IN RE: JOHN Q. HAMMONS FALL 2006, LLC

Case Type:
Business
Case Status:
Affirmed
Citation:
KS-16-037 (10th Circuit, Dec 28,2017) Not Published
Tag(s):
Ruling:
Questions of whether an entity is eligible to be a debtor under Bankruptcy Code § 109 or had the proper corporate authorization to file its case are not jurisdictional; accordingly, the bankruptcy court did not err in granting a debtor’s motion to reject an executory contract while a motion to dismiss the case under § 109 was still pending.
Procedural context:
A revocable trust and 71 wholly owned affiliates filed chapter 11 petitions to stay pending litigation relating to the appellant’s right-of-first-refusal (ROFR) to purchase certain real estate at a discount from the debtors. The debtors moved to reject the ROFR as an executory contract. The appellant moved to dismiss the cases arguing that the trust was not a business trust eligible to be a debtor, and that the other debtors did not have proper corporate authorizations to file. Since Appellant conceded that rejection of the ROFR was an exercise in the debtors’ ordinary business judgment, the bakruptcy court concluded that debtor eligibility was not jurisdictional and granted the motion to reject. The appellant appealed the rejection order only.
Facts:
This case raises tackles interesting questions about a bankruptcy court’s ability to administer the case while a motion to dismiss the case is pending. As the BAP observed, “no creditor can be allowed to hold the process hostage by the mere allegation that a debtor does not belong in bankruptcy court.”
Judge(s):
Michael, Romero, and Hall

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