03/17/2008 382 Emergency Motion to Convert Case From Chapter 11 to 7, filed by U.S. Trustee Receipt Number exempt, Fee Amount 15. Hearing scheduled for 3/18/2008 at 02:00 PM at Lexington Courtroom, 3rd Floor. (Attachments: # 1 Proposed Order) (Daugherty, John) (Entered: 03/17/2008)
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Doc 382
In re:
Case No. 07-50935
Chapter 11
Pro Mold, Inc.
Debtor.
UNITED STATES TRUSTEE’S EMERGENCY MOTION TO CONVERT CASE
Richard F. Clippard, United States Trustee, by counsel, moves for entry of an order converting this case to chapter 7, pursuant to 11 U.S.C. § 1112(b), and in support states as follows:
NOTICE OF HEARING
Please take Notice that this Motion will be heard by the Court on Tuesday, March 18, 2008 at 2:00 p.m. in the U.S. Bankruptcy Courtroom, 3rd Floor, 100 East Vine Street, Lexington, Kentucky 40507.
1. The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding.
2. On May 16, 2007 Pro Mold, Inc. (the “Debtor”) filed a voluntary petition for relief under Chapter 11.
3. The Debtor operated a facility that engaged in thermoplastic molding. On June 15, 2007, the John P. Murphy III Revocable Trust No 1, John P Murphy III, Pro Plas LLC, and 10315 LLC (collectively the “Murphy entities”), filed a Motion for Relief for Automatic Stay to obtain leave to foreclose on the assets of the Debtor.
4. On October 4, 2007, after an evidentiary hearing, the Court granted the Motions of the United States Trustee and the Murphy Entities to appoint a chapter 11 trustee. The United States Trustee appointed, and the Court approved, Kenneth C. Henry to serve as trustee.
5. Since his appointment, the trustee attempted to reorganize the estate, but on November 19, 2007 the Court granted the Motion for Relief from Automatic Stay filed by the Murphy entities. Ultimately, the trustee and the Murphy entities entered in an Agreed Order allowing the foreclosure to go forward. Inter alia, the trustee received $100,000 for the estate.
6. The Debtor, accordingly, has no business to operate. Upon information and belief, the trustee did not intend to administer any additional assets, e.g., possible causes of action against insiders and others, or to reorganize. This state of affairs represents a “substantial . . . loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation.” 11 U.S.C. § 1112(b)(4)(A).
7. In addition, the chapter 11 trustee has tendered his resignation, which the United States Trustee has accepted, effective March 20, 2008. Upon information and belief, no purpose is served by keeping this case in chapter 11. The need to convert this case on short notice was created by this unexpected resignation on short notice.
8. Upon information and belief, the trustee has not made an allowance for the filing of tax returns in this case when they are due, and for potential tax liabilities. Such a failure constitutes cause to convert. 11 U.S.C. § 1112(b)(4)(I).
[1]The Report for December 2007 was filed on March 14, 2008, approximately 60 days past due.
9. The Debtor has failed to file with the Court monthly operating reports for the month of January 2008 as required by the United States Trustee pursuant to 11 U.S.C. § 1106(a)(1) (incorporating 11 U.S.C. § 704(8)) and Fed. R. Bankr. P. 2015(a)).[1]
[1]The Report for December 2007 was filed on March 14, 2008, approximately 60 days past due.
10. “Timely and accurate financial disclosure is the life blood of the Chapter 11 process. Monthly operating reports are much more than busy work imposed upon a Chapter 11 debtor for no reason other than to require it to do something. They are the means by which creditors can monitor a debtor's post- petition operations.” In re Berryhill, 127 B.R. 427, 433 (Bankr. N.D. Ind. 1991). The Debtor’s unexcused failure to file monthly operating reports constitutes cause to dismiss or convert this case. 11 U.S.C. § 1112(b)(4)(F).
11. The Debtor has failed to pay to the United States Trustee the quarterly fees imposed by 28 U.S.C. § 1930(a)(6). To date, the Debtor owes fees for the Fourth Quarter of 2007 in the estimated amount of $3,750.00. The actual amount of the outstanding fees cannot be determined because of the Debtor’s failure to file all of its monthly operating reports. In addition, the Debtor owes at least $ 4,875.00 for the First Quarter of 2008, which is not yet due. This failure to pay constitutes cause to dismiss or convert this case. 11 U.S.C. § 1112(b)(4)(K).
WHEREFORE, the United States Trustee respectfully requests that the above-captioned case be converted to chapter 7, and for such other further relief as is necessary.
Dated: March 17, 2008
Richard F. Clippard
United States Trustee for Region 8
By Counsel
/s/ John L. Daugherty
John L. Daugherty
Assistant U.S. Trustee
100 E. Vine St., Suite 500
Lexington, KY 40507
(859) 233-2822 |
