In re 231 Fourth Avenue Lyceum, LLC

506 B.R. 196, 2014 WL 808878, 2014 Bankr. LEXIS 832, 59 Bankr. Ct. Dec. (CRR) 51
United States Bankruptcy Court, E.D. New York·Decided February 28, 2014·No. Case No. 13-42125 (CEC)·Published·Cited by 6 cases

Opinion

Chapter 11

DECISION

CARLA E. CRAIG, Chief United States Bankruptcy Judge

This matter comes before the Court on the motion of P.B. # 7 LLC (“P.B.”) to lift the automatic stay, pursuant to 11 U.S.C. § 362(d)(3)1. Because 231 Fourth Avenue Lyceum, LLC has failed to file a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time, as required by § 362(d)(3), P.B.’s motion to lift the automatic stay is granted.

JURISDICTION

This Court has jurisdiction of this core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) and (G), 28 U.S.C. § 1334, and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This decision constitutes the Court’s findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

BACKGROUND

231 Fourth Avenue Lyceum, LLC (the “Debtor”) commenced this case under chapter 11 of the Bankruptcy Code on April 11, 2013. The Debtor’s principal asset is real property located at 227-231 4th Avenue, Brooklyn, New York (the “Property”), which is encumbered by a mortgage held by P.B. The Debtor defaulted on the mortgage and P.B. obtained a judgment of foreclosure and sale on September 28, 2012 (the “Foreclosure Judgment”).

On the eve of the foreclosure sale, the Debtor filed this bankruptcy case. Other than the Property, the Debtor’s only other assets are trolley cars having a value, according to the Debtor, between $30,000 and $300,000.2 (Am. Proposed Disclosure Statement Dated 11/21/13; 13-42125-CEC, ECF No. 47 at 5.)3 The Debtor’s [200] schedules include P.B.’s secured claim and $700,000 of unsecured claims, $300,000 of which is insider debt. The amount of P.B.’s secured claim, calculated in accordance with the Foreclosure Judgment, is approximately $6.6 million. (Affirmation in Supp. of Mot. for Relief from Stay Exs. E and F, 13-42125-CEC, ECF Nos. 56-5 and 56-6.)

Since filing, the Debtor’s operating reports have shown that the Debtor has generated no income. (Monthly Operating Reports, Case No. 13-42125-CEC, ECF Nos. 16, 22, 23, 32, 62, 63, 64, and 65.) At the creditors’ meeting pursuant to § 341, the Debtor’s principal, Eric Richmond, stated that the Debtor leases the building to 231 Fourth Avenue Lyceum Inc. (“Lyceum Inc.”), a related entity, for $6,000 a year and 25 percent of any profits that entity generates. (Affirmation in Supp. of Mot. to Authorize/Direct that this case is a Single Asset Real Estate Case Ex. I, Case No. 13-42125-CEC, ECF No. 18-9 at 19.) Lyceum Inc., in turn, rents the building out for various events. Id. The last time the Debtor received a portion of Lyceum Inc.’s profits was three years prior to the Debtor’s bankruptcy filing. Id. at 18. Lyceum Inc. is listed in the Debtor’s schedules as an unsecured creditor owed $300,000. The Debtor’s Proposed Amended Disclosure Statement states that the Property grossed approximately $30,000 for the 30 days ending December 16, 2013. (Proposed Am. Disclosure Statement, Case No. 13-42125-CEC, ECF No. 59 at 6.) Furthermore, the Debtor projected that the Property would gross an additional $10,000 before the end of the year.4 Id.

On July 8, 2013, P.B. filed a motion to designate the Debtor as a single asset real estate debtor. (Mot. to Authorize/Direct that this case is a Single Asset Real Estate Case, Case No. 13-42125-CEC, ECF No. 17.) On November 1, 2013, after conducting several hearings, the Court entered an order designating the Debtor as a single asset real estate Debtor and directing the Debtor to comply with the provisions of § 362(d)(3) by filing “a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time”, or by commencing monthly payments that “are in an amount equal to the then applicable nondefault contract rate of interest on the value of the creditor’s interest in the real estate.” (Order Granting Mot. for a Determination that this Case is a Single Asset Real Estate Case, Case No. 13-42125-CEC, ECF No. 42 at 1-2) (quoting § 362(d)(3)).

On November 22, 2013, the Debtor filed a first amended chapter 11 plan and disclosure statement (its initial disclosure statement having been rejected as insufficient by order dated November 1, 2013), as well as a motion seeking approval of the first amended disclosure statement and plan, which was amended on November 25, 2013. (Mot. to Authorize/Direct Entry of [201] an Order Approving the Adequacy of the Debtor’s Am. Proposed Disclosure Statement and Am. Proposed Reorganization Plan, Case No. 13-42125-CEC, ECF No. 46; Am. Notice of Mot. to Authorize/Direct Entry of an Order Approving the Adequacy of the Debtor’s Am. Proposed Disclosure Statement and Am. Proposed Reorganization Plan, Case No. 13-42125-CEC, ECF No. 50.) On December 18, 2013, the Debtor filed a second amended chapter 11 Plan (the “Plan”), a second amended proposed disclosure statement (the “Disclosure Statement”), and an affirmation in further support of the Disclosure Statement and Plan. (Proposed Am. Disclosure Statement, Case No. 13-42125-CEC, ECF No. 59; Proposed Am. Chapter 11 Plan, Case No. 13- 42125-CEC, ECF No. 60; Affirmation in Further Support, Case No. 13^2125-CEC, ECF No. 61.)5

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In re 231 Fourth Avenue Lyceum, LLC, 506 B.R. 196, 2014 WL 808878, 2014 Bankr. LEXIS 832, 59 Bankr. Ct. Dec. (CRR) 51 (N.Y. 2014).

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