In re Gulfstar Industries, Inc., Bankruptcy No. 97-12044-8B1. No. 98-2506-CIV-T-17E.

• Decision Date: 02 July 1999
• Docket Number: Bankruptcy No. 97-12044-8B1. No. 98-2506-CIV-T-17E.
• Citation: 236 BR 75
• Parties: In re GULFSTAR INDUSTRIES, INC., Debtor. Amin T. Bishara, Appellant, v. Gulfstar Industries, Inc., Appellee.
• Court: U.S. District Court — Middle District of Florida

236 B.R. 75 (1999)

In re GULFSTAR INDUSTRIES, INC., Debtor Amin T. Bishara, Appellant, v. Gulfstar Industries, Inc., Appellee.

Bankruptcy No. 97-12044-8B1. No. 98-2506-CIV-T-17E.

United States District Court, M.D. Florida, Tampa Division.

July 2, 1999.

Michael C. Markham, Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., Clearwater, FL, for Amin T. Bishara, appellant.

Buddy D. Ford, Burns, Ford & Kiesten P.A., Michael R. Barnett, Michael Barnett, P.A., Tampa, FL, for Gulfstar Industries, Inc., dba, Flair Communications, Inc., appellee.

ORDER ON APPEAL

KOVACHEVICH, Chief Judge.

This case is before the Court on appeal from the Final Confirmation Order entered by Bankruptcy Judge Thomas Baynes, Jr., on September 2, 1998. Jurisdiction over appeals from the final judgments, orders, and decrees of the Bankruptcy Court is vested in the Federal District courts pursuant to 28 U.S.C. § 158(a).

Appellant has presented this Court with four issues for review. First, Appellant alleges that the Bankruptcy Court erred in finding that the Debtor had satisfied all of the requirements of 11 U.S.C.A. § 1129, confirmation of plan, without taking any evidence during the confirmation hearing. Second, Appellant argues that the Bankruptcy Court erred in concluding that the Debtor obtained the affirmative vote on its plan. Third, Appellant asserts that the Bankruptcy Court erred in overruling Appellant's Objection to Confirmation. Finally, Appellant alleges that the Bankruptcy Court erred in denying Appellant's Motion for Reconsideration of Order Confirming Plan and For Retabulation of Ballots.

FACTS

Appellee, Gulfstar Industries, filed a voluntary Chapter 11 Petition in the Bankruptcy Court on July 22, 1997. After filing its initial Reorganization Plan and Disclosure Statement on December 8, 1997, Appellee filed its First Amended Plan and Disclosure Statement on May 18, 1998. The Bankruptcy Court then entered an Order Approving the Disclosure Statement on June 2, 1998, and set the dates for the relevant deadlines and hearings in the case. On August 3, 1998, Appellee filed its Second Amended Plan of Reorganization. During these course of events, the Appellee's creditors were given opportunities to cast ballots in favor of the Appellee's reorganization plan.

Prior to the scheduled confirmation hearing, Appellant filed an Objection to Confirmation with the Bankruptcy Court on August 6, 1998. In the Objection to Confirmation, Appellant alleged, among other things, that with respect to each impaired class of claims or interests, each holder of a claim or interest had not accepted the plan and the plan was not fair and equitable with respect to such holders. The Bankruptcy Court held the confirmation hearing on August 12, 1998, where counsel representing the parties at interest in this appeal were present and given the opportunity to argue the merits of the proposed plan before Judge Baynes. Based upon the hearing, and the facts and law presented before the court, Appellee's reorganization plan was confirmed.

On September 14, 1998, Appellant filed a Motion for Reconsideration of Order Confirming Debtor's Second Amended Plan of Reorganization and for Re-tabulation of Ballots. This Motion was subsequently denied by the Bankruptcy Court on September 22, 1998. Appellant filed a Notice of Appeal with respect to the Order confirming the Debtor's Second Amended Plan of Reorganization and Order Denying Appellant's Motion for Reconsideration with this Court on October 1, 1998.

STANDARD OF APPELLATE REVIEW

The District Court is bound by the findings of fact made by the Bankruptcy Court unless it determines them to be clearly erroneous. The burden is on the Appellant to show that the Bankruptcy Court's factual findings are clearly erroneous. Federal Rules of Bankruptcy Procedure, Rule 8013; In re Downtown Properties, Ltd., 794 F.2d 647 (11th Cir.1986); In re Southmark Corp., 55 F.3d 1071 (5th Cir.1995). Appellant is entitled to an independent, de novo review of all conclusions of law and the legal significance accorded to the facts. In re Owen, 86 B.R. 691 (M.D.Fla.1988). Determinations by the Court involving mixed questions of law and fact are reviewed de novo. In re Southmark Corp. at 1074. With this standard in mind, the Court now turns to the issues on appeal.

I. THE BANKRUPTCY COURT DID NOT, AS A MATTER OF LAW, COMMIT ERROR IN CONFIRMING APPELLEE'S PLAN WITHOUT TAKING EVIDENCE AT THE CONFIRMATION HEARING BECAUSE A BANKRUPTCY COURT'S RELIANCE ON THE RECORD IS APPROPRIATE WHEN DETERMINING WHETHER THE REQUIREMENTS OF 11 U.S.C. § 1129 ARE MET.

Appellant argues that the Bankruptcy Court committed error in confirming Appellee's plan without taking evidence at the confirmation hearing. The Eleventh Circuit has clearly established that:

The focus of a court\'s inquiry when determining whether to confirm a reorganization plan is the plan itself, ... and courts must look to the totality of the circumstances surrounding the plan, keeping in mind the purpose of the Bankruptcy Code is to give debtors a reasonable opportunity to make a fresh start.

McCormick v. Banc One Leasing Corp., 49 F.3d 1524, 1526 (11th Cir.1995) (citations omitted).

With this focus in mind, the Bankruptcy Court "must hold an evidentiary hearing in ruling on confirmation," during which the proponent of the plan bears the burden of proving that the plan complies with the provisions of the Bankruptcy Code. In re Acequia, 787 F.2d 1352, 1358 (9th Cir.1986). During this required evidentiary hearing, it is sufficient for the court to decide compliance with 11 U.S.C. § 1129 based upon the Court file. In re Chandler Airpark Joint Venture, 163 B.R. 566, 569 (Bankr.D.Ariz.1992) ("The proponent of the reorganization plan presented no witnesses or evidence in support of confirmation other than the written stipulation and the Court's file in this case. Compliance with confirmation requirements must be based solely on this limited record.").

This Court finds In re Chandler, 163 B.R. at 569, to be persuasive in this matter, especially in light of an absence of authority from the Eleventh Circuit on this issue, and the Ninth Circuit's analysis in In re Acequia, 787 F.2d at 1358. In discussing the Bankruptcy Court's need to hold an evidentiary hearing in ruling on confirmation, the Ninth Circuit in In re Acequia stated that this need "does not preclude the Bankruptcy Court from considering evidence presented by the parties at prior evidentiary hearings." In re Acequia, 787 F.2d at 1358. That court went on to hold that "to require the Bankruptcy Court to ignore prior evidence would impose a harsh and unnecessary administrative burden." This Court agrees.

If the Bankruptcy Court were to be prevented from using the record when deciding whether a proposed reorganization plan meets the requirements of 11 U.S.C. § 1129, it would, in essence, be "grinding the same corn a second time." In re Acequia, 787 F.2d at 1358, quoting Aloe Creme Labs., Inc. v. Francine Co., 425 F.2d 1295, 1296 (5th Cir.1970). In the interests of judicial economy, this Court finds that it is not only permissible, but entirely...