Opinion
Case Nos. BK-N-03-52300 through BK-N-03-52304 and BK-N-03-52470 through BK-N-03-52474, (Joint Administration).
October 14, 2004
STEPHEN R. HARRIS, ESQ., BELDING, HARRIS PETRONI, LTD., Reno, NV, Special Counsel for Chapter 11 Trustee C. Alan Bentley.
MARSHA A. HOUSTON, ESQ., KATTEN MUCHIN ZAVIS ROSENMAN, Attorneys for FINOVA Capital Corp.
AMENDED ORDER APPROVING SALE OF REAL PROPERTY FREE AND CLEAR OF LIENS AND ENCUMBRANCES [1816 BEACH BLVD., BILOXI, MS]
Upon the MOTION FOR ORDER AUTHORIZING TRUSTEE TO SELL DEBTOR'S REAL PROPERTY FREE AND CLEAR OF LIENS AND ENCUMBRANCES [1816 BEACH BLVD., BILOXI, MS], filed herein on July 29, 2004, by C. ALAN BENTLEY, Trustee of the Chapter 11 bankrupt estates of MEGO FINANCIAL CORP., a New York corporation, and its nine (9) Jointly Administered Debtor subsidiaries (collectively "Debtors"), by and through his special counsel STEPHEN R. HARRIS, ESQ., of BELDING, HARRIS PETRONI, LTD., and noticed for hearing for August 23, 2004, at 2:00 p.m.; with STEPHEN R. HARRIS, ESQ., of BELDING, HARRIS PETRONI, LTD., appearing on behalf of the Trustee, and the Chapter 11 Trustee, C. ALAN BENTLEY, also participating by telephone; the Court also noting the appearances of other attorneys for creditors, creditors and interested parties; and the Court having considered oral argument for and against the relief requested, and all papers and pleadings on file herein, including FINOVA CAPITAL CORPORATION'S LIMITED OBJECTION TO MOTION FOR ODER AUTHORIZING TRUSTEE TO SELL DEBTOR'S REAL PROPERTY FREE AND CLEAR OF LIENS AND ENCUMBRANCES [1816 BEACH BLVD., BILOXI, MISSISSIPPI], and the Trustee withdrawing his surcharge requests, without prejudice to renew the surcharge requests in the future; with the sale of the Real Property open to overbidders, with such bidding conducted by the United States Bankruptcy Judge, and over-bidders being heard and the purchase price for the Real Property bid up from $1,000,000.00 to $1,400,000.00; and good cause appearing,
IT IS HEREBY ORDERED that the Trustee's MOTION FOR ORDER AUTHORIZING TRUSTEE TO SELL DEBTOR'S REAL PROPERTY FREE AND CLEAR OF LIENS AND ENCUMBRANCES [1816 BEACH BLVD., BILOXI, MS], is GRANTED, and that the Trustee, C. ALAN BENTLEY, is authorized to sell on behalf of LEISURE HOMES CORPORATION, formerly known as PREFERRED EQUITIES CORPORATION, that certain real property commonly described as 1816 Beach Boulevard, Biloxi, Mississippi, to successful overbidder, ECONOMY INNS, INC., for the sum of One Million Four Hundred Thousand Dollars ($1,400,000.00), on terms and conditions as set forth in the successful over-bidder's purchase contract, which purchase contract is attached hereto as Exhibit "A" and incorporated herein by that reference, except as modified and amended by this Order, with said sale made in accordance with 11 U.S.C. § 363(b)(1), free and clear of liens, claims and encumbrances, pursuant to 11 U.S.C. § 363(f)(2), with the recorded liens, claims and encumbrances to attach to the sales proceeds and paid as specified hereinafter; and
IT IS FURTHER ORDERED that the Trustee, C. ALAN BENTLEY, through the escrow holder, is authorized to pay the following:
1. The real estate commissions incurred in this transaction equal to 6% of the gross purchase price to Grubb Ellis/Sawyer Commercial;
2. The closing costs and pro-rations attributed to Seller;
3. All real property taxes pro-rated through the date of closing;
4. All net sales proceeds shall be paid directly to FINOVA Capital Corporation ("FINOVA"), on account of its first priority lien recorded against the Real Property, without prejudice to a later challenge by creditor(s) as to the validity, extent and perfection of FINOVA's first priority trust deed lien recorded against the Real Property, with FINOVA subject to disgorgement of all funds so received as may be ordered by this Court; and
5. The Forfeited Deposit shall be paid directly to FINOVA no later than October 18, 2004, as consideration for the extension of the closing date as described below if escrow does not close by October 15, 2004; andIT IS FURTHER ORDERED that this Real Property sale shall close on or before ten (10) days after entry of this Order, but in the event ECONOMY INNS, INC. cannot close within said ten (10) day period, the Debtor may extend the closing date to Friday, October 15, 2004, with said extension conditioned upon the Debtor obtaining the consent of FINOVA, and said extension further conditioned upon ECONOMY INNS, INC. depositing into escrow an additional non-refundable deposit of Two Hundred Thousand Dollars ($200,000.00), for a total non-refundable deposit into escrow of Three Hundred Thousand Dollars ($300,000.00), and refundable to ECONOMY INNS, INC., only in the event Debtor is unable to timely close escrow; otherwise, the $300,000.00 deposit shall be forfeited by ECONOMY INNS, INC. ("Forfeited Deposit"), and paid to FINOVA if escrow does not close by October 15, 2004; and
IT IS FURTHER ORDERED that in the event ECONOMY INNS, INC. cannot consummate its purchase of the Real Property pursuant to the terms and conditions set forth herein, DLP FINANCIAL GROUP, LLC shall be a back-up purchaser and shall purchase the Real Property for the total purchase price of $1,390,000.00, and escrow shall close according to the terms and conditions set forth in its original Purchase Agreement and as set forth in this Order; and
IT IS FURTHER ORDERED that the Buyer, ECONOMY INNS, INC., is entitled to safe harbor provisions of 11 U.S.C. § 363(m); and
IT IS FURTHER ORDERED that the ten (10) day stay of F.R.Bankr.P. 6004(g) is waived.
CONTRACT FOR THE SALE AND PURCHASE OF REAL ESTATE LOTS AND LAND IF NOT FULLY UNDERSTOOD, SEEK LEGAL ADVICE FROM YOUR ATTORNEY BEFORE SIGNING. THIS BECOMES A BINDING CONTRACT UPON ACCEPTANCE IN WRITING OF ALL PARTIES.19th August, 2004. Leisure Homes Corp. Al Bentley, Chapter 11 Trustee Economy Inns, Inc. 1816 Beach Blvd., Biloxi, MS Approx, 4,25 Acres of Land Tax Parcel #1210J-02-020,000 See Attached Legal Description and Survey PURCHASE PRICE: 1,010,000.00 EARNEST MONEY: 100,000.00 Cash Check Grubb Ellis/Sawyer Commercial Cash Down Payment: BALANCE: 910,000.00 CASH AT CLOSING EARNEST MONEY DEPOSIT: PURCHASER HAS EXAMINED THIS PROPERTY ALL IMPROVEMENTS ARE INCLUDED ALL PROPERTY TAXES, ASSESSMENTS AND/OR RENTALS SELLER TO FURNISH: WARRANTY DEED, SPECIAL WARRANTY DEED. LEASE ASSIGNMENT OR BILL OF SALE MINERAL RIGHTS. ANY THE RISK OF LOSS R Copyright© 2002 by Mississippi Association of REALTORS® F2 — Contract for the Purchase of Lots Land tm EXHIBIT A EXHIBIT "A" CLOSING DATE SHALL BE September 2, 2004, N/A P P P POSSESSION OF THE PROPERTY SHALL BE DELIVERED TO PURCHASER ON September 2, 2004 BREACH OF CONTRACT. COMMISSION: Seller Purchaser Grubb Ellis/Sawyer Commercial 6,000 THE ABOVE PARAGRAPH DOES NOT APPLY, SEE SPECIAL PROVISIONS REAL ESTATE AGENTS ARE NOT PRINCIPALS OTHER PROVISIONS: This contract of sale is contingent upon United States Bankruptcy Court approval. Earnest money is non-refundable except in the event that this contract is not accepted by the U.S. Bankruptcy Court. R Copyright© 2002 by Mississippi Association of REALTORS® Page 2 of 3 F2 — Contract for the Purchase of Lots Land tm
1. This purchase agreement is made the day of 2. THE SELLER(S) AGREES TO SELL, AND THE PURCHASER(S) AGREES TO BUY the property as described: 3. The purchaser will pay a total sum of $ A sum attached to the contract in the amount of $ [X] deposited with [Broker/Trustee], will be held in trust presuming clearance of check. Paid at closing and subject to adjustments and prorations $_________________________ Balance of purchase price $ Balance is payable as follows: If purchase of the property is subject to Purchaser being able to obtain financing, Purchaser shall within five (5) days after contract agreement, apply for and use Purchaser's best efforts to obtain a mortgage loan. 4. Upon acceptance of the Purchase Agreement, deposits and down payments received by above named Broker/Trustee shall be deposited in an escrow account and shall remain in that account until the transaction has ben consummated or terminated. All such funds will be deposited by the above named Broker/Trustee in federally insured accounts. In the event the transaction is not consummated, the above named Broker/Trustee shall hold such funds in escrow until: (a) all parties to the transaction have agreed in writing as to their disposition: (b) a court of competent jurisdiction orders such disbursement of the funds; or (c) the above named Broker/Trustee can pay the funds to the party who is entitled to receive them in accordance with the clear and explicit terms of this Purchase Agreement which established the deposit. In the latter event, prior to disbursement, the above named Broker/Trustee shall give written notice to each party not to be paid, by either: (a) hand delivery signed for by the addressee; or (b) by certified mail, both stating that this payment will be made unless a written protest from that party is received by the Broker/Trustee within 5 business days of the delivery of the mailing, as appropriate, of that notice. 5. and agrees to accept same in its present condition, except as may be specified herein. 6. in the purchase price including, if now on the property, all fencing, barns, wells, etc. Prior to the closing date, Seller may remove the following: __________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________ 7. shall be prorated as of the closing date, NOTE: Taxes are based upon current information furnished by the County Tax Office. Brokers and Agents cannot and do not assume any responsibility for any change or modification to the current tax assessment by the County Tax Office. 8. [X] (as appropriate). Reasonable time shall be given for examination of title. Should examination of title reveal defects which can be cured, Seller hereby obligates himself to cure same as expeditiously as possible and to execute and tender. Warranty Deed in accordance with the terms herein. SELLER WILL TRANSFER MINERAL RIGHTS WHICH THE POSSESSES IN THE REAL PROPERTY TO THE PURCHASER. 9. by fire or other casualty shall be on the Seller until Title is conveyed. SELLER(S) INITIALS ________ __________ PURCHASER(S) INITIALS _________ __________ Page 1 of 3 REALTOR® Rev. Date 3/2003 Sawyer Real Estate 2501, 13th Street, Gulfport MS 39501 Phone: (228) 863-0232 Fax: (228) 863-0632 Rita G. Sadler T7215678.ZFX Produced with "ZipForm" by RE FormsNet, LLC 18025 Fifteen Main Road, Clinton Township, Michigan 48035 (800) 383-9805 10. but may be earlier by mutual consent. CLOSING DATE SHALL BE EXTENDED up to thirty (30) days if any of the following occurs: A. Mutually agreed to, B. Title defects are reported which may be reasonably cured. C. The terms of the purchase contract require a new mortgage and the lender issues a commitment no later than the closing date but with a mortgage loan closing after the contract closing date. 11. CLOSING costs shall be paid by: (Please mark each space with an appropriate letter(s).) S if to be paid by Seller, P if to be paid by Purchaser, J if to be split by parties; N/A if not applicable. Appraisal Survey Attorney Fees Other 12. 13. Specific performances the essence of this contract, except as otherwise specifically provided for in Paragraph 3, 4, 12, and 16 and as further delineated below, and time is of the essence of this contract. In the event of breach of this contract by Purchaser, Seller may at his option (a) accept the earnest money deposit as liquidated damages ad this contract shall then be null and void; or (b) enter suit in any court of competent jurisdiction for damages for the said earnest money deposit; or (c) enter suit any court of competent jurisdiction for specific performance. If Seller accepts the earnest money deposit as liquidated damages, or if Seller litigates for additional damages in any court of law, Broker (s) shall be paid one half (1/2) of the earnest money deposit amount, or damages awarded, not to exceed the full commission herein provided. If the Seller succeeds in a suit for specific performance, Broker shall be paid a full commission by Seller. In the event of breach of contract by Seller, Purchaser at his option may either accept the return of the earnest money deposit and cancel the contract or enter suit for damages in any court of competent jurisdiction, or enter suit for specific performance in any court of competent jurisdiction. In the event of breach of contract by Seller, Broker shall be paid a full commission by Seller regardless of any action taken by Purchaser, unless and except this agreement calls for the Purchaser to pay commission. If it becomes necessary to insure the performance of the conditions of this contract for either party to initiate litigation, then the losing party agrees to pay reasonable attorney's fees and court costs in connection herewith. 14. [X] of property sold under this contract or through any other negotiated agreement, agrees to pay (check box) [X] % or $ ___________________________________ commission on the total purchase indicated in Clause 1 to Selling Broker(s). If Broker collects this commission, or any part thereof through legal action, defaulting party agrees to pay court costs and reasonable attorney's fees. This agreement shall not limit the right of the Broker set forth in any listing agreement which may be in effect between Seller and Broker, except that said listing agreement(s) is extended through the closing date of this contract or any other agreement or negotiated contract between the parties or the assigns. Any commission of fee due hereunder shall be earned and payable upon presentation of a Purchaser ready, willing and able to purchase at any price and terms acceptable to Seller, although Broker agrees to accept said commission or fee at closing as an accommodation to party paying commission. Seller and Purchaser hereby acknowledge receipt of a duplicate original hereof and acknowledge further that they have not received or relied upon any statement or representations regarding the effect of this transaction upon Seller(s) or Purchaser(s)' tax or legal liability. 15. in this transaction and are not to be held liable for any conditions or non-performance of this agreement nor have they given any legal advice unless disclosed in writing herein. 16. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ SELLER(S) INITIALS ___________ ___________ PURCHASER(S) INITIALS __________ __________ RELATOR® Rev. Date 3/2003 Produced with ZipForm by RE FormsNet, LLC 18025 Fifteen Mile Road, Clinton Township, Michigan 48035, (800) 383-9805 T7215678 ZFX