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What is the mechanism for Ch 11 Debtor to pay small consumer deposit claim preconfirmation?
charsetndows-1252
It could have been a first day motion issue, ie continue tenant relations and rentais in the ordinary course of business, including new tenant leases, evictions, return of security deposits, cash for keys, repairs, repainting, etc, all for the purpose of maintaining the collateral value and rental stream, notwithstanding it may be a little out of the strict chapter 11 rules. It's probably not too late to make that motion, and it may save you some work later on. Although probably hard to argue, as you would ordinarily do on the first day, that it is urgent.
Jason
Jason Wallach
jwallach@gladstonemichel.com
On Nov 14, 2011, at 5:28 PM, Alik Segal wrote:
> The chapter 11 case is in early stages--the disclosure statement and plan have not been filed yet. The debtor operates an apartment building and is holding three security deposits that were due to be returned prepetition. This involves three individuals with a $600 grand total of deposits. The debtor has been in chapter 11 for 3 months and it might be another 4 months before the plan is confirmed. The sum total of consumer deposits is tiny compared to Debtor's other debts or its operating budget, and individuals likely need the money. Debtor's management wishes to return the deposits to individuals before the effective date of the plan.
>
>
> Debtors frequently make "critical vendor" motion to pay critical vendors before the plan is confirmed, but that approach does not fit here.
> First, there is no expectation of repeat business from these tenants who have moved out.
> Second, the motivation to return the deposits before the plan's effective date is humanitarian (intended to benefit the individual consumers) rather than commercial (intended to benefit the debtor).
> Third, the cost of making the motion will exceed the amount to be refunded to the consumers
> What is the right approach here?
>
> --
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
>
charsetndows-1252
It could have been a first day motion issue, ie continue tenant relations and rentais in the ordinary course of business, including new tenant leases, evictions, return of security deposits, cash for keys, repairs, repainting, etc, all for the purpose of maintaining the collateral value and rental stream, notwithstanding it may be a little out of the strict chapter 11 rules. It's probably not too late to make that motion, and it may save you some work later on. Although probably hard to argue, as you would ordinarily do on the first day, that it is urgent.Jason
Jason Wallach
The post was migrated from Yahoo.