Saturday, May 17, 2014
In re Victory Construction Co., Inc. case brief summary
In re Victory Construction Co., Inc.
o Fred Roven re-activated a defunct company for the purpose of buying a piece of property that already had several liens on it and then declared bankruptcy shortly after purchase. He was planning to build a luxury hotel while in bankruptcy and then sell it for a giant profit.
“Good Faith” Issues the Ct considered:
(1) Does a debtor's lack of "good faith" in filing a Chapter 11 case constitute "cause" to vacate the automatic stay under § 362(d)(1)?
(2) Does the law impose a "good faith" condition on debtor's right to file or maintain a proceeding under Chapter 11?
If the answer to these questions is negative, plaintiff's right to relief in this case is limited to a consideration of the issues of adequate protection, the existence of equity, and whether the property is necessary to an effective reorganization.
(3) Was the debtor's petition in this case filed in "good faith"?
"Good faith" must therefore be viewed as an implicit prerequisite to the filing or continuation of a proceeding under Chapter 11 of the Code.
Accordingly, and for the foregoing reasons, the debtor's lack of "good faith" in filing a case under Chapter 11 is "cause," independent of the existence or lack of adequate protection, to vacate the automatic stay under § 362(d)(1).Ct granted relief from the stay.
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