COEPTIS EQUITY FUND LLC V. GINA KLUMP (IN RE COEPTIS EQUITY FUND LLC)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 1 year 11 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- No. 23-60003 (9th Circuit, Mar 15,2024) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Ninth Circuit held a bankruptcy court did not abuse its discretion in approving compensation for a Subchapter V Trustee over a debtor’s objection for work performed (a) after removing the debtor from possession, (b) to convert the case to chapter 7, and (c) to sell estate property, as (i) the sales were “reasonably likely to benefit the debtor’s estate” under 11 U.S.C. § 330(a)(4)(A)(ii)(I), and (b) secured creditors moved for stay relief to foreclose or advised they would do so, and the debtor offered no evidence a sale was unnecessary.
- Procedural context:
- The Bankruptcy Appellate Panel for the Ninth Circuit, hearing Debtor's appeal in the first instance. addressed Debtor's arguments in one opinion as to whether the bankruptcy court erred in (a) removing Debtor from possession, (b) granting a motion to convert the case to chapter 7, and (c) awarding compensation to the Subchapter V Trustee. The Ninth Circuit entered two opinions on March 15, 2024. One opinion affirmed the bankruptcy court's rulings on removing debtor from possession and granting the motion to convert. The second opinion (the one summarized here) built off the first in addressing whether the bankruptcy court abused its discretion in awarding fees to the Subchapter V Trustee under 11 U.S.C. § 330(a)(3-4).
- Facts:
- Debtor Coeptis Equity Fund LLC filed a petition for relief under chapter 11 in the U.S. Bankruptcy Court for the Northern District of California, electing to proceed under subchapter V. The U.S. Trustee appointed a Subchapter V Trustee. The bankruptcy court later found Debtor should be removed as a debtor in possession under 11 U.S.C. § 1185(a) and granted the Subchapter V Trustee authority to operate Debtor's business under 11 U.S.C. § 1183(b)(5). The Subchapter V Trustee ultimately moved to convert the case to chapter 7, and the court granted the motion. When the Subchapter V Trustee sought approval of compensation, Debtor objected. Debtor contended it should not have been removed as the debtor in possession and the case should not have been converted to chapter 7, and thus no compensation should be awarded for related work. Debtor also argued the Subchapter V Trustee should not receive compensation for selling two parcels of estate property. Debtor contended one parcel could have been sold for a higher price and "there was 'no good reason'" to sell the other parcel. After a hearing, the bankruptcy court approved compensation to the Subchapter V Trustee. Debtor appealed to the Bankruptcy Appellate Panel for the Ninth Circuit, which affirmed. Debtor filed a second appeal to the Ninth Circuit.
- Judge(s):
- S. THOMAS, MCKEOWN, and CHRISTEN
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