In re Sindesmos Hellinikes-Kinotitos of Chicago

• Citation: 607 B.R. 898
• Decision Date: 25 October 2019
• Docket Number: Case No. 18bk34548
• Parties: IN RE: SINDESMOS HELLINIKES-KINOTITOS OF CHICAGO, Debtor.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

607 B.R. 898

IN RE: SINDESMOS HELLINIKES-KINOTITOS OF CHICAGO, Debtor.

Case No. 18bk34548

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

Signed October 25, 2019

Attorneys for "Concerned Parishioners": Nathan Q. Rugg, Jack O. Snyder, Jr. and Michael D. Educate, Barack Ferrazzano Kirschbaum & Nagelberg LLP, Chicago, IL

Attorney for Debtor: David Herzog, Herzog & Schwartz, P.C., Chicago, IL

Attorney for Fifth Third Bank: David A. Golin, Saul Ewing Arnstein & Lehr LLP, Chicago, IL

Attorney for The Universal Church, Inc.: Kevin C. Driscoll, Jr., Barnes & Thornburg LLP, Chicago, IL

Trial Attorney for Patrick S. Layng, United States Trustee: Ha Nguyen, Office of the United States Trustee, Chicago, IL

MEMORANDUM DECISION

TIMOTHY A. BARNES, Judge.

This matter comes on for consideration on the Motion for Entry of Order (I) Granting Relief from Amended Order Approving and Authorizing the Debtor to Sell Real Estate, Free and Clear of Liens and Encumbrances, to Assume and Assign Real Property Lease, and to Shorten Notice, and (II) Granting Related Relief [Dkt. No. 127] (the " Rule 60 Motion"), as originally brought by HT Preservation Society, Ltd. ("HTPS") and as joined by certain parishioners (the so-called "Concerned Parishioners" and together with HTPS, the "Movants") by way of the Joinder of Concerned Parishioners to Motion for Entry of Order (I) Granting Relief from Amended Order Approving and Authorizing the Debtor to Sell Real Estate, Free and Clear of Liens and Encumbrances, to Assume and Assign Real Property Lease, and to Shorten Notice, and (II) Granting Related Relief [Dkt. No. 132] (the "Joinder").¹

In the Rule 60 Motion, without having objected to the Amended Order Approving and Authorizing the Debtor to Sell Real Estate, Free and Clear of Liens and Encumbrances, to Assume and Assign Real Property Lease, and to Shorten Notice [Dkt. No. 121] (the "Chicago Sale Order"), which Chicago Sale Order contained protections under section 363(m) of title 11 of the United States Code, 11 U.S.C. § 101, et seq . (the "Bankruptcy Code"), and after the appeal period for the Chicago Sale Order has passed, the Movants seek to have this court vacate the Chicago Sale Order for lack of authority of the debtor, Sindesmos Hellinikes-Kinotitos of Chicago (the "Debtor" or the "Holy Trinity Church"), to enter into the sale approved thereunder.

For the reasons stated more fully herein, after having set briefing on the Rule 60 Motion² and considered all of the filings in relation thereto, and after having conducted a hearing on October 15, 2019 (the "Hearing") at which each of the parties discussed herein appeared and was heard, the court concludes that the Movants have failed to establish the requirements to vacate the Chicago Sale Order under Federal Rule of Civil Procedure 60 (" Rule 60" specifically and generally, the "Rules"), made applicable in this matter by Federal Rule of Bankruptcy Procedure 9024 (generally, the "Bankruptcy Rules"). For that reason, the Rule 60 Motion should be, and by separate order entered concurrently herewith will be, denied.

JURISDICTION

The federal district courts have "original and exclusive jurisdiction" of all cases under the Bankruptcy Code. 28 U.S.C. § 1334(a). The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under the Bankruptcy Code, or arising in or related to cases under the Bankruptcy Code. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy judges must therefore determine, on motion or sua sponte , whether a proceeding is a core proceeding or is otherwise related to a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(3). As to the former, the bankruptcy judge may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy judge may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. §§ 157(b)(1), (c). Instead, the bankruptcy judge must "submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district court judge after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1).

In addition to the foregoing considerations, the bankruptcy judge must also have constitutional authority to hear and determine a matter. See Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). Constitutional authority exists when a matter originates under the Bankruptcy Code or, in noncore matters, where the matter is either one that falls within the public rights exception, id. , or where the parties have consented, either expressly or impliedly, to the bankruptcy judge hearing and determining the matter. See Wellness Int'l Network, Ltd. v. Sharif , 575 U.S. 665, 135 S. Ct. 1932, 1947, 191 L.Ed.2d 911 (2015) (parties may consent expressly or impliedly to a bankruptcy court's jurisdiction); Richer v. Morehead , 798 F.3d 487, 490 (7th Cir. 2015) (noting that "implied consent is good enough").

The bankruptcy court, acting in the stead of the district court, has exclusive jurisdiction over the bankruptcy estate's assets, wherever located. 28 U.S.C. § 1334(e)(1). It follows that a motion concerning such assets is a matter concerning the administration of the estate and is therefore a statutorily core proceeding, 28 U.S.C. § 157(b)(2)(A), and a motion to sell such assets is expressly core. 28 U.S.C. § 157(b)(2)(N). It further follows that a motion to reconsider an order regarding such a motion concerning the sale of bankruptcy estate assets also arises in a case under the Bankruptcy Code. See Fed. R. Civ. P. 60 ; Elscint, Inc. v. First Wis. Fin. Corp. (In re Xonics ), 813 F.2d 127, 130 (7th Cir. 1987) ("Doubtless courts may enforce their own orders.") (internal citations omitted); In re Morrow , 495 B.R. 378, 382 (Bankr. N.D. Ill. 2013) (Barnes, J.).

Based on the foregoing, except as otherwise noted herein, the court has the jurisdiction and statutory and constitutional authority to hear and determine this matter and to enter final orders with respect to the Rule 60 Motion.

HISTORY

The history of this matter extends not just to the case itself, but to another, prior bankruptcy case and the efforts, both in this court and elsewhere, of the Debtor's major secured creditor to collect on the obligations owed it.

The Debtor, the so-called Holy Trinity Church, is a religious corporation consisting of one of the oldest Greek Orthodox churches in this country. As will be discussed below, the church has existed in each of this and the previous two centuries. The Debtor's two major assets were, prior to the events unfolding as described herein, the church's nave (the "Chicago Property") and a second property where the Debtor, ultimately by agreement with and thus through the Hellenic American Academy Foundation (the "Academy"), operated a religious school (the "Deerfield Property" and together with the Chicago Property, the "Properties"). In addition, adjacent to the Chicago Property is a parking lot owed by the Debtor (the "Parking Lot").³

In 2007, the Debtor became indebted to MB Financial Bank, N.B. ("MBFB") for more than $8.2 million dollars. See Official Form 410, Proof of Claim of MB Financial Bank, N.A. (filed March 22, 2019) [Claim 4-1] (the "Bank Claim" and generally, the "Bank Loan"). Fifth Third Bank ("Fifth Third" and together with MBFB, the "Bank") is the successor in interest to the Bank Claim. According to filings by the Bank in this case, the money was borrowed to improve the Deerfield Property. See Mot. of MB Financial Bank N.A. for Order Excusing Receiver from Compliance with Sections 543(a) and 543(b) of the Bankruptcy Code, at ¶ 6 [Dkt. No. 17] (the "Receiver Motion"). As security for the Bank Claim, the Debtor granted the Bank mortgages and assignments of rent and executed related documents pertaining to both of the Properties, but not pertaining to the Parking Lot. Id. at ¶ 7.

According to MBFB, the Debtor defaulted on the Bank Loan some time in 2013 and MBFB served notices of default in 2013 and 2014. Id. at ¶ 13. In 2015, MBFB instituted foreclosure actions against the Chicago Property, id. at ¶ 14, but before a receiver could be appointed, the Debtor commenced its first chapter 11 bankruptcy case. Id. at ¶ 15. That case, In re Sindesmos Hellinikes-Kinotitos of Chicago , Case No. 15bk22446 (Bankr. N.D. Ill. filed June 29, 2015) (the "Prior Case"), was assigned to the undersigned.

For nearly three years, in the Prior Case, the Debtor attempted to formulate a plan of reorganization. Much of the early part of the case was focused on disputes between the Bank, the Debtor and the Academy regarding the school on the Deerfield Property. Ultimately, after the undersigned denied the Academy's claim, Order Sustaining Objection [Prior Case, Dkt. No. 173], and lifted the automatic stay to allow MBFB to pursue nonbankruptcy remedies with respect to the Properties, Order Modifying Automatic Stay [Prior Case, Dkt. No. 208], another judge sitting in the undersigned's stead ruled against the Academy on certain of its alleged claims in the Deerfield Property and, over the objection of the Academy, the court approved the sale of the Deerfield Property for approximately $3.7 million. Order (A) Approving the Sale of Real Estate to the...