Order Granting Chapter 7 Trustee'S Motion For An Order
- Date
- 2021-06-22
Summary
An order filed June 24, 2021 as Doc 372 in In re Panthera Enterprises, LLC, BK No. 2:19-bk-00787, a Chapter 7 case in the U.S. Bankruptcy Court for the Northern District of West Virginia, following a June 22, 2021 hearing. It grants Chapter 7 Trustee Aaron C. Amore's motion to sell the debtor's real property to Panthera Training, LLC for approximately $6.7 million under 11 U.S.C. § 363, and his motion to compromise an adversary proceeding and resolve objections. Citing McElroy Coal v. Dobbs, the court finds a right of first refusal in the original deed is a personal right, treats deed provisions 7 and 8 as rejected executory contracts, and overrules the remaining objection. It finds Panthera Training a good faith purchaser under 11 U.S.C. 363(m) and keeps the stay in place pending the WVEDA relief-from-stay hearing.
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No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 1 of 8
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
In re:
PANTHERA ENTERPRISES, LLC,
Debtor
BK No. 2:19-bk-00787
Chapter 7
ORDER GRANTING CHAPTER 7 TRUSTEE'S MOTION FOR AN ORDER
APPROVING THE SALE OF THE DEBTOR'S REAL PROPERTY AND
NOVATING CERTAIN GOVERNMENT CONTRACTS FREE AND CLEAR
OF LIENS, CLAIMS, INTERESTS, AND ENCUMBRANCES PURSUANT TO
11 U.S.C. § 363
And
ORDER GRANTING MOTION TO COMPROMISE/SETTLE ADVERSARY
PROCEEDING AND RESOLVE PENDING OBJECTIONS TO TRUSTEE’S
MOTION TO SELL REAL PROPERTY BY SMI, LLC, TR&L, LLC AND
AZADIAN GROUP, LLC
On June 22, 2021, came Aaron C. Amore, Trustee, with a Motion for An
Order Approving the Sale of the Debtor's Real Property and Novating Certain
Government Contracts Free and Clear of Liens, Claims, Interests, and
Encumbrances Pursuant to 11 U.S.C. § 363 (ECF 304) ("Motion to Sell") and a
Motion to Compromise/Settle Adversary Proceeding and Resolve Pending Objections
to Trustee's Motion to Sell Real Property by SMI, LLC, TR&L, LLC and Azadian
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 2 of 8
Group, LLC (ECF 352) pursuant to 11 U.S.C. §§ 105, 541, 704, and Fed. R. Bankr.
P. 2002, and 9019 (“Motion to Compromise”). The motions were noticed and set for
hearing before the Court on the 22nd day of June 2021.
Multiple objections were filed to the Motion to Sell, and a mediation was held
before the Honorable Keith L. Phillips prior to hearing. All objections were resolved
at mediation except for the objection filed by Rennick C. Williams, Betty P.
Williams and Robert Williams (hereafter collectively, the “Williams”) to both the
Motion to Sell and the Motion to Compromise.
The Court has considered the evidence presented at hearing, the arguments
of counsel, the pleadings filed, and the record in this case, and based thereon,
makes the following findings of fact and conclusions of law.
1. The Debtor's case was originally filed as a Chapter 11 case which was
converted to a Chapter 7 proceeding on July 21, 2020. Upon conversion
Aaron C. Amore (hereafter “Trustee”) was appointed as Chapter 7
Trustee.
2. Panthera Training, LLC (hereafter “Panthera Training”) operates a
training facility on the property owned by the Debtor under a long-term
lease agreement. Panthera Training has been operating on the premises
for an extended period of time and the lease provides for substantial
cashflow.
3. On March 29, 2021, the Trustee filed his Motion to Sell pursuant to 11
U.S.C 363(b)(1), proposing to sell to Panthera Training the Debtor’s real
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 3 of 8
property for approximately $6.7 million based upon various sums Training
agreed to pay at closing, some of which are additional sums Panthera
Training agreed to pay to resolve the objections resolved at mediation.
4. The unresolved objection of the Williams involves a “right of first
refusal” contained in the original deed and conveyance to the Debtor,
along with a claimed right to compensation if the property is sold to a
third party.
5. The issue before the Court is whether the provisions in the deed
numbered 7 and 8 are covenants running with the land and binding on
the Chapter 7 Trustee and subsequent purchasers or are they personal
covenants taken in the form of an executory contract that was rejected by
the Chapter 7 Trustee by operation of 11 U.S.C. § 365(b)(1) 60 days after
the conversion of the bankruptcy case.
6. The preamble of the deed indicates all provisions of the deed that
follow are covenants that run with the land, but that is not the end of the
inquiry. In McElroy Coal v. Dobbs, 853 SE 2d 620 (2020), the West
Virginia Supreme Court of Appeals observed that “rights of first refusal
are presumed to be personal” and when the court confronts a right of first
refusal servitude the court begins by assuming the benefit is personal, i.e.
”that it is not transferrable and does not run with the land.”
7. The Williams presented one witness at trial to rebut the presumption,
Robert Williams, the son of Rennick and Betty Williams, who testified he
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 4 of 8
was involved in the negotiations leading up to the closing of the family
transaction with the Debtor. Mr. Williams explained why the right of first
refusal was contained in the deed but had no adequate explanation why
the right of first refusal was limited in its applicability to his parents and
their surviving children. Other provisions in the deed's covenants section,
such as convenant 4, refer to certain rights reserved to the Grantors, their
successors in interest and assigns. The deed covenants numbered 7 and 8
contain no such language. Notwithstanding the language in the
preamble, the Court finds that the right of first refusal is a personal right
and this finding has not been rebutted to the Court’s satisfaction.
8. The Court further finds that the provisions numbered 7 and 8 in the
deed are executory contracts that were not assumed by the Chapter 7
Trustee and are deemed rejected by operation of law.
9. The Court further finds that there were unperformed obligations on
both sides of the right of first refusal that if they were not performed
would create a material breach that would excuse the other's performance.
The Court refers to In re Kellstrom Industries, Inc., 236 B.R. 833 (200), a
Delaware case to illustrate the point.
10. The Court further observes that no party objected to the Trustee’s
request that Panthera Training be found to be a good faith purchaser
under the contract for sale and the Court so finds. The Court notes that
Panthera Training was actively involved in the mediation and worked to
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 5 of 8
resolve the objections in this case, all with the assistance of Judge
Phillips. It has acted openly and diligently before the Court to move this
sale forward in an expeditious manner.
11. The Court also finds that this motion has been pending since March
20, 2021. The Williams have not taken any action to make an equal or
better offer knowing of the pending motion. The sole action was to object
to the sale. Also, in the original conveyance deed, the Williams expressly
subordinated their right of first refusal to the WVEDA’s deed of trust,
which all agree would be foreclosed out if the Court grants the pending
motion for relief from stay filed by the WVEDA. The consequences of the
Debtor’s primary asset being foreclosed out would have a detrimental
consequences to the entire creditor body which will have a potential
recovery from the sums to be paid to the bankruptcy estate by Panthera
Training.
12. Based on all of these factors the Court finds that the Williams'
objection to the Motion to Sell and to the Motion to Compromise should be
overruled and the Motion to Sell should be granted approving the
proposed sale.
Accordingly, it is
ORDERED and ADJUDGED that the objection filed by Rennick C.
Williams, Betty P. Williams and Robert Williams to the Motion to Sell and to the
Motion to Compromise is hereby OVERRULED, and it is
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 6 of 8
ORDERED and ADJUDGED that the Motion to Sell is hereby GRANTED,
and it is
ORDERED and ADJUDGED that the Motion to Compromise is hereby
GRANTED, and it is.
ORDERED and ADJUDGED that Panthera Training is deemed to be a
good faith purchaser pursuant to 11 U.S.C. 363(m).
The Court shall retain jurisdiction to hear any disputes or issues related to
the proposed sale and the stay shall remain in place pending hearing on the motion
for relief from stay filed by WVEDA continued by this Court until July 22, 2021.
The Clerk is directed to send copies of this Order to Counsel for the Chapter 7
Trustee, Panthera Training LLC, West Virginia Economic Development Authority,
West Virginia Paving, Inc., TR&L, LLC and SMI, LLC, the Williams, the Debtor,
and any other party that has requested to receive notice in this case.
Prepared by:
/s/ Aaron C. Amore
Aaron C. Amore, Trustee
WVSB No. 6455
AMORE LQW, PLLC
206 West Liberty Street
Charles Town, WV 25414
T: (304) 885-4111
F: (866) 417-8796
aaron@amorelaw.com
Seen and Not Objected:
/s/ Debra Lee Allen
Debra Lee Allen, WVSB No. 9838
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 7 of 8
Spilman Thomas & Battle, PLLC
48 Donley Street, Suite 800
Morgantown, West Virginia 26507-0615
T: (304) 291-7920 | (304) 216-5835
F: (304) 291-7979
dallen@spilmanlaw.com
Counsel for West Virginia Economic
Development Authority
/s/ Douglas E. Kahle
Douglas E. Kahle, VSB # 15964
Admitted Pro Hac Vice
308 Cedar Lakes Drive, 2nd Floor
Chesapeake, VA 23322
T: (757) 547-9191
F: (757) 547-9135
DKahle@basnightkinser.com
Counsel for Panthera Training, LLC
/s/Zachary J. Rosencrance
Zachary J. Rosencrance (WV Bar No. 13040)
Bowles Rice LLP
zrosencrance@bowlesrice.com
600 Quarrier St |Charleston, WV 25301
Tel: (304) 347-1161
Fax: (304) 347-1756
Counsel for Panthera Training, LLC
/s/ Gary O. Kinder
Office of United States Trustee
300 Virginia St. East Room 2025
Charleston, WV 25301
Gary.O.Kinder@usdoj.gov
304-347-3406
Assistant United States Trustee
/s/Henry G. Swergold
Henry G. Swergold, ESQ.
Platzer, Swergold, Goldberg, Katz & Jaslow, LLP
475 Park Avenue South, 18th Floor
No. 2:19-bk-00787 Doc 372 Filed 06/24/21 Entered 06/24/21 16:46:10 Page 8 of 8
New York, NY 10016
Telephone: (212)593-3000 ext #228
Facsimile: (212) 593-0353
Email: hswergold@platzerlaw.com
Counsel for Azadian Group, LLC
/s/ Stephen L. Thompson
Stephen L. Thompson, Esq. (WVSB # 3751)
BARTH & THOMPSON
P.O. Box 129
Charleston, West Virginia 25321
Telephone: (304) 342-7111
Facsimile: (304) 342-6215
E-mail: sthompson@barth-thompson.com
Counsel for West Virginia Paving, Inc.
/s/ Norm Daniels
DANIELS LAW FIRM, PLLC
P. O. Box 1433
Charleston, West Virginia 25325
(304) 342-6666 Office
(304) 389-9999 Cell
normdaniels@danielslawfirm.com
Counsel for West Virginia Paving, Inc.
Refused to Agree to Order as it omitted findings related to Covenants 1 through 6.
James E. Smith II, Esquire WVSB 5447
122 East Street; P.O. Box 127
Keyser, West Virginia 26727
Attjes2esq@gmail.com
Counsel for Rennick Williams
Betty Williams & Robert Williams
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