In re Terron Hernandez

513 B.R. 172, 71 Collier Bankr. Cas. 2d 1781, 2014 Bankr. LEXIS 2393, 2014 WL 2467974
CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedJune 2, 2014
DocketNo. 13-08012 (ESL)
StatusPublished
Cited by2 cases

This text of 513 B.R. 172 (In re Terron Hernandez) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Terron Hernandez, 513 B.R. 172, 71 Collier Bankr. Cas. 2d 1781, 2014 Bankr. LEXIS 2393, 2014 WL 2467974 (prb 2014).

Opinion

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case is before the court upon the Motion for Sanction, Reasonable Ex[175]*175penses, and Attorneys’ Fees Pursuant to Federal Bankruptcy Rule 9011 filed by Banco Popular de Puerto Rico (“BPPR”) (Docket No. 11) alleging that the signing by Debtors’ counsel and subsequent filing of the second bankruptcy petition was done in violation of 11 U.S.C. § 109(g)(2) and Fed. R. Bankr.P. 9011(b). The Debtors filed a Reply to Creditor’s Request for Sanctions and in Compliance With Court Order (Docket No. 41) arguing that when the second petition was filed they were undergoing negotiations with BPPR, that due to lack of cooperation from BPPR an agreement was not reached in good faith, and that the petition was filed with the intention to pay creditors. For the reasons stated below, BPPR’s Motion for Sanction, Reasonable Expenses, and Attorneys’ Fees Pursuant to Federal Bankruptcy Ride 9011 is hereby granted.

Jurisdiction

The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(1) and (b)(2)(A). Venue of this proceeding is proper under 28 U.S.C. §§ 1408 and 1409.

Procedural Background

The Debtors filed their first bankruptcy petition under Chapter 11 of the Bankruptcy Code on March 9, 2012 (Case No. 12-01808 Docket No. 1).

On July 31, 2012, BPPR and Doral Bank moved for relief from stay under Section 362 (Case No. 12-01808 Docket Nos. 80 and 83). The Debtors opposed and a hearing was held on August 28, 2012 (Case No. 12-01808 Docket No. 108). The court entered minute orders at the hearing granting the Debtors 30 days to reach a stipulation with both BPPR and Doral (Case No. 12-01808 Docket No. 109).

On October 4, 2012, BPPR moved for the entry of an order lifting the stay in its favor as more than 60 days had lapsed since the initial hearing on the motion to lift stay and because the Debtors has breached the stipulation on the use of cash collateral (Case No. 12-01808 Docket No. 133). Doral Bank also moved the court for an order lifting the automatic stay on November 2, 2012 (Case No. 12-01808 Docket No. 149). The matters were heard on January 22, 2013 and continued to April 2, 2013 (Case No. 12-01808 Docket No. 193 and 194). On April 2, 2013 the court 'entered a minute order lifting the stay in favor of Doral and stating the terms of adequate protection payments to BPPR (Case No. 12-01808 Docket No. 235).

On July 8, 2013, the court entered an Order (Case No. 12-01808 Docket No. 262) stating, inter alia, the following:

Lastly, the court concludes that pursuant to its April 2, 2013 Order it was clearly established that if the parties did not reach an agreement within ninety (90) days to negotiate the terms of the sale of the property, the automatic stay would be lifted in favor of BPPR. The Debtors and BPPR were granted thirty (30) days thereafter in the event that both parties had agreed to the sale of the property. The ruling afforded the Debtors an opportunity to complete a sale in excess of the secured debt. The opportunity did not materialize.

Thus, upon the Debtors’ failure to comply with the April 2, 2013 Order (Case No. 12-01808 Docket No. 235) the automatic stay was lifted in favor of BPPR, without need of further notice or hearing.

On July 16, 2013, the Debtors filed a Motion Requesting Voluntary Dismissal (Case No. 12-01808 Docket No. 264) pursuant to 11 U.S.C. § 1112(b)(1) stating that:

[t]he instant bankruptcy petition was triggered by the imminent execution of a judgment entered by the Puerto Rico [176]*176Court of First Instance on December 9, 2009, for BPPR and against the Debtors’ subject property. The same was obtained through a collection and foreclosure proceeding filed by the principal creditor in the instant case, BPPR. Therefore, this litigation relates to Debtors’ default in credit facilities provided by BPPR. Before filing the petition, Debtors attempted to negotiate with BPPR, but their negotiation efforts did not succeed. Pursuant to the outcome of this bankruptcy filing, BPPR was going to foreclose on the subject property owned by the Debtors.

In their Motion Requesting Voluntary Dismissal, the Debtors also stated that “[a]s such, Debtors no longer see the protection of the bankruptcy code as the most effective solution to their economic troubles and foresee negotiations outside of bankruptcy as the most beneficial to the Debtors and all parties involved” (Case No. 12-01808 Docket No. 264, p. 6). Moreover, the Debtors requested the voluntary dismissal of their Chapter 11 petition based upon the following reasons: (i) the original purpose of the reorganizations is extinct because their only income producing property and their most valuable asset will be subject to a foreclosure proceeding to be resumed by BPPR; (ii) the Debtors believe that they may negotiate and reach a settlement outside the bankruptcy court involving the sale of assets and repayment of creditors; (iii) “... even BPPR has admitted, through its motions for lift of stay, that it would rather execute on its collateral outside the bankruptcy process, even though it has had the opportunity to accept various significant offers made during the bankruptcy case;” and (iv):

[conversion of the case to Chapter 7 would not be in the best interests of creditors and the estate because, in the absence of the subject property on which the lift of stay order has been issued, the estate would be insolvent, would have insufficient income and would be incapable of producing any kind of dividends to unsecured creditors nor pay any priorities or administrative expenses. The lift of stay orders basically rendered the Debtors insolvent by taking away their only assets. Therefore, a Chapter 7 conversion would result in a no-asset case. (Case No. 12-01808 Docket No. 264, pp. 6-7) (emphasis added).

On August 6, 2013, the court held a previously scheduled hearing to consider the approval of the Debtors’ disclosure statement. At the onset of the hearing, the court questioned the parties if there was any objection to the voluntary dismissal of the case as the time to object had lapsed the day before. The Debtors requested that their Motion Requesting Voluntary Dismissal be held in abeyance to allow them thirty (30) days to negotiate the sale of the property over which BPPR held a lien. BPPR objected indicating that it had not been part of the negotiations and that it was an undersecured creditor.

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Related

In re Figueroa Alonso
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Cite This Page — Counsel Stack

Bluebook (online)
513 B.R. 172, 71 Collier Bankr. Cas. 2d 1781, 2014 Bankr. LEXIS 2393, 2014 WL 2467974, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-terron-hernandez-prb-2014.