Muscongus Bay Co., In re

• Decision Date: 30 April 1979
• Docket Number: No. 79-1039,79-1039
• Citation: 597 F.2d 11
• Parties: , Bankr. L. Rep. P 67,240 In re MUSCONGUS BAY COMPANY, d/b/a Muscongus Bay Wood Products, Muscongus Associates, Inc., and Northeast Industry, Inc., Bankrupt. Appeal of Anthony ABBOTONI.
• Court: U.S. Court of Appeals — First Circuit

Page 11

597 F.2d 11

5 Bankr.Ct.Dec. 156, Bankr. L. Rep. P 67,240

In re MUSCONGUS BAY COMPANY, d/b/a Muscongus Bay Wood

Products, Muscongus Associates, Inc., and

Northeast Industry, Inc., Bankrupt.

Appeal of Anthony ABBOTONI.

No. 79-1039.

United States Court of Appeals, First Circuit.

Argued April 5, 1979.

Decided April 30, 1979.

Gordon F. Grimes, Portland, Me., with whom Richard E. Poulos and Bernstein, Shur, Sawyer & Nelson, Portland, Me., were on brief, for appellant.

George J. Marcus, Portland, Me., with whom Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Me., was on brief, for appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

In the bankruptcy sale that generated this appeal, the bankruptcy court refused to confirm Mr. Abbotoni's bid of $23,333, which was both the only and the highest timely bid at public auction. Instead it extended the bidding period upon receiving a late offer from Mr. Winchenback for $26,200. The court subsequently confirmed sale to Mr. Winchenback for $28,350, which was the highest bid submitted during the bidding extension. Mr. Abbotoni appealed, and the district court affirmed. After careful consideration of the arguments made on this appeal, we affirm the decision below for essentially the reasons set forth by the district court in its thoughtful analysis. While the case is perhaps close, we agree that the bankruptcy court acted within the scope of its broad discretion in extending the period for filing sealed bids and in confirming the sale to Mr. Winchenback for $28,350.

We add only a few observations. The policy favoring confirmation of a bankruptcy sale to the highest bidder at a fairly conducted public auction gives way to the goal of benefitting the bankrupt estate and its creditors when the sale price would be "grossly inadequate." Munro Drydock, Inc. v. M/V Heron, 585 F.2d 13, 14-15 (1st Cir. 1978).

"(G)ross inadequacy is said to exist when apart from situations involving fraud or unfairness, which is not the case here there is a substantial disparity between the highest bid and the appraised or fair market value, and 'there is a reasonable degree of probability that a substantially better price will be obtained by a resale . . . .' 4B Collier on Bankruptcy P 70.98(17) at 1192 (14th ed. 1978); Reid v. King, 157 F.2d 868, 870-71 (4th Cir. 1946)."

Id. at 15. Here, the bankruptcy court was entitled to find, as it did, that a substantial disparity existed between Mr. Abbotoni's $23,333 bid and the fair market value of the property. It is true that the $38,500 appraisal upon which the bankruptcy court relied was not made by an appraiser appointed by the court pursuant to 11 U.S.C. § 110(f) and Fed.R.Bankr.P. 606(a), but instead by an appraiser secured by the Small Business Administration the sole interested creditor. But there was no objection to the introduction of that appraised value, and appellant despite opportunity presented no evidence that the appraisal was...