Opinion
Case No. 01-60386-DOT, Chapter 11, Procedurally Consolidated
June 18, 2002
Counsel for Keith L. Phillips, Chapter 11 Trustee: Benjamin C. Ackerly, VSB #9120 and Tyler P. Brown, VSB #28072 with Hunton Williams from Richmond, Virginia.
This matter came before the Court on the motion of Keith L. Phillips, Chapter 11 Trustee (the "Trustee") for the above-captioned debtors (the "Debtors") for an order pursuant to sections 105 and 363 of title 11 of the United States Code, 11 U.S.C. § 101-1330 (the "Bankruptcy Code") authorizing and approving (A) the sale (the "Sale") of certain personal (the "Personal Property") and the real property commonly known as 1223 Turkey Hill Road, Cecil County, Maryland (the "Real Property", and together with the Personal Property, the "Assets") pursuant to the Purchase and Sale Agreement (the "Agreement") between Debtor CKI, L.L.C. and John R. Harrison (the "Purchaser"), free and clear of all liens, claims and encumbrances subject to higher offers; and (B) bidding procedures with respect to the proposed Sale (the "Motion") and the Limited Objection of Kellam Energy, Inc. and Kellam Realty Company, L.L.P. (together, "Kellam") to the Motion (the "Limited Objection"). Upon consideration of the Motion and the Limited Objection, the statements of counsel, and any other evidence or documents filed in response to, or in support of, the Motion, it is hereby
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.
FOUND AND DETERMINED THAT:
Pursuant to Fed.R.Bankr.P. 7052, findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate.
A. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2)(A), (N) and (O).
B. Notice of: (i) the Motion; (ii) the hearing to consider approval of the Sale; and (iii) the Bidding Procedures (as defined below) has been given to all persons or entities entitled thereto in accordance with the requirements of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of this Court and orders of this Court and the form, manner and sufficiency of such notice was good and proper under the circumstances and no other or further notice shall be required.
C. Based upon the record presented to the Court by the Trustee, the Bidding Procedures represent a reasonable exercise of the Trustee's business judgment and are reasonably calculated to ensure the sufficiency of the consideration provided by the Sale under the circumstances.
D. Upon entry of this order, each selling Debtor (i) has full corporate power and authority to execute the Agreement and to consummate the Sale contemplated by the Agreement.
E. Approval of the Agreement and consummation of the Sale at this time are in the best interests of the Debtors, their creditors, their estates and other parties in interest.
F. The Trustee has demonstrated both (i) good, sufficient and sound business purpose and justification and (ii) compelling circumstances for the Sale pursuant to section 363 of the Bankruptcy Code prior to, and outside of, a plan of reorganization in that, among other things, the prompt consummation of the Sale represents the best way to maximize the value of the Assets for the benefit of the Debtors' estates and creditors and other parties in interest.
G. The Agreement was negotiated, proposed and entered into by the Debtors and the Purchaser without collusion, in good faith, and from arms'-length bargaining positions. Neither the Debtors, the Trustee, nor the Purchaser have engaged in any conduct that would cause or permit the Agreement to be avoided under 11 U.S.C. § 363 (n).
H. The Purchaser is a good faith purchaser under 11 U.S.C. § 363 (m) and, as such, is entitled to all of the protections afforded thereby.
I. The $175,000 consideration to be paid for the Property by Purchaser pursuant to the Agreement, together with all other consideration set forth in the Agreement, (i) is fair and reasonable, (ii) is the highest and best offer for the Assets, (iii) will provide a greater recovery for creditors than would be provided by any other practical available alternative and (iv) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and under the laws of the United States.
J. The Sale must be consummated promptly because time is of the essence.
K. The transfer of the Assets to the Purchaser will be a legal, valid and effective transfer of the Assets and will vest the Purchaser with all right, title and interest of the Debtors in the Assets free and clear of all (i) mortgages, security interests, conditional sale or other title retention agreements, pledges, liens, claims, judgments, demands, easements, charges, encumbrances, defects, options, rights of first refusal, and restrictions of all kinds (collectively, the "Interests") and (ii) all debts arising under or out of, in connection with, or in any way relating to, any acts of the Debtors, claims (as defined in section 101 (5) of the Bankruptcy Code), rights or causes of action (whether at law or in equity), obligations, demands, guaranties, interests and matters of any kind or nature whatsoever that arise prior to the consummation of the Sale (collectively, the "Claims"), except for those Claims or Interests set forth in the Agreement.
L. The Purchaser would not have entered into the Agreement and would not consummate the transactions contemplated thereby if the Sale of the Assets to the Purchaser were not free and clear of all Claims and Interests, or if the Purchaser would, or in the future could, be liable for any of the Claims and Interests, other than as set forth in the Agreement.
M. The Trustee may sell the Assets free and clear of all Claims and Interests of any kind or nature whatsoever because, in each case, one or more of the standards set forth in 11 U.S.C. § 363 (f)(1)-(5) have been satisfied. Those holders of Claims and Interests that did not object to the Motion are hereby deemed to have consented to the Sale of the Assets to Purchaser pursuant to 11 U.S.C. § 363 (f)(2). Those holders of Claims and Interests that did object to the Motion, if any, fall within one or more of the other subsections of 11 U.S.C. § 363 (f) and are adequately protected by having their Claims or Interests, if any, attach to the cash proceeds of the Sale attributable to the property against which or in which they assert a Claim or Interest.
N. The Sale is a sale in contemplation of a plan and, accordingly, a transfer pursuant to 11 U.S.C. § 1146 (c), which shall not be taxed under any law imposing a stamp or similar tax.
It therefore appearing just and proper to do so, it is accordingly hereby ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is GRANTED.
2. All objections to the Motion or the relief requested therein, if any, that have not been withdrawn, waived, or settled, and all reservations of rights included therein, hereby are overruled on the merits.
3. The Agreement and all of its terms and conditions, except as set forth on the record, are hereby approved.
4. The Trustee, on behalf of the Debtors, or the Debtors themselves, are authorized to execute and deliver, and empowered to perform under, consummate and implement, the Agreement, together with all additional instruments and documents that may be reasonable necessary or desirable to implement the Agreement, and to take all further actions as may be reasonably necessary or appropriate to the performance of the obligations contemplated by the Agreement.
5. Pursuant to 11 U.S.C. § 105 (a) and 363 (f), the Assets shall be transferred to the Purchaser, and upon consummation of the Sale (the "Closing") shall be free and clear of all Claims or Interests of any kind or nature whatsoever, other than as set forth in the Agreement, with all such Claims and Interests, if any, to attach to the net proceeds of the Sale in the order of their priority, with the same validity, force and effect which they now have as against the Assets, subject to any claim and defense the Trustee or Debtors may possess with respect thereto.
6. The transfer of the Assets to the Purchaser pursuant to the Agreement constitutes a legal, valid and effective transfer of the Assets, and shall vest the Purchaser with all right, title and interest of the Debtors in and to the Assets free and clear of all Claims and Interests, other than as set forth in the Agreement.
7. The consideration provided by the Purchaser for the Assets under the Agreement shall be deemed to constitute reasonably equivalent value and fair consideration.
8. On the date of the Closing of the Sale (the "Closing Date"), each of the Debtors' creditors is authorized and directed to take such actions as may be necessary to release its Claim against or Interest in the Assets, if any, as such Claim or Interests may have been recorded or otherwise exist.
9. The failure specifically to include any particular provisions of the Agreement in this Sale Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Agreement be authorized and approved in its entirety as clarified or amended on the record.
10. The transfer of the Assets pursuant to the Agreement is a transfer pursuant to 1146 (c) of the Bankruptcy Code, and, accordingly, shall not be taxed under any law imposing a stamp or similar tax.
11. The ten day stay of this Sale Order under Federal Rule of Bankruptcy Procedure 6004 (g) is hereby abrogated in accordance with such Rule and this Sale Order shall be effective and enforceable immediately upon entry.
12. As adequate protection for Kellam's lien (the "Kellam Lien") on consigned fuel inventory and accounts receivable at the subject location, the Trustee, pursuant to section 363 (f) of the Bankruptcy Code, shall escrow from the proceeds of the Sale $10,000.00 (the "Escrowed Funds"), to which the Kellam Lien shall attach, pending a further order of this Court directing the distribution or other release of the Escrowed Funds. Nothing contained in this Order shall be construed to effect (i) Kellam's rights or claims, if any, under section 507 (b) of the Bankruptcy Code, or (ii) Kellam's right to adequate protection with regard to any other dealer location which serves as its collateral.