAD Properties, 84 B.R. 827 (Bkrptcy.M.D.Fla. 1988).

3. The factors cited in the above referenced cases fall into three basic categories: (1) whether the debtor is actually an existing business enterprise or ongoing business concern which may be rehabilitated or reorganized consistent with the Congressional intent and protection afforded by Chapter 11; (2) whether the debtor has filed a petition for reorganization on the eve of a foreclosure or similar judicial action and bankruptcy offers the only means...