YBA Nineteen, LLC v. IndyMac Venture, LLC (In re YBA Nineteen, LLC)

505 B.R. 289
CourtDistrict Court, S.D. California
DecidedFebruary 4, 2014
DocketCivil No. 13cv2426-WQH-RBB; Bankruptcy No. 13-00968-LA11; Bankruptcy Appeal No. 3
StatusPublished
Cited by8 cases

This text of 505 B.R. 289 (YBA Nineteen, LLC v. IndyMac Venture, LLC (In re YBA Nineteen, LLC)) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
YBA Nineteen, LLC v. IndyMac Venture, LLC (In re YBA Nineteen, LLC), 505 B.R. 289 (S.D. Cal. 2014).

Opinion

ORDER

HAYES, District Judge.

The matter before the Court is the appeal of the “Order Converting Case to One Under Chapter 7” (“Order Converting Case”), issued by the Bankruptcy Court on October 4, 2013. (ECF No. 1).

I. Background

This is the third appeal to this Court in this bankruptcy proceeding. See In re YBA Nineteen, S.D. Cal. Case No. 13cv1326-WQH-RBB; In re YBA Nineteen, S.D. Cal. Case No. 13cv2239-WQH-RBB.1 The Court presumes familiarity with its Orders issued in the other appeals.

A. Proceedings Prior to the October 3, 2013 Status Conference

Debtor, YBA Nineteen, LLC, filed a voluntary Chapter 11 petition on January 31, 2013. On March 6, 2013, the Bankruptcy Court entered an Order entitled, “Order Re: Chapter 11 Petition 1) Setting Status Conference; 2) Setting Compliance Deadlines; 3) Setting Disclosure Statement and Plan Filing Deadlines; and 4) Setting Sanctions, If Appropriate, Including Dismissal, Conversion or Appointment of a Chapter 11 Trustee or Examiner Because of Noncompliance with Above-Reference[d] Requirements” (the “Scheduling Order”). (Notice of Lodgment Supp. Mot. for Stay, Ex. C at 1, ECF No. 4-2 at 14). The Scheduling Order states:

The above-referenced Debtor filed a petition for reorganization under Chapter 11. To insure compliance with the numerous federal and local rales governing bankruptcy procedure as well as the United States Trustee’s Operating and Reporting Requirements for Chapter 11 cases (‘ORR’) and for other good cause appearing, the Court hereby
1. ORDERS that pursuant to 11 U.S.C. § 105(d), the Court will hold a status conference on this Chapter 11 case on 4/11/13 ... at which the Debtor and the United States Trustee shall appear.
2. ORDERS that prior to the above-referenced status conference, the Debtor shall have complied with all applicable ORR, federal and local bankruptcy rules governing Chapter 11 cases, including, but not limited to ... d. Submission of all operating reports due under ORR C.3....
[292]*2923. ORDERS that no later than one week in advance of this status conference and before every continued hearing of this Chapter 11 status conference, the Debtor is directed to file and serve on the U.S. Trustee a report addressing the status of each of the above-referenced requirements and any other requirements imposed by the Court at a previous status conference in this case. Failure to file this status report or comply with the requirements ordered by the Court may be cause to dismiss or convert this case, appoint a Chapter 11 trustee or examiner or impose other appropriate sanctions as permitted by 11 U.S.C. §§ 105(a) and 1112(b).

Id. at 2. The United States Trustee’s Operating and Reporting Requirements for Chapter 11 cases (“ORR”), which are incorporated in the Scheduling Order, state that a debtor must file Monthly Operating Reports no later than twenty calendar days after the close of each month. (Appellee’s Notice of Lodgment, Ex. 3 at 65 ¶ C.3., ECF No. 22).

On April 11, 2013, the Bankruptcy Court conducted a status conference. (Notice of Lodgment Supp. Mot. For Stay, Ex. G, ECF No. 4-2 at 26). The Bankruptcy Court docket reflects that Debtor did not file a status report prior to the April 11, 2013 status conference, and Debtor filed the operating report for February (which was due on March 20, 2013) on the day of the conference, April 11, 2013. Id. The Bankruptcy Court’s Minute Order from the April 11, 2013 status conference states: “Hearing continued to 7/18/13 at 10:30 to hear the [Disclosure Statement] & Plan. Debtor to set the claims bar date. Amend Sch[edules] B & D.” (Notice of Lodgment Supp. Mot. For Stay, Ex. D, ECF No. 4-2 at 17).

On April 22, 2013, Debtor filed the operating report for March. (Notice of Lodgment Supp. Mot. For Stay, Ex. G, ECF No. 4-2 at 27). On May 8, 2013, Debtor filed the operating report for April. Id. at 28. On May 31, 2013, Debtor filed an amendment to Schedules A and B (although Debtor did not amend Schedule D). Id. at 30. On July 16, 2013, Debtor filed the operating reports for May (which was due on June 20, 2013) and June. Id. at 33. On July 18, 2013, the Bankruptcy Court conducted a status conference. Id. at 34. The Bankruptcy Court docket reflects that Debtor did not file a disclosure statement, a plan or a status report prior to the July 18, 2013 status conference. Id. The Bankruptcy Court’s Minute Order from the July 18, 2013 status conference states: “Hearing continued to 9/5/13 at 11:00, [Disclosure Statement] to be filed by 7/22/13.” (Notice of Lodgment Supp. Mot. For Stay, Ex. F, ECF No. 4-2 at 21).

On July 22, 2013, Debtor filed a Disclosure Statement pursuant to 11 U.S.C. § 1125. (Notice of Lodgment Supp. Mot. For Stay, Ex. G, ECF No. 4-2 at 35). On August 12, 2013, the Bankruptcy Court issued an order scheduling a status conference and hearing on the Debtor’s Disclosure Statement for October 3, 2013. Id. at 38.

On September 11, 2013, Debtor filed the operating report for July (which was due on August 20, 2013). Id. at 42.

On September 19, 2013, Appellee and secured creditor IndyMac Venture, LLC filed an “Opposition to Approval of Disclosure Statement and Suggestion That Case Be Converted to a Case under Chapter 7 of the Bankruptcy Code at Case Status Hearing.” (Appellee Notice of Lodgment, Ex. 4, ECF No. 22 at 73). This document states:

The Court is ... considering the Debt- or’s chapter 11 status hearing. Due to [293]*293the lack of case progress, the enormous administrative expenses accrued in the estate and the continuing loss and diminution in the estate, IndyMac suggests that the Court convert Debtor’s case to chapter 7. As the Court knows, the Debtor has refused to engage in repairs and remediation to the property while the property remains under the threat of foreclosure. The Debtor’s appeal now threatens to extend the duration of the case while IndyMac is stayed from foreclosing. The duration of the case is now extending into the Southern California rainy season in which IndyMac’s collateral will be exposed to further moisture intrusion and rot.
All the foregoing suggests a need for a change in case management to break the impasses that have developed. The case should be converted to chapter 7 to facilitate a resolution of the case.
Wherefore, IndyMac Venture, LLC respectfully requests that the Court deny approval of Debtor’s disclosure statement and convert the ... case to a case under chapter 7 of the Bankruptcy Code.

Id. at 75.

On September 27, 2013, the Bankruptcy Court issued a Tentative Ruling denying approval of the Debtor’s Disclosure Statement. (Notice of Lodgment Supp. Mot. For Stay, Ex. I, ECF No. 4-2 at 54).

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Bluebook (online)
505 B.R. 289, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yba-nineteen-llc-v-indymac-venture-llc-in-re-yba-nineteen-llc-casd-2014.