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Bankruptcy | Case Law | Use Sale Lease Property

USE SALE OR LEASE OF PROPERTY - §363

In re Fitzgerald, 428 B.R. 872 (9th Cir. BAP 2010)

1. Because there was no evidence of good faith in the record, the sale did not render an

appeal moot under § 363(m); nor was the appeal equitably moot, since the appellees did not

demonstrate that the appellants could not be afforded any relief.

2. Given the fact that the buyers of the estate’s claims against the defendants were the

defendants themselves, the price paid for the claims required closer scrutiny than would be required

in an ordinary sale auction.

3. The sale involved here was both a sale and a compromise, requiring the court to examine

whether it met the four-part test of In re A &C Properties, 784 F.2d 1377, 1381 (9th Cir. 1986 ).

In re PW LLC, 391 B.R. 25, 41 (9th Cir. BAP 2008)

1) “. . . § 363(f)(3) does not authorize the sale free and clear of a lienholder’s interest if the

price of the estate property is equal to or less than the aggregate amount of all claims held be

creditors who hold a lien or security interest in the property being sold.”

2) The term “interest” in § 363(f)(5) must be read expansively, and includes liens.

3) The compelled “money satisfaction” referred to in § 363(f)(5) means that the interest

holder could be compelled for less than full payment. Cramdown under § 1129(b)(2) is not a legal

or equitable proceeding to which § 363(f)(5) refers.

In re Lanijani, 325 B.R. 282 (9th Cir. BAP 2005)

“. . .[W]hen a cause of action is being sold to a present or potential defendant over the

objection of creditors, a bankruptcy court must, in addition to treating it as a sale, independently

evaluate the transaction as a settlement under the prevailing “fair and equitable” test, and consider

the possibility of authorizing the objecting creditors to prosecute the cause of action for the benefit

of the estate, as permitted by § 503(b)(3)(B).”

In re Flynn, 418 F.3d 1005 (9th Cir. 2005)

Finding that attorneys fees incurred in a co-owner sale constituted “compensation of a

trustee” under § 363(j), the court held that the non-debtor co-owner’s share of the attorneys fees

incurred in the sale were not chargeable to the co-owner.

In re Popp, 323 B.R. 260 (9th Cir. BAP 2005)

Failure to make specific findings that the estate had an ownership interest in property being

sold required reversal. Neither § 363(m) nor the general mootness doctrine nor equitable mootness

applied.

In re Rodeo Canon Development Corp., 362 F.3d 603 (9th Cir. 2004), remanded for further

proceedings,126 Fed.Appx. 353 (9th Cir. 2005)

“A bankruptcy court may not allow the sale of property as “property of the estate “ without

first determining whether the debtor in fact owned the property....The Property would not be

property of the estate if. . .it was partnership property. That Rodeo, as a partner, had at least a 50%

interest in the Property does not alter that conclusion.”

In re Flynn, 418 F.3d 1005 (9th Cir. 2005)

Attorney fees could not be deducted from sale of co-owned property until after the sale

proceeds had been divided between the estate and co-owner. Trustee had to distribute co-owners

share of the proceeds immediately after the sale.

In re Thomas, 287 B.R. 782 (9th Cir. B.A.P. 2002)

Purchaser's good faith under § 363(m) must initially be determined by bankruptcy court.

In re R.B.B., Inc., 211 F.3d 475 (9th Cir. 2000)

No assignment and sale of debtor’s franchise to bona fide purchaser where order approving

transactions was ambiguous as to specific entity that would take assignment and fund purchase.

In re Loloee, 241 B.R. 655 (9th Cir. B.A.P. 1999)

Sale order which purported to resolve lienholder priority dispute without notice to all

lienholders was void.

In re Filtercorp, Inc., 163 F.3d 570 (9th Cir. 1998)

Failure to obtain stay of sale pending appeal mooted appeal.

In re Diego’s, Inc., 88 F.3d 775 (9th Cir. 1996)

Trustee sale governed by state contract law.

In re Safeguard Self-Storage Trust, 2 F.3d 967 (9th Cir. 1993)

Revenues from leasing storage space constitute cash collateral. Contract was a lease of real

property. Rents were subject to perfected deed of trust.

In re Anchorage Nautical Tours, Inc., 145 B.R. 637 (9th Cir. B.A.P. 1992)

Sale of boat was not in debtor’s ordinary course of business

In re Southwest Products, Inc., 144 B.R. 100 (9th Cir. B.A.P. 1992)

Insufficient evidence of bad faith in sale by trustee to insider - thus appeal moot under

363(m)

In re Ewell, 958 F.2d 276 (9th Cir. 1992)

363(m) - “good faith”. Failure to obtain stay of sale order moots appeal under § 363(m).

Doubtful that FRCP 62(d) applies to sales. Even if sale occurred during 10 day period, doesn’t

make it void. Definition of good faith.

In re Intermagnetics America, Inc., 926 F.2d 912 (9th Cir. 1991)

Bankruptcy court order approving sale of estate property found to be fraudulent did not

mandate dismissal of trustee’s complaint on res judicata grounds

In re Mann, 907 F.2d 923 (9th Cir. 1990)

Failure to obtain stay pending appeal of foreclosure determination renders appeal moot

under §363(m). Cal. law re: redemption rights. To set aside foreclosure, must show gross

inadequacy of sale price and slight unfairness.

In re Two S Corp., 875 F.2d 240 (9th Cir. 1989)

Value is conclusively determined by sales price - no need for evidentiary hearing.

In re Air Beds, Inc., 92 B.R. 419 (9th Cir. B.A.P. 1988)

Distribution of proceeds of sale should not take place until after a plan is confirmed.

In re Onouli-Kona Land Co., 846 F.2d 1170 (9th Cir. 1988)

Sale of property mooted appeal.