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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
In re:
PANTHERA ENTERPRISES, LLC
BK No. 2:19-bk-00787
Debtor
Chapter 7
MOTION TO COMPROMISE AND SELL ESTATE’S INTEREST IN AN
UNSECURED PROMISSORY NOTE TO PANTHERA TRAINING, LLC
FOR $100,000.00
Comes now Aaron A. Amore, Trustee ("Trustee") in the above referenced case
and moves the Court for approval of a compromise to liquidate the Bankruptcy
Estate’s sole remaining asset, an unsecured promissory note payable by Panthera
Training, LLC, for One Hundred Thousand Dollars and Zero Cents ($100,000.00)
pursuant to 11 U.S.C. §§ 105, 541, 704, and Fed. R. Bankr. P. 2002, and 9019. The
Trustee desires to liquidate this remaining asset in order to fully administer this
case and foster its closure. In support of this motion, the Trustee states as follows:
1.
The Debtor filed its voluntary petition under Chapter 11 of the
Bankruptcy Code on September 13, 2019, the Friday before a foreclosure sale of the
Debtor’s real property was to take place on Monday, September 16, 2019.
2.
The bankruptcy proceeding was converted to a Chapter 7 by Order of
the Court entered July 21, 2020, and Aaron C. Amore was appointed the Chapter 7
Trustee ("Trustee").
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3.
Administration of the case was challenging given that multiple
Adversary Proceedings were filed with secured and unsecured lienholders asserting
claims on the Debtor’s assets, which primarily consisted of the Debtor’s real
property known as 2506 Fishpond Road, Old Field, Mineral County, West Virginia.
4.
The Trustee filed a motion to sell the Debtor’s real property, fixtures
and improvements on March 29, 2021 which led to multiple objections and further
negotiation by the Trustee with various parties. A motion to compromise/settle the
adversary proceedings and resolve objections to the Trustee’s original motion to sell
was filed on or about June 2, 2021.
5.
The Court held a hearing on said motion to compromise on June 22,
2021 and ultimately entered an order on June 25, 2021 approving the sale,
compromise/settling the adversary proceeding and resolving objections to the
Trustee’s motion to sell.
6.
Pursuant to the Court’s order, the sale took place July 20, 2021 at
which time the purchaser, Panthera Training, LLC, signed a Promissory Note
(“Note”) for Two Hundred and Seventy-Five Thousand Dollars ($275,000.00). See
Exhibit A.
7.
Under the terms of the Note, Panthera Training, LLC was to make
payments to the Trustee as fees from certain government contracts for training at
the facility were earned, until such time as the contracts were fully novated.
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8.
From the period beginning July, 2021 and ending February of 2023,
Panthera Training, LLC did make periodic payments to the Trustee as trainings
were conducted and fees earned, reducing the outstanding amount of the note to
Two Hundred Thousand Seventeen Four Hundred Four Dollars and Seventy-Two
Cents ($217,404.72). The amount and dates of payment are recorded on the
spreadsheet attached as Exhibit B.
9.
The remaining outstanding balance on the note is due and payable in
full on or before September 30, 2024.
10.
Since February of 2023 the contracts have been fully novated, and no
payments have been made on the Note.
11.
Robert Starer, one of the principals of Panthera Training, LLC, became
increasingly ill in 2023 and passed away in February of 2024.
12.
Just prior to and following his death, Merle Starer “Starer,” the
remaining principal of Panther Training, LLC, subsequently marketed the property
for sale at a price designed to sufficiently cover the secured and unsecured debt,
including the Note held by the Bankruptcy Estate. Starer provided periodic updates
on prospective purchasers and status of offers, many of which seemed promising.
13.
On or around June 28, 2024, Starer contacted the Trustee indicating
that Panthera Training, LLC has been unable to attract a buyer who has both the
technical capability of operating the facility and the financial resources to complete
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the transaction and offered to purchase the note for One Hundred Thousand Dollars
and Zero Cents ($100,000.00).
14.
The Buyer is not an insider of the Debtor, and the sale represents an
arms-length transaction between the parties, made without fraud, collusion, and no
attempt has been made by either party to take any unfair advantage of the other.
15.
The Trustee solicited bids from companies known to purchase
Bankruptcy Estate assets with an original deadline to submit of July 10, 2024
which was later extended to July 15, 2024. To date, no bids to purchase the Note
have been received by the Trustee.
LEGAL STANDARD
A decision to compromise a claim is also reviewed under the business
judgment test. E.g., In re OptInRealBig.com, LLC, 345 B.R. 277, 292 (Bankr. D.
Colo. 2006) (“Where an application under Rule 9019 is appropriate, the Court's job
is to determine whether a given settlement is fair and equitable to the estate. In
making its determination, the Court gives some deference to the business judgment
of the debtor-in-possession.”). A review of that business judgment generally turns on
the outcome of four factors: (1) the probability of success in litigation; (2) the likely
difficulties in collection; (3) the complexity of the litigation involved, and the
expense, inconvenience and delay necessarily attending it; and (4) the paramount
interest of the creditors. Fry’s Metals, Inc. v. Gibbons (In re RFE Industries, Inc.),
283 F.3d 159, 165 (3rd Cir. 2003). See also Protective Committee for Independent
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Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)
(same); Drexel v. Loomis, 35 F.2d 800, 806 (8th Cir. 1929) (same). A compromise of
claims under Rule 9019 serves the purpose of binding the bankruptcy estate and the
creditor to the terms of the bargain struck by the parties. OptInRealBig.com, 345
B.R. at 291.
Consideration of Fry factors:
(1) the probability of success in litigation-The note is in default and will be
due and payable on or before September 30, 2024. There is little impairment to
action on the note, as maker “waives presentment, demand, protest and notice of
dishonor…”
(2) the likely difficulties in collection- The Trustee sees little, if any ability to
secure the note to assets of Panthera Training, LLC as the terms of the note make it
subject to the debt owed to the WVEDA and limits enforceability by the holder of
the note and any subsequent holder of the note. The note was part of the larger
motion to compromise and was limited in its nature in order to secure the
acceptance of WVEDA.
(3) the complexity of the litigation involved- The issues surrounding the
default on the note do not involve complex litigation and would not significantly
increase the costs to the Estate. It would delay the overall case if enforcement
efforts were sought in comparison to the compromise offered in this motion. If the
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Court approves this motion, the Trustee will be able to conclude this matter in the
2024 tax year sufficient so no additional tax return is due which will reduce the
expenses to the Estate.
(4) the paramount interest of the creditors- The compromise would reduce
recovery to the priority creditors. The compromise would pay the claims of the
Trustee for his expenses, the balance of his compensation due from the original
motion to compromise, the attorney for the Trustee, the claim of the U.S. Trustee
and then pay a little over Twenty (20%) of the administrative priority claim of
Bernstein-Burkley. Even assuming full payment on the note, there would be a very
small recovery to the administrative priority claims after Bernstein-Burkley’s claim.
The Trustee asserts the Note has severely limited marketability as it is
unsecured with no collateral available to create security to increase the value of the
Note. Any transfer or assignment of the Note also requires the written acceptance of
WVEDA and limits ability to both secure the note and receive payment, depending
on the status of payments to the WVEDA.
The Trustee believes that the sale of the Note to Panthera Training, LLC is
in the best interest of the Estate and will result in funds being available to
administer. Additionally, as this case has been pending since September of 2019,
approval of the compromise and sale of the note will expedite the final
administration and closure of this case. The Trustee believes that said offer is fair
and reasonable and that accepting the compromise and approving the sale will
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result in a benefit to the estate by expediting its administration, especially given
the limited marketability of the Note and the length of time this case has remained
open.
The Trustee has not included normal upset bid language as any assignment
and/or transfer of the note would require the written acceptance of the WVEDA. If
such an objection to the motion is filed and request to bid, the Trustee can request
written consent from the WVEDA and further relief from this Court.
WHEREFORE, the Trustee moves the Court for authority to compromise the
estate’s interest in the Promissory Note and Sell the Note for One Hundred
Thousand Dollars ($100,000.00) to Panthera Training, LLC.
Respectfully submitted,
/s/ Aaron C. Amore
Aaron C. Amore, WVSB No. 6455
Amore Law, PLLC
206 West Liberty Street
Charles Town, WV 25414
T: (304) 885-4117
F: (866) 417-8796
aaron@amorelaw.com
Chapter 7 Trustee Aaron C. Amore
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