In re The Landing, Bankruptcy No. 92-20384-172.

Decision Date01 July 1993
Docket NumberBankruptcy No. 92-20384-172.
Citation156 BR 246
PartiesIn re THE LANDING, Debtor.
CourtU.S. Bankruptcy Court — Eastern District of Missouri

Fredrich J. Cruse, Operating Trustee, Hannibal, MO.

Branson L. Wood III, Hannibal, MO, for Prestige Realty, Inc.

Vicki A. Dempsey, Hannibal, MO, for Operating Trustee.

Charles E. Rendlen, III, Hannibal, MO, for Creditors' Committee.

David R. Crosby and Arthur Margulis, St. Louis, MO, for Stephen Isserman.

Leslie A. Davis, Chapter 7 Trustee on Related Bankruptcy Cases, Clayton, MO. Lonnie D. Whitaker, U.S. Small Business Administration, St. Louis, MO.

Michael A. Clithero and Jennifer M. Joyce, St. Louis, MO, for Ralph W. Kalish, Jr., et al.


JAMES J. BARTA, Bankruptcy Judge.

At Saint Louis, in this District, this 1st day of July, 1993.

The hearing to consider the Operating Trustee's application and notice for authority to approve a sale of substantially all of the Debtor's assets prior to submission of a disclosure statement and plan was called on June 30, 1993. A review of the record indicated that the Court had received eight timely filed written objections to the notice of sale.

At the commencement of the hearing the Operating Trustee announced that for several reasons, he was withdrawing his request to approve the sale as noticed to creditors. He also stated that he had received two additional written offers to purchase the Debtor's property, but that he had not had an opportunity to review each proposal and therefore would not request Court approval of either offer at this time.

In response to this announcement, Counsel for Robert Smith & Associates ("Buyer") requested that the Court approve the sale as noticed to creditors, notwithstanding the Trustee's statements. On consideration of the record as a whole, the Court entered its determinations and orders from the bench after receiving comments from Counsel for other interested parties including the Small Business Administration, the holder of a deed of trust against the Debtor's property. Counsel for the Official Unsecured Creditors Committee announced its agreement with the Trustee's withdrawal of his request to approve the proposed sale.

This is a core proceeding pursuant to Section 157(b)(2)(N) of Title 28 of the United States Code. The Court has jurisdiction over the parties and this matter pursuant to 28 U.S.C. §§ 151, 157 and 1334, and Rule 29 of the Local Rules of the United States District Court for the Eastern District of Missouri.

The Order For Relief was entered in this involuntary proceeding as of November 24, 1992. The Operating Trustee was appointed after the Court granted a motion originally filed by the Involuntary Petitioners.

The Debtor is a Missouri Limited Partnership that operates a recreational development on the Mark Twain Lake, South and West of Hannibal, Missouri. The development includes a water slide, wave pool, convenience store, cabins and R/V facilities, as well as a go-cart track and the electrical, mechanical and other equipment necessary to operate the facility. The Operating Trustee opened the facility for the 1993 season shortly before May 31, 1993.

The Offer to Purchase is contingent upon the Buyer entering into an assumption agreement with the Small Business Administration and ITT Financial Services for the assumption of the indebtedness on the property to be sold. As of the date of the hearing, the Buyer and SBA indicated that such an agreement had not been entered into, and that the Buyer was attempting to arrange for payment of the secured debt by means other than by assuming the existing obligations, although the attempts to assume the debt had not been abandoned.

The Offer to Purchase also required that the Buyer was to provide the Operating Trustee with a "written loan commitment for all required financing in advance of the hearing" on June 30, 1993. The Trustee has not been provided with such an agreement.

The personal property to be sold through the Offer to Purchase is to include certain life insurance policies which insure the life of Stephen Isserman, the individual general partner of The Dam Partnership III, which is the partnership general partner of the Debtor partnership. Mr. Isserman was also designated as the person responsible for performing the duties of the Chapter 11 Debtor. The Trustee announced that it had been recently determined that the insurance policies are not owned by the Debtor, and therefore could not be transferred in this sale.

The Offer to Purchase also includes provisions that require the Trustee, at his expense, to prosecute an action to determine the extent of the estate interest in several cabins, even though the proceeds of a successful prosecution will be transferred to the Buyer. Other provisions permit the Buyer in its sole discretion, and apparently without any deadline, to exclude property from this sale, should the Buyer determine that the property represents a liability. The liability would then remain with the estate. Still other provisions in the Offer to Purchase appear to permit the Buyer to decide after closing, which unexpired leases it will assume. Without more, this provision appears to be inconsistent with 11 U.S.C. § 365.

Unless a liquidating plan of reorganization is anticipated, a proceeding under Chapter 11 is intended, through the vehicle of a disclosure statement and plan, to allow a debtor to continue its business operations, to continue to...

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