In re Forever Propane Sales & Serv., Inc.

597 B.R. 696
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedMarch 5, 2019
DocketCASE NO. 18-25557-JKO
StatusPublished

This text of 597 B.R. 696 (In re Forever Propane Sales & Serv., Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Forever Propane Sales & Serv., Inc., 597 B.R. 696 (Fla. 2019).

Opinion

John K. Olson, Judge, United States Bankruptcy Court

THIS CASE is before the Court without a hearing upon Forever Propane Sales & Service, Inc.'s (the "Debtor" or "Debtor-in-Possession") Amended Motion for Reconsideration of Order of Abstention and Dismissal (the "Motion for Reconsideration") [ECF 34]. This Court entered an Order to Show Cause Why this Court Should Not Abstain from Hearing this Case Pursuant to 11 U.S.C. § 305(a) (the "Order to Show Cause") [ECF 24]. The Order to Show Cause observed that this bankruptcy case "appear[ed] to be a two party dispute centered on the Fair Labor Standards Act." [ECF 24]. On February 12, 2019, following a hearing on the Order to Show Cause, the Court entered an Order of Abstention and Dismissal [ECF 31] pursuant to 11 U.S.C. § 305(a). The Debtor then filed its Motion for Reconsideration [ECF 34] on February 25, 2019, which is at issue in this Order.

I. The Law

The "Eleventh Circuit has not directly addressed the issue of abstention under § 305," FMB Bancshares, Inc. v. Trapeza CDO XII, Ltd. (In re FMB Bancshares, Inc.) , 517 B.R. 361, 371 (Bankr. M.D. Ga. 2014) ; although, generally, courts addressing abstention under § 305 consider several factors, including

(1) whether another forum is available or there is already pending action in another court; (2) whether the creditor and debtor are actively engaged in an out of court workout; (3) the purpose for which bankruptcy jurisdiction has been sought; (4) whether the bankruptcy will unnecessarily interfere with state or federal regulatory schemes; and (5) the effect the bankruptcy proceeding will have on the debtor's business.

Id. at 371-72 (citing In re Axl Industries, Inc. , 127 B.R. 482, 485 (S.D. Fla. 1991) ). Whether the "bankruptcy action is essentially a two-party dispute" is also considered, *698especially where the creditor can obtain non-bankruptcy relief. FMB Bancshares , 517 B.R. at 372. However, the factors mentioned "are merely factors for a court to consider and no one factor standing alone represents a threshold issue that requires abstention." Id. at 372 (emphasis added). Which factors to consider and how much weight shall be given to those factors is at the discretion of the Court and shall be looked at on a case-by-case basis when determining whether abstention is appropriate under § 305(a). Id.

In FMB Bancshares , the court determined whether abstention was appropriate in considering whether the "two-party dispute ... would be more appropriately decided in a court of general jurisdiction." Id. at 374. The creditor in FMB Bancshares was a "corporate entity incorporated under the laws of the Cayman Islands" and an investor in a subsidiary of the debtor. Id. at 364. The creditor was the sole non-insider creditor of the debtor, and it initiated an involuntary Chapter 7 case against the debtor. Id. The debtor asked the court to abstain under § 305 on the basis of (1) bankruptcy not being in the best interests of the debtor and the creditors, and (2) the debtor-creditor relationship being a "two-party dispute that would be more appropriately decided in a court of general jurisdiction." Id. at 373-74. The court decided not to abstain because it was not clear that "both the debtor and creditors would be better served by [the bankruptcy court] relinquishing jurisdiction." Id. at 374. The court was also "not certain that [the creditor] could obtain adequate relief in another forum." Id. The court further reasoned that "[d]ismissal would likely result in a long protracted litigation in a court of general jurisdiction and force [the creditor] to wait even longer for any recovery of its investment." Id.

In In re C & C Dev. Grp., LLC , No. 11-32362-BKC-AJC, 2012 WL 1865422, at *4, 2012 Bankr. LEXIS 2269, at *5, 11 (Bankr. S.D. Fla. May 21, 2012), the court dismissed a case under 11 U.S.C. § 305 because it was "evident" to the court that the creditor's motivation in filing the case was "to avoid the pending" state court action. The court further reasoned that dismissal was appropriate because the petitioning party had adequate state law remedies, and "dismissal will be granted where the petitioning [party] [is] attempting to use Bankruptcy Court as an alternative to proceeding with [s]tate [c]ourt litigation to resolve what is essentially a two-party dispute." Id. at *3, 2012 Bankr. LEXIS 2269, at *7-8.

II. Discussion

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597 B.R. 696, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-forever-propane-sales-serv-inc-flsb-2019.