In re Northgate Terrace Apartments, Ltd., Bankruptcy No. 2-90-00217.
| Decision Date | 05 April 1991 |
| Docket Number | Bankruptcy No. 2-90-00217. |
| Parties | In re NORTHGATE TERRACE APARTMENTS, LTD., Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Thomas I. Blackburn, Denmead, Blackburn & Willard, Columbus, Ohio, for debtor.
Terry M. Miller, Drew T. Parobek, Vorys, Sater, Seymour and Pease, Columbus, Ohio, for Goldome Realty Credit Corp.
Jay Alix, Jay Alix & Associates, Southfield, Mich., Chapter 11 Trustee.
Michael L. Cook, Sally M. Henry, Skadden, Arps, Slate, Meagher & Flom, New York City, and Marilyn Shea-Stonum, Jones, Day, Reavis & Pogue, Columbus, Ohio, for Trustee.
Charles M. Caldwell, Asst. U.S. Trustee, Columbus, Ohio, Columbus Office of the United States Trustee, for Region IX.
Leon Friedberg, Benesch, Friedlander, Coplan & Aronoff, Columbus, Ohio, for the Official Committee of Unsecured Creditors.
This matter is before the Court on a second renewed motion for relief from stay filed by Goldome Realty Credit Corporation ("Goldome"). The debtor, Northgate Terrace Apartments, Ltd., ("Northgate") opposed the motion and the matter was heard by the Court on March 27, 1991.
The Court has jurisdiction in this matter under 28 U.S.C. § 1334 and the General Order of Reference previously entered in this district. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(G).
The facts underlying the respective position of these parties have been set forth in the Court's two prior opinions denying relief from stay. Those facts need not be restated.
Certain relevant events and facts have occurred since the Court's January 31, 1991 ruling which denied one of Goldome's earlier motions for relief from stay. That denial was premised upon a finding that the debtor had moved within a reasonable time to propose a plan of reorganization after it received financial information from the receiver. The success of that plan was contested and there were legal issues relating to its confirmation. The Court chose not to determine those matters in the context of a relief from stay motion. Those issues included questions of first impression which the Court believed were more appropriately dealt with in a confirmation setting. The holding assumed, however, that such a hearing would be held within a short period of time. That confirmation hearing, however, has not yet occurred.
In the earlier opinion the Court recognized that there had been delay by the state court receiver ("Receiver") in transferring financial data to the debtor about the operation of its property and there had been difficulties in interpreting that data once it had been received. Goldome had a role in selecting that Receiver. Those factors caused the Court to determine that the time within which the debtor should reasonably have been able to propose a confirmable plan had not yet expired. At the conclusion of that order, however, the Court stated:
The Court cautions, however, that Northgate must have its disclosure statement in a final posture by the hearing date of March 11, 1991 and must be prepared to proceed to confirmation without further delay. (Opinion of January 31, 1991 at p. 11, 126 B.R. 520, 526 (S.D. Ohio 1991)).
At the time of the disclosure statement hearing on March 11, 1991, Northgate had not amended its disclosure statement to include necessary information relating to the operation of its property. That information was to include an analysis of the Receiver's operations as well as the results of the debtor's operations since the turnover of the property in late August, 1990. In fact, there had been no amendments to the disclosure statement since the Court's issuance of its order of January 31, 1991. Because the disclosure statement had other obvious deficiencies and was not in final posture "as previously ordered," the Court denied approval of its adequacy in an order entered March 14, 1991. On that same day Goldome renewed its second motion for relief from stay. On March 18, 1991 the debtor filed a Second Amended Disclosure Statement and Plan. A hearing on the adequacy of that disclosure statement has tentatively been set for May 20, 1991. Whether that hearing goes forward, of course, depends upon the resolution of this motion of Goldome.
The only issue before the Court in this matter is whether Northgate has failed to propose and pursue an effective plan of reorganization within a reasonable time.
Goldome asserts that the Court must find in its favor because Northgate did not comply with the Court's order of January 31, 1991.
The debtor, on the other hand, insists that its actions have been timely and that it is moving forward as quickly as can be expected, given the difficulties of this case and the many other Chapter 11 plans in which its general partner is actively engaged. The debtor's general partner, Cardinal Industries, Inc., is also a Chapter 11 debtor before this Court. Northgate further believed it would be given a short period after the March 11, 1991 hearing to "clean up" its disclosure statement and amend it to accommodate Goldome's various objections. Allowance of a short cleanup period has been the usual procedure followed by this Court in disclosure statement matters. The debtor further introduced testimony about the procedures and timing its general partner follows in generating plans of reorganization for the many Chapter 11 cases before this Court for which it serves as general partner. Difficulties with the Receiver and time spent responding to Goldome's many motions was also cited as cause for whatever delay exists.
It is apparent that Goldome wishes to terminate this reorganization effort as quickly as possible. All of the reasons for that effort do not arise from concerns about this debtor's property or its operations. Moreover, Goldome has received significant payments on its obligation during the pendency of this case. Nevertheless, the debtor should have complied with the Court's order of January 31, 1991 or should have sought permission for delay or clarification of what the Court meant by "final posture" and "without further delay."
Goldome urges the Court to mean what it says, enforce its orders and grant it relief from the automatic stay. The debtor requests additional time to complete the process now underway and maintains that it has moved as fast as it could under the circumstances. Goldome further points to a desire to resolve the appeal it filed of the Court's January 31, 1991 order. The Court considers that issue to be irrelevant to its decision, however.
This Court has set guidelines for determining the reasonable time within which a Chapter 11 debtor must propose a plan. See In re Ashgrove Apts. of DeKalb County, Ltd., 121 B.R. 752 (Bankr.S.D. Ohio 1990). The list of factors set forth in Ashgrove is nonexhaustive. What is "reasonable" necessarily depends upon the specific facts of a particular case. While one year may be reasonable under one set of facts, under different facts it may be completely unreasonable. No single answer applies to all cases.
Black's Law Dictionary defines "reasonable time" as "such time as is necessary conveniently to do what must be done and as soon as the circumstances will permit." Reasonable time is not what any one party or even the Court perceives it should be under ideal conditions. This is especially true where evidence shows that circumstances are not ideal and thus, a longer time than originally anticipated may be justified. The term "reasonable" implies fairness and equity under the circumstances; it is not a knee-jerk reaction which oversimplifies the issue.
This Court cautioned Northgate to proceed without further delay and meant it. Goldome contends it simply wants this Court to enforce that "order" because the debtor is not moving as quickly as Goldome (and at times this Court) perceives it should. But the evidence did not show that Northgate was delaying. Delay means more than the mere passage of time. It requires an action or intentional nonaction designed to "put things off," "impede the process," "defer," or "postpone."
Northgate offered evidence at the latest hearing to show that it was moving within a reasonable time toward confirmation of a proposed plan. Even though Goldome urges this Court to stop placing emphasis on the uncooperativeness of the Receiver, the lack of historical data from the Receiver's operations was a constant and real problem. This Court has frequently recognized that books and records may be more important to a debtor's ability to formulate a feasible plan of reorganization than is physical possession...
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