Matter of Gulf Beach Development Corp., Bankruptcy No. 84-1178.
| Decision Date | 04 February 1985 |
| Docket Number | Bankruptcy No. 84-1178. |
| Parties | In the Matter of GULF BEACH DEVELOPMENT CORP., Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida |
Douglas Zahm, West Palm Beach, Fla., for movant.
Richard Prosser, Tampa, Fla., for debtor.
ORDER ON MOTION TO MODIFY STAY
THIS IS a Chapter 11 case and the immediate matter under consideration is a Motion to Modify Stay filed by Union Chelsea National Bank (Bank) against Gulf Beach Development Corporation, the Debtor in the above-styled case. The Bank seeks the entry of an Order Modifying the Automatic Stay imposed by § 362 of the Bankruptcy Code, to permit the Bank to continue a foreclosure action which was commenced in October, 1982 in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida (Case No. 82-12252-18). The mortgage sought to be foreclosed encumbers certain real property located in Indian Shores, Florida known as Indian Summer Condominiums. The project consists of two separate buildings. One building is located directly on the Gulf of Mexico and contains sixteen condominium units, while the other is located across the street, fronts on the Intercoastal Waterway and contains eight condominium units.
The Debtor is the record title holder of the subject property and on March 9, 1981, Michael Sedwick, as President of the Debtor executed a note in the principal amount of $1,500,000 secured by a mortgage in favor of the Bank for the purpose of obtaining construction financing. The mortgage provides that it shall also secure future advances whether optional or obligatory, made within 15 years from the date of the mortgage, however, the total unpaid balance shall not exceed twice the face amount of the note plus interest.
The Bank seeks relief from the stay for cause, including lack of adequate protection, pursuant to § 362(d)(1) and alleges that the buildings are unoccupied and are subject to deterioration, theft and vandalism; that the Debtor has failed to provide proof of insurance, and, that the Debtor has failed to pay the 1983 property taxes. The Bank also seeks relief pursuant to § 362(d)(2) and alleges that the Debtor has no equity in the subject property and that the property is not necessary to an effective reorganization.
It is the Debtor's position that the Bank is not entitled to the relief sought for the following reasons: (1) on September 3, 1983, the Bank released the Debtor from the debt evidenced by the note and mortgage; (2) the Bank does not own or hold a promissory note and mortgage executed by the Debtor encumbering the Indian Summer property; even if the debt survives the release, it is merely an unsecured claim; the property is insured; the Debtor has substantial equity in the property; the property is the sole asset of this Debtor and is, therefore, absolutely essential to effective reorganization. In addition, the Debtor contends that a second mortgage in favor of Dison Corporation, N.V. and a third mortgage in favor of Leonard S. Vaillancourt, are criminally usurious and, therefore, do not encumber the property.
Based on the testimony and documentary evidence presented at the final evidentiary hearing, the Court finds and concludes as follows:
As noted earlier, on March 9, 1981, the Debtor, by its President executed the note and mortgage in favor of the Bank. The Debtor defaulted under the terms of the note and mortgage and in October, 1982, the Bank commenced a foreclosure action. On October 18, 1982, a Receiver was appointed by the state court to complete the improvements and in that regard, the Bank continued to advance construction funds. On September 3, 1983, the Debtor and the Bank entered into a Settlement Agreement and executed a Release. The Settlement agreement provides in pertinent part:
To continue reading
Request your trial