- Allen v. Absher, et al. (In re Allen), No. 14-1242 (10th Cir. May 27, 2015)
- The 10th Circuit affirmed the U.S. District Court for the District of Colorado, which affirmed the bankruptcy court's order approving the sale of debtor's stock in two oil companies to a creditor. The 10th Circuit found that debtor had not provided adequate evidentiary support for his argument of bad faith to invalidate the sale, and thus did not reach the issue of whether good faith was a required finding to approve the sale. The 10th Circuit found no error in the bankruptcy court's determination of the value of the stock, or its finding that the sale was within the chapter 7 trustee's sound business judgment.
- Procedural context:
- Chapter 7 trustee moved for approval of sale of stock to a creditor. Debtor objected. Bankruptcy court approved sale, and debtor appealed to district court. District court affirmed, and debtor appealed to Tenth Circuit. Tenth Circuit affirmed.
- Debtor was the sole owner and CEO of two oil companies, "AERC," and "H&M," which jointly operated oil leases. TCA, a secured creditor of both entities, succeeded in asking a Colorado state court to place the oil companies into receivership in 2012. The state court appointed a receiver who had served as the entities' outside accountant. In 2012, the entities filed for bankruptcy under chapter 11. The bankruptcy court appointed the Receiver as trustee for the estates. Debtor obtained loans to pay off TCA, with the loan secured by all of Debtor's shares in the oil companies, as well as other property of Debtor. Lender executed a term sheet providing Debtor certain non-dilution and control rights. After Debtor paid off TCA, he defaulted on the loan, and filed bankruptcy under chapter 7. The chapter 7 trustee moved to sell debtor's stock in the entities to the Lender for about $665,000. Debtor objected that the sale price was too low. The bankruptcy court ruled that debtor's valuation allegations gave him standing to object, but ultimately approved the sale following an evidentiary hearing on the valuation of the stock. Debtor appealed to the district court, asserting that Lender was not a good faith purchaser. The district court affirmed the sale order, finding that "good faith" was not a required element of approval of the sale under section 363(b). .
- Briscoe, Lucero, Matheson
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