In re Thorpe

540 B.R. 552, 2015 WL 5916926, 2015 U.S. Dist. LEXIS 137997
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedOctober 9, 2015
DocketCIVIL ACTION No. 15-5239; Bankruptcy No. 13-15267
StatusPublished
Cited by4 cases

This text of 540 B.R. 552 (In re Thorpe) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Thorpe, 540 B.R. 552, 2015 WL 5916926, 2015 U.S. Dist. LEXIS 137997 (Pa. 2015).

Opinion

OPINION

WENDY BEETLESTONE, District Judge.

Before the Court are the consolidated appeals from two orders by the United States Bankruptcy Court in the Matter of Renee M. Thorpe, Debtor (Bankruptcy Case No. 13-15267). The first appeal concerns the Bankruptcy Court’s denial of Thorpe’s motion to modify an existing Chapter 12 reorganization plan on an expedited basis, or in the alternative, to clarify that a proposed transaction would satisfy the debtor redemption provisions of the existing confirmed reorganization plan and require cancellation of an auction of Mrs. Thorpe’s family farm. The second appeal concerns the Bankruptcy Court’s confirmation of the sale of the farm at a court-ordered auction, despite objections from Mrs. Thorpe that irregularities in the auction process undermined the integrity of the auction.

I. FACTUAL AND PROCEDURAL HISTORY

In 2010, Renee M. Thorpe (“Mrs. Thorpe”) and Dale Thorpe (“Mr. Thorpe”) received notice from Susquehanna Bank that they were in default on two loans secured by mortgages on the Thorpe Family Farm (the “Farm”) in Upper Makefield Township, Newtown, Pennsylvania. The Farm covers approximately 144 acres, and is divided by a public road. A house and several farm buildings are located on the north side of the road, while the portion of the Farm on the south side of the road consists of a 47.915-acre parcel of undeveloped land (the “Parcel”). Though the Parcel has its own tax identification number and legal description, the entire Farm was deeded together when it was first acquired by the Thorpe family in 1945, when it was conveyed within the family in 2003, and when it was conveyed to Mr. and Mrs. Thorpe in 2007.

The Thorpes and Susquehanna Bank initially attempted to resolve the Thorpes’ debt through various proceedings in state court but were unable to do so. A Sheriffs sale of the Farm was originally scheduled in May 2012. That sale was cancelled as a result of a Chapter 12 petition filed by Mr. Thorpe. That case was dismissed on March 8, 2013 for failure to submit a viable reorganization plan with an order barring Mr. Thorpe from filing future bankruptcy petitions without leave of court. In re Thorpe, No. 12-19652 (Bankr. E.D. Pa. Mar. 8, 2013).

After the dismissal of Mr. Thorpe’s bankruptcy case, Susquehanna Bank assigned the mortgages to Lititz Properties, LLC (“Lititz”). Lititz continued the effort to collect on the debt, and another Sher-riff s sale was scheduled for June 14, 2013. (Appellant Br. at 11). The day before the scheduled sale, Mrs. Thorpe filed the Chapter 12 petition that eventually gave rise to the appeals at issue here. Frederick L. Reigle was appointed as the Chapter 12 Trustee (the “Trustee”). After several unsuccessful attempts to submit a confirma-ble reorganization plan and intense negotiation with Lititz and the Trustee, Mrs. Thorpe gained approval of a Fourth Amended Chapter 12 Reorganization Plan (the “Fourth Amended Plan”) on January 23, 2014. (ECF No. 121). The Fourth Amended Plan memorialized the first iteration of what the parties and the Bankruptcy Court have described as a “grand bargain.” The essence of the bargain was to allow sale of the Parcel to generate funds to pay down Mrs. Thorpe’s debt and allow her to retain ownership of the re[556]*556mainder of the Farm. Paragraph 2(C) of the Fourth Amended Plan set out a specific schedule for marketing the Parcel. Pursuant to the schedule, Mrs. Thorpe had the first opportunity. If she was unable to “enter into an agreement for sale on or before February 15, 2014,” the Trustee was authorized to market the Parcel until April 16, 2014. If neither Mrs. Thorpe nor the Trustee were able to sell the Parcel within that time frame, the plan provided that “the parcel shall be sold promptly at auction.” Any sale of the Parcel, whether in a private transaction or at auction, was to be closed no later than 90 days after confirmation of the sale by the Bankruptcy Court. The Fourth Amended Plan did not explicitly indicate whose responsibility it was subdivide the Farm to allow any conveyance of the Parcel.

Initial efforts to market the Parcel were met with some success, and on the final day permitted by the Fourth Amended Plan, Mrs. Thorpe filed a motion to sell the Parcel to Mack & Roedel, LLC for $1,300,000. Lititz and the Trustee objected to the sale on the grounds that the agreement of sale to Mack & Roedel contained terms that conflicted with the Fourth Amended Plan, and that there were higher and better offers for the Parcel. On April 11, 2014, the Bankruptcy Court sustained the objections, and ordered Mrs. Thorpe to enter into an agreement of sale with King’s General Contracting (“King’s”) in the amount of $1,350,000 within seven days, with a closing no later than July 2, 2014. (ECF No. 136).1 The April 11, 2014, sale order indicated that “time is of the essence” and that King’s failure to meet deadlines would constitute a breach of the agreement. Zaveta Land Holdings, LLC (“Zaveta”) was established as a back-up purchaser, in the event that King’s defaulted.

Despite the Bankruptcy Court’s careful order and the provisions for a back-up purchaser, no sale occurred. On April 22, 2014, King’s defaulted. Finding that neither Mack & Roedel nor Zaveta remained ready or willing to purchase the Parcel, the Bankruptcy Court ordered the Trustee to market the Parcel through September 2, 2014. (ECF No. 155). Linda Emerson (“Emerson”) of Berkshire Hathaway Home Services Fox and Roach was approved as the realtor for sale of the Parcel. (ECF No. 163).

Emerson’s marketing efforts yielded another potential buyer for the Parcel. On September 10, 2014, the Trustee received a signed offer to purchase the Parcel for $900,000 from Deepak and Jayshree Patel (the “Patels”). (ECF 221). Mrs. Thorpe objected to this sale. At a lengthy hearing on September 17, 2014, the Bankruptcy Court declined to approve the sale because the price offered by the Patels was unlikely to sufficiently alleviate Mrs. Thorpe’s debt service burden to allow her to eventually meet the other obligations of the Fourth Amended Plan. (ECF No. 256 at 96-97). The deadline for submitting another amended plan was extended.

Following the rejection of the sale of the Parcel to the Patels, Lititz renewed its motion to dismiss Mrs. Thorpe’s bankruptcy case. Over the next two months, Mrs. Thorpe, Lititz, and the Trustee again engaged in extensive negotiations. These negotiations eventually yielded the confirmation of the Fifth Amended Chapter 12 Reorganization Plan (the “Fifth Amended Plan”). (ECF No. 290). The Fifth Amended Plan resuscitated the grand' bargain, but this time provided that the entire [557]*557Farm would be sold at Auction if neither the Parcel nor the Farm could be sold under a revised marketing schedule. Under the new schedule, the Trustee would continue to market the Parcel until March 31, 2015, and would then market the entire Farm until June 30, 2015. If those efforts did not yield a. sale, an auction would be scheduled. The specific parameters for the mai’keting of the Farm were set forth in paragraph 2(D) of the Fifth Amended Plan:

The Trustee shall have until March 31, 2015, to continue to market for sale [the Parcel].... If the Parcel is not under a fully executed bonafide agreement of sale by March 31, 2015, the Trustee shall market the entire farm property for sale from April 1, 2015 through June 30, 2015. The Trustee shall have full access to the entire farm property in connection with marketing it for sale....

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Related

IN RE: RENEE MARIE THORPE
E.D. Pennsylvania, 2020
In re Thorpe
597 B.R. 253 (E.D. Pennsylvania, 2019)
In re Irwin
558 B.R. 743 (E.D. Pennsylvania, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
540 B.R. 552, 2015 WL 5916926, 2015 U.S. Dist. LEXIS 137997, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-thorpe-paeb-2015.