March 13 — Two appeals by a Chapter 11 debtor, one from an order lifting the automatic stay and one from an order dismissing the bankruptcy case, were dismissed March 3 by the U.S. District Court for the Eastern District of Michigan (R.T.R. Bldg. Co. v. The PrivateBank (In re R.T.R. Bldg. Co.), 2014 BL 57809, E.D. Mich., No. 5:13-cv-12956-JCO-LJM, 3/3/14).
Judge John Corbett O'Meara found that because the debtor had failed to obtain a stay pending appeal and the debtor's only valuable asset had been sold, the appeals should be dismissed as moot because no effective relief could be granted.
The PrivateBank held a mortgage on RTR's property. RTR went into default on the mortgage in November 2012. PrivateBank began to foreclose on the property and a foreclosure sale was scheduled for March 7, 2013. However, on that same day, RTR filed for Chapter 11 protection.
RTR argued that a period of vacancy was not uncommon for that type of property. RTR also argued that a related entity, Polaris Construction Inc., could fund its operational and plan expenses. RTR presented Polaris's tax returns as evidence that a plan was feasible.
The bankruptcy court granted the bank's motion to lift the stay and RTR did not seek a stay pending appeal. The bank conducted a foreclosure sale of the property on June 13, 2013. RTR appealed the order lifting the stay on July 9, 2013. Then on July 30, 2013, the bankruptcy court entered an order dismissing RTR's bankruptcy, which RTR also appealed.
In this case, the court said that RTR failed to obtain a stay and the foreclosure sale went through. The court said it could not rescind the sale and therefore could not grant RTR effective relief. Furthermore, the court said that RTR's only asset of any value was sold at the foreclosure sale and so RTR was unable to reorganize. Therefore, the court found that dismissal was appropriate. Accordingly, the court dismissed RTR's appeals.
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