Jointly Administered Under Case No. 04-00757-W11.United States Bankruptcy Court, E.D. Washington.
June 9, 2004
Barry W. Davidson, Davidson Medeiros, Spokane, Washington, and Bruce W. Leaverton, Mary Jo Heston, Susan Brye Jahnke, Lane Powell Spears Lubersky LLP, Seattle, WA, Attorneys for Metropolitan Mortgage Securities Co., Inc. Debtor and Debtor-in-Possession.
Doug B. Marks, Ford Elsaesser, Bruce A. Anderson, Elsaesser Jarzabek Anderson Marks, Elliot McHugh, Chtd., Sandpoint, Idaho, and Jeffrey T. Wegner, John J. Jolley, Jr. Kutak Rock LLP, Omaha, Nebraska, Attorneys for Summit Securities, Inc., Debtor and Debtor-in-Possession.
KARR TUTTLE CAMPBELL, Diana K. Carey, Seattle, WA, Attorneys for Old West Annuity Life Insurance Company.
MURPHY, BANTZ BURY, P.S. John F. Bury, Spokane, WA, Attorneys for Russell L. Johnson.
NAPA COUNTY COUNSEL, Krishan Chopra, Napa, CA, Attorneys for County of Napa.
ORDER AUTHORIZING SALE OF CERTAIN REAL PROPERTY BY SUMMIT SECURITIES, INC. TO SVC-NAPA L.P. FREE AND CLEAR OF LIENS, CLAIMS AND INTERESTS AND APPROVING PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS AND SHORTENING TIME TO OBJECT
PATRICIA WILLIAMS, Chief Judge, Bankruptcy
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THIS MATTER having been heard on the Motion for Order Authorizing Sale of Certain Real Property by Summit Securities, Inc. to SVC-Napa L.P. Free and Clear of Liens, Claims and Interests and Approving Purchase Agreement and Escrow Agreement and Shortening Time to Object (Doc. No. 670) (the “Motion”) filed by Summit Securities, Inc. (“Summit”) on May 3, 2004; due and adequate notice of the Motion and the sale provided for therein (the “Sale”) having been given to all parties entitled thereto; and the Court having jurisdiction over both the subject matter of and the parties to the Motion and finding that this matter is a core proceeding and the Court being fully advised in the premises,
THE COURT HEREBY FINDS that:
A. The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Fed.R.Bankr.P. 7052, made applicable to this proceeding pursuant to Fed.R.Bankr.P. 9014.
B. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.
C. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Motion.
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D. Notice of the Motion has been given in accordance with sections 102(1) and 363 of the Bankruptcy Code, Fed.R.Bankr.P. 2002, 6004, 9007 and 9014, the local rules of the Court, and the Agreement. The foregoing notice constitutes good and sufficient notice of the Motion, and no other or further notice of the Motion or the entry of this Order need be given.
E. A reasonable opportunity has been afforded any interested party to object and be heard regarding the Motion.
F. Sound business reasons exist for Summit’s sale of the Real Property pursuant to the Agreement. Entry into the Agreement and consummation of the transactions contemplated thereby constitute the exercise by Summit of sound business judgment and such acts are in the best interests of Summit, its estate and its creditors.
G. The consideration to be realized by Summit’s estate pursuant to the Agreement is fair and reasonable.
H. The Agreement and the transactions contemplated by the Agreement were negotiated and have been and are undertaken by Summit and SVC-Napa L.P. (the “Buyer”) at arm’s length, without collusion and in good faith within the meaning of section 363(m) of the Bankruptcy Code. As a result of the foregoing,
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Summit and the Buyer are entitled to the protections of section 363(m) of the Bankruptcy Code with respect to all aspects of the Agreement.
I. The purchase price under the Agreement is fair and reasonable and is sufficient value for the Real Property. A sale of the Real Property other than one free and clear of liens, claims and encumbrances would impact materially and adversely on Summit’s bankruptcy estate, will yield substantially less value for Summit’s estate, with less certainty than the available alternatives and thus the alternative would be of substantially less benefit to the estate of Summit. Therefore, the sale contemplated by the Agreement is in the best interests of Summit and its estate, creditors and other parties in interest.
J. Summit will be acting in good faith pursuant to section 363(m) of the Bankruptcy Code in closing the transaction contemplated by the Agreement at any time or after the entry of this Order and cause has been shown as to why this Order should not be subject to the stay provided in Fed.R.Bankr.P. 6004(g).
K. The sale of the Real Property outside of a plan of reorganization pursuant to the Agreement neither impermissibly restructures the rights of Summit’s creditors nor impermissibly dictates the terms of a liquidating plan of reorganization for Summit.
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For all of the foregoing reasons and after due deliberation, the Court ORDERS, ADJUDGES, AND DECREES THAT:
1. All objections and responses, if any, concerning the Motion have been withdrawn, are overruled and denied or are resolved pursuant to the terms of this Order.
2. The Motion, the Agreement, and the transactions contemplated thereby are hereby approved.
3. Pursuant to section 363(b) of the Bankruptcy Code, Summit is authorized to sell the Real Property to the Buyer upon the terms and subject to the conditions set forth in the Agreement.
4. Summit is hereby authorized to execute and deliver any and all documents and instruments as may be required to effectuate the terms of the Agreement, the transactions contemplated thereby and this Order. Summit and each other person having duties or responsibilities under the Agreement, any agreements related thereto or this Order, and their respective directors, officers, general partners, agents, representatives, and attorneys, are authorized and empowered — subject to the terms and conditions contained in the Agreement — to carry out all of the provisions of the Agreement and any related agreements; to issue execute, deliver, file and record, as appropriate, the documents evidencing and
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consummating the Agreement, and any related agreements; to take any and all actions contemplated by the Agreement, any related agreements or this Order; and to issue, execute, deliver, file and record, as appropriate, such other contracts, instruments, releases, deeds, bills of sale, assignments, or other agreements or documents and to perform such other acts and execute and deliver such other documents, as are consistent with, and necessary or appropriate to implement, effectuate and consummate, the Agreement, any related agreements and this Order and the transactions contemplated thereby and hereby, all without further application to, or order of, the Court or further action by their respective directors, stockholders, or partners, and with like effect as if such actions had been taken by unanimous action of the respective directors, stockholders, and partners of such entities. Summit shall be, and hereby is, authorized to certify or attest to any of the foregoing actions (but no such certification or attestation shall be required to make any such action valid, binding and enforceable). The execution of any such document or the taking of any such action shall be, and hereby is, deemed conclusive evidence of the authority of such person to so act. Without limiting the generality of the foregoing, this order shall constitute all approvals and consents, if any, required by the corporation laws of the State of Idaho and all other applicable business corporation, trust, and other laws of the applicable governmental units
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with respect to the implementation and consummation of the Agreement, any related agreements and this Order, and the transactions contemplated thereby and hereby.
5. Provided that the outstanding real estate taxes assessed against the Real Property that are due and owing to the County of Napa, California are paid in full to the Napa County Treasurer as set forth in paragraph 19(a) of this Order, the sale of the Real Property to the Buyer shall be free and clear of liens and all other claims whatsoever pursuant to section 363(f) of the Bankruptcy Code, including the lien of Old West, and the Buyer shall not be liable in any way (as a successor to Summit or otherwise) for any claims that any of the foregoing or any third party may have against Summit or the Real Property. Any and all alleged liens and claims on such Real Property shall be transferred, affixed and attached to the proceeds of such sale (the “Sale Proceeds”), with the same validity, priority, force and effect as such liens had been upon the Real Property immediately prior to the closing.
6. Subject to the closing and the payment by the Buyer to Summit of the consideration provided for in the Agreement, effective as provided in the Agreement, the sale of the Real Property by Summit to the Buyer shall constitute a legal, valid and effective transfer of the Real Property and shall vest the Buyer with
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all right, title and interest of Summit in and to the Real Property, free and clear of all liens pursuant to section 363(f) of the Bankruptcy Code.
7. The sale of the Real Property to the Buyer under the Agreement will constitute a transfer for reasonably equivalent value and fair consideration under the Bankruptcy Code and the laws of the State of California. The transfer of the Real Property by Summit to the Buyer is a legal, valid and effective transfer of the Real Property notwithstanding any requirement for approval of consent of any person.
8. The Buyer is hereby granted and entitled to the protections provided to a good-faith purchaser under section 363(m) of the Bankruptcy Code. Furthermore, the proposed sale is not subject to avoidance under 11 USC 363(n).
9. The Buyer has not assumed or otherwise become obligated, as a successor or otherwise, pursuant to the Agreement, for any of Summit’s liabilities, debts or obligations.
10. Pursuant to Fed.R.Bankr.P. 7062, the Order shall be effective and enforceable immediately upon entry and its provisions shall be self-executing.
11. This Court shall retain exclusive jurisdiction through the earlier of dismissal or closing of this case to interpret and enforce the provisions of this Agreement and this Order in all respects and further to hear and determine all matters arising from the construction or implementation of this Order or the
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Agreement and any and al disputes between Summit and/or the Buyer, as the case may be, and any party other than Summit that is a party to, among other things, any contract affecting the Real Property which remains valid and enforceable after the closing date; provided, however, that in the event the Court abstains from exercising or declines to exercise such jurisdiction or is without jurisdiction with respect to the Agreement or this Order, such abstention, refusal or lack of jurisdiction shall have no effect upon, and shall not control, prohibit, or limit the exercise of jurisdiction of any other court having competent jurisdiction with respect to any such matter.
12. The provisions of this Order are non-severable and mutually dependent. Nothing contained in any plan of reorganization confirmed in this case or in any order confirming such plan shall conflict with the provisions of the Agreement.
13. This Order shall inure to the benefit of the Buyer, Summit and their respective successors and assigns, including but not limited to any successor chapter 11 or chapter 7 trustee that may be appointed in Summit’s bankruptcy case and shall be binding upon any trustee, party, entity or other fiduciary that may be appointed in connection with this case or any other or further cases involving Summit, whether under chapter 7 or chapter 11 of the Bankruptcy Code.
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14. Pursuant to Fed.R.Bankr.P. 6004(g), this Order shall not be stayed, and Summit and the Buyer are free to close under the Agreement at any time.
15. The Agreement and any related agreements may be modified, amended or supplemented by agreement of Summit and the Buyer without further action of the Court; provided that any such modification, amendment or supplement is not material and substantially conforms to and effectuates the Agreement.
16. The failure specifically to include any particular provisions of the Agreement in this Order shall not diminish or impair the efficacy of such provisions, it being the intent of the Court that the Agreement be authorized and approved in its entirety.
17. All entities who on the date of closing may be in possession of some or all of the Real Property are hereby directed to surrender possession of said Real Property to the Buyer on the date of closing.
18. All amounts, if any, to be paid by Summit pursuant to the Agreement constitute administrative expenses under sections 03(b) and 507(a)(1) of the Bankruptcy Code and are immediately payable if and when such obligations arise under the Agreement.
19. The Sale Proceeds shall be distributed as follows:
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a. The County of Napa, California holds a first and paramount lien against the Real Property in the amount of $10,052.41 for unpaid real estate taxes for Napa County Assessor’s Parcel Nos. 046-620-008 and 046-620-009 (the “Real Estate Tax Claim”). The Sale Proceeds shall be first used to pay the Real Estate Tax Claim prior to any other distribution of the Sale Proceeds and Summit is hereby directed to pay the Real Estate Tax Claim from the Sale Proceeds.
b. After payment of the Real Estate Tax Claim, the Sale Proceeds shall be used to pay any costs or expenses of the closing of the sale of the Real Property that Summit is responsible for paying pursuant to the terms of the Agreement.
c. An amount of the Sale Proceeds equal to two percent (2%) of the gross purchase price to be paid by the Buyer to Summit pursuant to the Agreement (the “Holdback”) shall be deposited into the registry of this Court pending further order of this Court. Old West asserts an interest in the Holdback pursuant to the Old West Note and the Old West Deed of Trust. Russell L. Johnson (“Johnson”) asserts an interest in the Holdback pursuant to an Employee Compensation Structure Agreement dated August 15, 2003. Summit agrees that the Holdback should be distributed to either Old West orPage 12
Johnson pending final resolution of the competing claims to the Holdback. The Court shall conduct a hearing on the competing claims to the Holdback. Nothing contained in this Order shall prejudice the claims of Old West and Johnson to the Holdback, nor prejudice any defenses, cross-claims or counterclaims of Old West or Johnson.
d. The remainder of the Sale Proceeds shall be distributed to Old West and shall reduce Summit’s obligation to Old West under the Old West Note in a like amount.