Opinion
BKY: 04-31406 (DDO)
April 29, 2004
ORDER FOR SALE FREE AND CLEAR OF LIENS
This matter came before the Court on April 22, 2004 and after appropriate notice on the Trustee's motion for sale free and clear of liens of substantially all of the Debtor's assets, both real and personal, as reflected on the Debtor's schedules filed March 9, 2004 (hereinafter collectively referred to as the "Property"). Based upon the files, records, and arguments of counsel,
IT IS HEREBY ORDERED:
1. The Motion for sale free and clear of liens is granted.
2. All proceeds ("VSB Proceeds") from the sale of the Debtor's property located in Lino Lakes, Minnesota, Inver Grove Heights, Minnesota, Store 171 (Prescott, Wisconsin) and Store 239 (Big Lake, Mirmesota) (hereinafter referred to as the "VSB Assets") shall be subject to a first priority lien of VSB Financial, Inc. ("VSB"). The VSB Proceeds shall be paid by the Trustee to VSB for application of its claim, including to the extent there are sufficient VSB Proceeds, post-petition interest, costs, expenses and reasonable attorneys' fees within ten (10) days of closing of the sale of the property. To the extent that VSB is paid infull from one or more of the property sales, VSB shall release its lien and consent to the sale of the remaining property. Upon the sale of the property and upon payment in full of all obligations owed to VSB, VSB shall cancel the original note and deliver it to the Trustee. No amounts paid to VSB from the sale of the property shall be subject to disgorgement or other claims of the Debtor or the estate and VSB shall have no liability or obligation to return or refrmd any amounts paid to VSB once such amounts are received by VSB.
3. All proceeds ("Gulfstream Proceeds") from the sale of the Debtor's property referred to as Stores 116, 127, 144, 219, 230, 267, 271, 280, 203, 228, 176, 245, 282, and 273 (hereinafter referred to as the "Gulfstream Assets") shall be subject to the first priority lien of Bay View Franchise Mortgage Acceptance Company, Bay View Bank, N.A., Bay View Capital Corporation, Holly Yellen Management, Inc. and Flag Bank (hereinafter collectively referred to as "Gurfstream"). The Gurfstream Proceeds shall be paid by the Trustee to Gurfstream Financial Services, Inc. ("Gurfstream") for application of its claim, including, to the extent there are sufficient Gurfstream Proceeds, post-petition interest, costs, expenses and reasonable attorneys fees within ten (10) days of closing of the Gulfstream Assets. However, the Trustee shall escrow monies received from the sale of the Gulfstream Assets in the amount of the indebtedness owing Gulfstream for the Polka Dot Dairy Stores 128, 193 and 226 until the Trustee and Gulfstream resolve any disputes or until further Order of this Court. Upon sale of all of the Gulfstream Assets and upon payment in full of all obligations owed to Gulfstream on the Notes relating to the Gulfstream Assets, Gulfstream shall cancel the original Notes relating to the Gulfstream Assets and deliver them to the Trustee. No amounts paid to Gulfstream from the sale of the Gulfstream Assets shall be subject to disgorgement or other claims of the Debtor or the estate and Gulfstream shall have no liability or obligation to return or refund any amounts paid to Gulfstream once such amounts are received by Gulfstream.
4. All liens, claims and encumbrances ("Liens"), including unpaid real estate taxes, on the various properties (a) will be satisfied within ten (10) days of closing by the Trustee through payment in full to holders of such Liens or, in the event such Liens are disputed, the establishment of reserve(s) or escrow accounts) in the amount of such Liens, or (b) have attached to the proceeds of sale of the Property with the same force, effect and priority as such Liens had on the Property, subject to the rights and defenses, if any, of the Debtor and any party in interest with respect thereto.
5. A dispute (the "Dispute") exists between Wallace and Marlene Pettit ("Pettits") and the Trustee concerning, among other tilings, the validity, priority and extent of the Pettits' security interest in the Debtor's equipment, inventory and accounts receivable relating to Stores 139, 145, 151, 159, 178, 180, 186, 187, 191, 194, 195, 196, 197, 199, 200, 213, 214, 218, 220, 221, 222, 225, 236, 241, 243, 255, 258, 268, 269, 279, 284, 290, 292, 293, 295, 299, 300 and 304. The Pettits and the Trustee have stipulated that the Trustee will file and adversary proceeding (the "Adversary Proceeding") to resolve the Dispute, and that, without prejudice to the Pettits' ability to bring a motion to dismiss or for summary judgment in such adversary proceeding — the Dispute constitutes a "bona fide dispute" pursuant to 11 U.S.C. § 363(f)(4). The Trustee is authorized to sell the equipment, inventory and accounts receivable relating to the above-referenced stores free and clear of any interest of the Pettits. The first $980,000.00 in net proceeds of the sale will be held by the Trustee in her fiduciary account and such net proceeds will be subject to the security interest of the Pettits to the same dignity, priority and extent as any security interest that the Pettits had in such assets pre-petition. Such proceeds will be disposed of in accordance with the resolution of the Adversary Proceeding.
6. All persons and entities, including, without limitation, all debt security holders, equity security holders, governmental, tax, and regulatory authorities, lenders, trade and other creditors, holding interests of any kind or nature whatsoever against or in the Debtor or the Property (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or noncontingent, senior or subordinated), arising under or out of, in connection with, or in any way relating to the Debtor, the Property, the operation of the Debtor's businesses prior to the closing, or the transfer of the Property to the buyers, are forever barred, estopped, and permanently enjoined from asserting against the buyer, its successors or assigns, its property, or the Property, such persons' or entities' claims, causes of action or interests.
7. This Order is and shall be binding upon and shall govern the acts of all entities including, without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, administrative agencies, governmental units, secretaries of state, federal, state, and local officials, and all other person and entities who may be required by operation of law, the duties of their office, or contract, to accept, file, register or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state to title in or to the Property. All Liens against the Debtor's estate of record as of the date of this Order shall forthwith, upon the occurrence of the closing with respect to the Property, be removed and stricken as against such Property, without further order of the Court or act of any party. Upon closing, the entities listed above in this paragraph are authorized and specifically directed to strike all such recorded Liens against the Property as provided for herein from their records, official or otherwise.
8. Each and every federal, state, and local governmental agency, unit or department is hereby directed to accept this Order as sole and sufficient evidence of the transfer of title of the Property to the buyer, and such agency or department may rely upon this Order in consummating the transactions contemplated by this Order.
9. Each buyer is not (nor shall it be deemed to be) a successor to the Debtor or its estate by reason of any theory of law or equity or as a result of the consummation of the transaction contemplated in this Order or otherwise. Each buyer is not (i) assuming any collective bargaining agreement, employee pension, welfare or benefit plan nor (ii) assuming or in any way responsible for any liability or obligation of the Debtor and/or its estate accruing, arising or relating to a period prior to Closing, except as otherwise expressly provided in this Order.
10. All entities, including, but not limited to, the Debtor (and/or their respective successors, including any trustees thereof), and each of their creditors, employees, unions, former employees and shareholders, administrative agencies, governmental units, secretaries of state, federal, state and local officials, maintaining any authority relating to Environmental, Health and Safety laws, and their respective successors or assigns, and all parties to the Property are permanently and forever barred, restrained and enjoined from commencing or continuing in any manner any action or other proceeding against any buyer as alleged successor or otherwise with respect to any Lien,
11. The Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to this Order, issue any order in furtherance of the transactions, and hear and resolve any issue relating to the buyers' rights under the Property. The Court shall retain jurisdiction, even after the closing of this chapter 7 case, among other tilings, to
(a) interpret, implement and enforce the terms and provisions of this Order and of each of the agreements executed in connection therewith;
(b) protect the buyers and the Property against any of the Liens, as provided herein, including to enjoin the commencement or continuation of any action seeking to impose successor liability, or bulk sale liability;
(c) enter orders in aid or furtherance of the transactions contemplated in this Order;
(d) compel delivery of the Property to the buyers;
(e) resolve any disputes arising under or related to this Order or the related transactions or to ensure the peaceful use and enjoyment of the Property by the buyers; (f) adjudicate any and all issues and/or disputes, if any, relating to the buyers' or the Debtor's right, title or interest in, to and under the Property and the proceeds thereof;
(g) re-open the Debtor's chapter 7 case to enforce the provisions of this Order.
12. The transactions contemplated by this Order are undertaken by each of the buyers in good faith (as that term is used in section 363(m) of the Bankruptcy Code), and the buyers shall continue to be in good faith (as that term is used in section 363(m) of the Bankruptcy Code) by proceeding to close the transactions contemplated by this Order. Accordingly, the reversal or modification on appeal of the authorization to consummate the transactions approved hereby shall not affect the validity and enforceability of such transactions, unless such authorization is duly stayed pending such appeal. Each and every entity is enjoined from commencing or continuing an action seeking relief under section 363(n) of the Bankruptcy Code with respect to any buyer.
13. Pursuant to section 363(b) of the Bankruptcy Code, the Debtor, the Trustee and the buyers, as well as their officers, employees, and agents, are authorized to take any and all actions and/or execute any and all documents as may be necessary or desirable to consummate the transactions contemplated by this Order. Any actions taken by the Debtor and the buyers necessary or desirable to consummate such transaction prior to the entry of this Order are hereby ratified.
I, Nancy A. Brill, hereby certify that I am a Deputy Clerk for the United States Bankruptcy Court for the District of Minnesota, Third Division; that on April 29, 2004 true and correct copies of the annexed:
ORDER FOR SALE FREE AND CLEAR OF LIENS
were placed by me in individual official envelopes; that said envelopes were addressed individually to each of the persons, corporations, and firms at their last known addresses, were sealed and on the day aforesaid were placed in the United States mails at St. Paul, Minnesota, to:
US TRUSTEE NAUNI J MANTY WILLIAM P WASSWEILER 1015 US COURTHOUSE RIDER BENNETT LLP RIDER BENNET LLP 300 So. 4TH ST 333 So. 7TH ST STE 2000 333 So. 7TH ST STE 2000 MINNEAPOLIS MN 55415 MINNEAPOLIS MN 55402 MINNEAPOLIS MN 55402 MARK J KALLA MICHAEL F MCGRATH DANIEL BECK DORSEY WHITNEY LLP RAVICH MEYER ET AL 225 So. 6TH ST STE 3500 50 So. 6TH ST STE 1500 80 So. 8TH ST STE 4545 MINNEAPOLIS MN 55402-4629 MINNEAPOLIS MN 55402 MINNEAPOLIS MN 554022 PHILLIP L KUNKEL MICHAEL R STEWART STEVEN W MEYER GRAY PLANT MOOTY BENNETT FAEGRE BENSON LLP OPENHEIMER WOLFF PA 90 So. 7TH ST STE 2200 DONNELLY 1010 W ST GERMAIN STE 600 MINNEAPOLIS MN 55402-3901 45 So. 7TH ST RM 3400 ST CLOUD MN 56031 MINNEAPOLIS MN 55402 TED R CHEESEBROUGH KURT M ANDERSON DAVID A ORENSTEIN FAEGRE BENSON PO BOX 2434 PARSINEN KAPLAN ROSBERG 90 So. 7TH ST MINNEAPOLIS MN 55402-0434 GOTLIEB PA MINNEAPOLIS MN 55402-3901 100 So. 5TH ST STE 1100 MINNEAPOLIS MN 55402 LARRY B RICKE TOM THUMB FOOD MARKETS INC LEONARD STREET DEINARD 110 E 17TH ST 150 So. 5TH ST STE 2300 HASTINGS MN 55033 MINNEAPOLIS MN 55402 and this certificate was made by me.