Bank of America, N.A. v. LSSR, LLC (In re LSSR, LLC)

Summarized by Andrew Hardenbrook , Snell & Wilmer, LLP
12 years 9 months ago

Citation:

BAP No. CC-12-1636-DKiTA

Tag(s):

Ruling:

The Bankruptcy Appellate Panel (BAP) affirmed a bankruptcy court's denial without prejudice of an unsecured creditor's motion for stay relief (Motion) for failure to properly serve the Motion on the top 20 unsecured creditors. Although the secured creditor mailed the Motion to the top 20 unsecured creditors, the BAP held that service was improper because the Motion was not sent to the attention of “an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process” of the top 20 unsecured creditors under 7004(b)(3). The BAP reasoned that, because motions for stay relief are contested matters under Federal Rule of Bankruptcy Procedure (Rule) 9014, they must be served in accordance with Rule 9014.

Procedural context:

A secured creditor filed a motion for stay relief against a single asset real estate debtor under § 362(d)(3). The bankruptcy court denied stay relief without prejudice for two reasons: (i) the secured creditor failed to properly serve the motion on the top 20 unsecured creditors; and (ii) the debtor made a payment to the secured creditor as required by § 362(d)(3)(B). The secured creditor appealed to the Bankruptcy Appellate Panel.

Facts:

A secured creditor filed a motion for stay relief against a single asset real estate debtor under § 362(d)(3) for failure to file a plan or commencement payments within 90 days after the entry of the order for relief. The secured creditor mailed the Motion to the debtor, its attorney, the United States Trustee, Internal Revenue Service, local county tax assessor, and the top 20 unsecured creditors listed by the debtor. The proof of service to the motion did not indicate that the Motion had been served to the attention of an officer, a managing or general agent, or any other agent of the top 20 unsecured creditors. While the debtor did not make a payment to the secured creditor from its bank account, an affiliate of the debtor had made a payment to the secured creditor by check with a letter that referenced the debtor’s bankruptcy case number. In response to the Motion, the debtor took the position that the check was made on behalf of the debtor and satisfied its obligations under § 362(d)(3)(B) and that the secured creditor failed to properly serve the Motion on the top 20 unsecured creditors. The bankruptcy court agreed, and the secured creditor appealed to the BAP.

Judge(s):

Dunn, Kirscher, Taylor

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!