Case Type:
Case Status:
BAP No. OR-21-1138-GTB (9th Circuit, Jan 27,2022) Not Published
BAP for 9th Circuit affirmed ruling of bankruptcy court (D. Or.) approving sale pursuant to 11 USC 363.
Procedural context:
Bankruptcy court granted Chapter 7 trustee's motion for approval of sale pursuant to 11 USC 363 over creditor's objection. Creditor appealed to BAP for 9th Circuit.
In December 2018, Dr. Do formed Debtor as a single member LLC to perform chiropractic services. After forming Debtor, he entered into an agreement with Platinum, under which Platinum would provide management and other services to Debtor. The exact nature of the agreement is disputed by the parties. Mr. Golovan asserts that as part of the agreement, he became a minority owner of Debtor and had a right to Dr. Do’s remaining interest in Debtor if he left the practice. Dr. Do contends that he was not obligated to transfer his interest and Mr. Golovan never had an ownership stake in Debtor. Because of the dispute, Debtor informed its patients in October 2019 that it would no longer provide services, and it ceased operations by November 2019. Mr. Golovan alleges that after Debtor ceased operations, Dr. Do continued to collect payments and insurance reimbursements on behalf of Debtor and failed to account for over $200,000 of Debtor’s funds. Dr. Do claims that after Debtor ceased operations, Mr. Golovan attempted to initiate an improper purchase of Dr. Do’s ownership in Debtor, filed documents with state authorities indicating that he was the sole owner of Debtor, and took possession of all Debtor’s property, including patient records. In January 2021, Debtor filed a chapter 7 petition. Debtor’s only scheduled assets consisted of office equipment—repossessed prepetition and having an unknown value—and accounts receivable, which Debtor valued at $0. Debtor included Platinum and Mr. Golovan as unsecured creditors but listed their claims at $0. Debtor also scheduled Mr. Golovan as owner of a 49% interest in Debtor but indicated that the interest was disputed. In April 2021, Trustee file a motion for authority to sell property pursuant to § 363.
Gan, Taylor, Brand

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