In re National Cattle Congress, Inc.
| Decision Date | 20 January 1995 |
| Docket Number | Bankruptcy No. 93-61986KW. |
| Citation | 179 BR 588 |
| Parties | In re NATIONAL CATTLE CONGRESS, INC., Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Iowa |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
John Titler, Cedar Rapids, IA, for debtor.
Jeffrey Farrell, Asst. Atty. Gen., Des Moines, IA, for Iowa Racing and Gaming Com'n.
Thomas Fiegen, Cedar Rapids, IA, for Unsecured Creditors' Committee.
On December 12, 1994, the above-captioned matter came on for hearing pursuant to assignment. Attorney John Titler represented Debtor National Cattle Congress, Inc. Assistant Attorney General Jeffrey Farrell represented Defendant Iowa Racing and Gaming Commission (the "Commission"). Attorney Tom Fiegen represented the Unsecured Creditors Committee. The matter before the Court is Debtor's Motion for Determination Regarding Application of Automatic Stay to Revocation Resolution of Iowa Racing and Gaming Commission. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(G).
Debtor filed its Chapter 11 petition on December 16, 1993. Debtor is in the business of conducting greyhound racing at the Waterloo Greyhound Park in Black Hawk County pursuant to a pari-mutuel dog racing license from and under the supervision of the Iowa Racing and Gaming Commission. In July 1994, the Commission renewed Debtor's license for the live racing season from November 1, 1994 through April 23, 1995.
Legislative changes in March 1994 allowed race track facilities to operate expanded, casino-style gaming such as slot machines. Debtor has projected that this expanded gambling capability would give it long term viability. The new law, however, requires passage of a county referendum prior to installation of slot machines at the track. On September 27, 1994, a referendum on the operation of gambling games at the Waterloo track was defeated in Black Hawk County for the second time.
At a hearing held November 4, 1994, the Commission determined that it would revoke Debtor's pari-mutuel dog racing license. Its written ruling dated November 30, 1994, bases its decision on Debtor's failure to demonstrate financial responsibility and long term viability. The Commission asserts this conclusion was reached through consideration of Debtor's financial information, statistics concerning mutuel handle and the results of the two recent referendums. The Commission decided on November 4 to revoke Debtor's license effective November 11, 1994 if the license was not voluntarily surrendered prior to that date. Debtor did not surrender its license and the Commission now considers the license revoked.
On November 10, 1994, Debtor filed its Motion for Determination Regarding Application of Automatic Stay to Revocation Resolution of Iowa Racing and Gaming Commission. It simultaneously filed a related adversary proceeding seeking a temporary order restraining the Commission from revoking its license. The Court granted the temporary restraining order, without objection, to remain in effect until the present Motion is determined.
Debtor alleges that the revocation resolution constitutes a violation of the automatic stay under 11 U.S.C. § 362(a)(1) and § 362(a)(3). Debtor moves the Court to declare the revocation null and void and provide a remedy regarding the future operation of the Waterloo track. The Unsecured Creditor's Committee supports Debtor's position and additionally argues that revocation of the license violates the § 525 prohibition against discriminatory treatment based solely on an entity's status as a debtor under the Code.
The Commission argues that:
1) The Commission's revocation resolution is controlled by the exception provisions of § 362(b)(4) which except this action from the broad provisions of § 362(a)(1).
2) The revocation resolution does not violate the provisions of § 362(a)(3) as this conduct does not constitute "control over property of the estate".
3) The revocation resolution does not violate the § 525 prohibition as it was validly based on the financial responsibility requirements of the Iowa Code and was not based on any discriminatory purpose.
When a bankruptcy petition is filed, an estate is created pursuant to 11 U.S.C. § 541(a). The term "estate" is broadly defined in § 541 to include all of a debtor's interest in property whether it is tangible or intangible. Property interests are interpreted in an expansive manner. See United States v. Whiting Pools, Inc., 462 U.S. 198, 205, 103 S.Ct. 2309, 2314, 76 L.Ed.2d 515 (1983); Whetzal v. Anderson, 32 F.3d 1302, 1303 (8th Cir.1994).
At the same time that a bankruptcy petition is filed, an automatic stay arises pursuant to 11 U.S.C. § 362(a). A primary purpose of the automatic stay provision is to afford debtors in Chapter 11 reorganizations an opportunity to continue their businesses with their available assets. Small Business Admin. v. Rinehart, 887 F.2d 165, 168 (8th Cir.1989). The automatic stay is specifically designed to afford debtor a "breathing spell" free from actions by creditors against the debtor's estate. In re Briggs Transp. Co., 780 F.2d 1339, 1343 (8th Cir.1985). The stay is intended to aid in equitably distributing a debtor's assets. Id.
The automatic stay under § 362 prohibits conduct under eight specific categories. Only §§ 362(a)(1) and 362(a)(3) are in controversy in this case. They provide:
These provisions are separate and distinct. The Court will separately analyze each subsection.
Before the facts of this case can be applied to the appropriate stay provisions, the Court must determine whether the racing license which was issued and in effect at the time of the filing of the petition is property of the estate. The property provisions of 11 U.S.C. § 541 include interests of the debtor of all types. Bankruptcy courts have almost universally applied the broad test enunciated by the Supreme Court in United States v. Whiting Pools, Inc., 462 U.S. at 205, 103 S.Ct. at 2314. This definition is accepted in the 8th Circuit and in the Bankruptcy Courts of the Northern District of Iowa. While the issue is not in significant dispute, the Commission does not stipulate that this license is property of the estate. The Court will, therefore, briefly examine this issue.
Debtor cites the Northern District of Iowa case of In re Newport Star Clipper Ltd. Partnership, No. L91-00114-W, 1995 WL 237361 (Bankr.N.D.Iowa, March 30, 1992) as authority for the proposition that a liquor license is property of the estate and that this Court has authority to direct the issuance of such a license. While the Court's order in Newport Star Clipper supports a finding of property of the estate, the order was entered as a temporary order pending subsequent hearings. The purpose of the issuance of the order was merely to stay matters and to keep debtor in business until the matter could be fully presented and briefed. Other than providing some insight on the issue of property of the estate, Newport Star Clipper should be limited to its facts and to the proposition that a temporary order may be entered to preserve the status quo in a licensing proceeding. It cannot be read as resolving the multiple issues raised in this case.
Though Newport Star Clipper does not provide significant answers in this case, this Court and other courts have discussed, at great length, the property implications of differing types of licenses.
This Court concluded in In re American Cent. Airlines, Inc., 52 B.R. 567, 570 (Bankr. N.D.Iowa 1985), that airport landing slots allocated to debtor constitute property of the estate. The same conclusion was reached in In re Gull Air, Inc., 890 F.2d 1255, 1260 (1st Cir.1989). That court held that debtor's proprietary interest in landing slots, which was limited as to superior rights of the FAA and conditions imposed by FAA regulations, nevertheless constituted property of the estate. Id.
A broadcasting license was found to be valuable, intangible property of a debtor's estate in In re Central Arkansas Broadcasting Co., 170 B.R. 143, 146 (Bankr.E.D.Ark. 1994). A certificate of public convenience necessary for a trucking company to do business is property of debtor's estate. In re Rocky Mountain Trucking Co., 47 B.R. 1020, 1021 (D.Colo.1985). A certificate of approval carrying a right to do business for a debtor operating a school is property of the debtor's estate. In re Draughon Training Inst., Inc., 119 B.R. 921, 926 (Bankr.W.D.La.1990).
Based on the foregoing authorities and the United States Supreme Court's holding that property interests under the Bankruptcy Code are to be broadly construed, this Court concludes that Debtor's racing license does constitute property of the estate. It is a property interest in which Debtor has, at a minimum, a proprietary interest to be administered by the Bankruptcy Court balanced against the State's legitimate interest in regulation of the subject matter of the license. Within those parameters, the Bankruptcy Code's broad definition of property of the estate, which has been expansively embraced by this Court, ultimately encompasses...
To continue reading
Request your trial
-
In re Warwick
... ... In re Metco Mining and Minerals, Inc., 171 B.R. 210, 217 (Bankr.W.D.Pa.1994); In re Glaze, 169 B.R. 956, 964 ... 359 (Bankr.S.D.Ohio 1994); see also Carolco Television Inc. v. National Broadcasting Co. (In re De Laurentiis Entertainment Group, Inc.), 963 F.2d ... ...