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Keywords

motionbankruptcychapter 11 bankruptcy

motionbankruptcy

Related Cases

In re Light Foot Group LLC, Not Reported in B.R., 2011 WL 5509025, 66 Collier Bankr.Cas.2d 1626, 55 Bankr.Ct.Dec. 193

Facts

The Debtor filed for Chapter 11 bankruptcy and opposed a motion from Old Line Bank and PNC Bank, which sought a declaration that the Debtor is a single asset real estate entity. The Debtor's property consists of five tracts of land with 17 residential units that generate substantially all of its gross income. The court found that the Debtor's business activities were limited to the rental of these residential units, with no substantial business conducted beyond this operation.

The real property that is the subject of the Motion before the court consists of five tracts of land. There are 17 residential units amongst these tracts that generate substantially all of Debtor's gross income.

Issue

Whether the Debtor qualifies as a single asset real estate entity under the Bankruptcy Code, thereby subjecting it to the provisions of 11 U.S.C. § 362(d)(3).

Rule

To qualify as a single asset real estate entity, a debtor must have real property constituting a single property or project, which generates substantially all of the gross income of the debtor, and on which no substantial business is conducted other than the operation of the real property.

Three requirements emerge from this definition which must all be met for a debtor to be considered a SARE debtor: (1) the debtor must have real property constituting a single property or project (other than residential real property with fewer than 4 residential units), (2) which generates substantially all of the gross income of the debtor, and (3) on which no substantial business is conducted other than the business of operating the real property and activities incidental thereto.

Analysis

The court analyzed the Debtor's property and business activities, concluding that the rental income generated from the residential units constituted a single project. The court rejected the Debtor's arguments that the presence of residential units with fewer than four units disqualified it from SARE status, emphasizing that the overall operation of the property as a rental business met the SARE criteria.

The court finds this activity to be a single project centered on operation of Debtor's real property as a single asset.

Conclusion

The court found that the Debtor's property qualifies as single asset real estate under the Bankruptcy Code and granted the motion for relief from the automatic stay.

For the foregoing reasons, and upon consideration of all the facts and circumstances presented, the court finds Debtor's property to be 'single asset real estate' as defined in the Bankruptcy Code.

Who won?

Old Line Bank and PNC Bank prevailed in the case as the court determined that the Debtor's property met the definition of single asset real estate, allowing them to proceed with their claims.

Old Line Bank and PNC Bank prevailed in the case as the court determined that the Debtor's property met the definition of single asset real estate.

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