Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 1 of 28 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION www.flmb.uscourts.gov In re: HOPEWELL BUSINESS CENTER, LLC HOPEWELL ENTERPRISES, LLC Debtors. Case No. 8:14-bk-07040-CPM Case No. 8-14-bk-07041-CPM Chapter 11 Jointly Administered Under Case No. 8:14-bk-07040-CPM / DEBTORS MOTION FOR ORDER AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THEIR ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, AND ENCUMBRANCES PURSUANT TO 11 U.S.C. 363, 1123, AND 1129 PLEASE TAKE NOTICE that a hearing on this motion has been scheduled for December 15, 2014 at 4:30 p.m., in Courtroom 8B, Sam M. Gibbons United States Courthouse, 801 N. Florida Ave., Tampa, Florida 33602, before the Honorable Catherine Peek McEwen, United States Bankruptcy Judge. HOPEWELL BUSINESS CENTER, LLC ( Business Center ) and HOPEWELL ENTERPRISES, LLC ( Enterprises ), as debtors and debtors in possession (collectively, the Debtors ), by and through their undersigned attorneys, respectfully request the entry of an order authorizing the sale of the Property (defined below) to the Purchaser (defined below) in accordance with the terms of the Plan (defined below) and the Purchase Agreement (defined below), free and clear of any and all liens, claims, and encumbrances pursuant to 11 U.S.C. 363, 1123, and 1129. In support of this motion (the Motion ), the Debtors respectfully represent as follows:
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 2 of 28 Jurisdiction and Venue 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334. The subject matter of this Motion is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper in this district pursuant to 28 U.S.C. 1408. The statutory predicates for the relief sought in this Motion include 11 U.S.C. 105, 363, 365, 1107, 1108, 1123, and 1129 and Rules 2002 and 6004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). Background 2. On June 18, 2014 (the Petition Date ), the Debtors filed their Voluntary Petitions for Relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ). 3. The cases are currently being jointly administered. 4. The Debtors continue to manage their properties and operate their businesses as debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. 5. Together, the Debtors own approximately 500 contiguous acres of real property (including all applicable related contract rights, development rights, and permits, the Property ) in Hillsborough County, Florida. Business Center rents out 50 acres to Borchard Farms, which grows strawberries and other fruits and vegetables. Enterprises rents out 450 acres as greenbelt land for cattle grazing. The Property is best described as consisting of three parcels that are illustrated in Exhibit A. 6. The Debtors have determined that it would be in the best interests of their creditors and the estates to maximize value through a sale of the Property pursuant to Section 363 of the Bankruptcy Code. In connection with the proposed transaction, the Debtors filed: (i) a motion to approve procedures for the submission and consideration of bids ( Bid Procedures ); 2
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 3 of 28 and (ii) an amended plan of liquidation dated November 25, 2014 (Doc. No. 89) (the Plan ), which provides for the sale of the Property, and the distribution of the sale proceeds to creditors. At a hearing held on November 25, 2014, the Court approved the Bid Procedures. The Court entered the order approving the Bid Procedures (the Bid Procedures Order ) on November 26, 2014 (Doc. No. 94). 7. CenterState Bank ( CenterState ) asserts a first priority mortgage on the Property, as security for an indebtedness in the approximate amount of $2.4 million. In addition, C1 Bank asserts a junior lien on the Property, as security for a loan made to Trucks E-Quip, Inc., a related non-debtor, with a current balance of approximately $1.05 million As of the date of this Motion, the Court has not made any determination as to the extent, validity, priority, or perfection of any security interest asserted by CenterState, or any other party. Relief Requested 8. The Debtors and Sam Astin, III (the Purchaser ) entered into that certain Agreement for Purchase and Sale of Property (the Purchase Agreement ), which provides for the sale by the Debtor, and the purchase by the Purchaser, of the Property, for a price in the amount of $2,460,000.00, plus a buyer s premium of three percent (3%). A copy of the Purchase Agreement is attached hereto as Exhibit B. The Purchaser is not an insider or otherwise related to the Debtors in any manner. 9. The Debtors respectfully request the entry of an order authorizing the sale of the Property to the Purchaser, or the bidder with the highest and best offer, as determined at the auction scheduled for December 11, 2014 at 11:00 a.m. (the Auction ), on the terms set forth in the Plan, the Bid Procedures Order, and the Purchase Agreement, free and clear of any and all claims (including claims as defined in Section 101(5) of the Bankruptcy Code), mortgages, 3
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 4 of 28 pledges, liens, security interests, interests, charges, encumbrances, setoffs, recoupments, cure claims, liabilities, debts, indebtedness, costs, damages, judgments or obligations of any character whatsoever and whenever arising, either before or after the Petition Date 1 (collectively, the Encumbrances ) pursuant to Sections 363, 1123, and 1129 of the Bankruptcy Code, Bankruptcy Rule 6004, and an order of this Court granting this motion (the Sale Order ). The Encumbrances of any creditors or claimants of any kind whatsoever will attach to the sale proceeds to the same extent, validity, and priority as existed on the Property as of the Petition Date. 10. Section 363(b)(1) states that the trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). Courts usually defer to the business judgment of a debtor in deciding whether or not to authorize a debtor to sell property outside the ordinary course of business. See e.g., In re Continental Airlines, Inc., 780 F.2d 1223 (5th Cir. 1986); In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983); In re Mason s Nursing Center, Inc., 73 E.R. 360, 362 (Bankr. S.D. Fla. 1987). In considering whether a debtor is justified in selling assets outside the ordinary course of business, courts consider four factors: (1) whether there is a sound business reason justifying the sale; (2) whether adequate and reasonable notice of the sale was provided to interested parties; (3) whether the sale has been negotiated in good faith; and (4) whether the purchase price is fair and reasonable. 11. The Debtors, through the exercise of their business judgment, have determined that the sale of the Property is in the best interests of the Debtors, their estates, and all creditors. Indeed, the Auction and the Bid Procedures will ensure that the price is fair and reasonable. 1 All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement. 4
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 5 of 28 Moreover, the sale proceeds will pay allowed claims in accordance with their respective priorities, as more particularly set forth in the Plan. 12. Section 363(f) of the Bankruptcy Code authorizes the sale of the Property free and clear of all Encumbrances if: 11 U.S.C. 363(f) (1) (5). 1) Applicable non-bankruptcy law permits a sale of such property free and clear of such interests; 2) Such entity consents; 3) Such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; 4) Such interest is in bona fide dispute; or 5) Such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 13. The Debtors have given notice of the Bid Procedures to all persons or entities with actual, apparent, or alleged liens on the Property. The Debtors have authority to sell the Property free and clear of liens pursuant to, inter alia, Section 363(f)(5) of the Bankruptcy Code. In addition, consistent with Section 363(e) of the Bankruptcy Code, all asserted liens shall attach to the sale proceeds to the same extent, validity, and priority as existed on the Property on the Petition Date. Accordingly, any asserted lien claimant is adequately protected. 14. The Property will be sold and transferred under a plan confirmed under Section 1129 of the Bankruptcy Code. Therefore, the Debtors request, pursuant to Section 1146(a) of the Bankruptcy Code, that the making or delivery of an instrument or instruments of transfer, any or all of which include the vesting, transfer and/or the sale of any real or personal property or any direct or indirect interest therein, including, without limitation, all documents relating to or referred to in the Purchase Agreement, not be taxed under any law imposing any recording, 5
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 6 of 28 registration, transfer or stamp tax or fee, or any similar tax or fee, including any applicable transfer taxes or fees, sales taxes, or mortgage recording taxes or fees. The Debtors further request that all federal, state and local governmental agencies or departments be directed to accept and abide by the terms of the transfer tax exemption as set forth herein in connection with any transfer of the Property, including accepting any and all documents and instruments necessary and appropriate to consummate the transactions contemplated by the Purchase Agreement. 15. The Property is being sold pursuant to arm s length, good faith negotiations and the competing bid process pursuant to the Bid Procedures Order. Therefore, the Debtors request that the Sale Order contain findings of fact and conclusions of law that the sale is not avoidable pursuant to Section 363(n) of the Bankruptcy Code, and that the Purchaser, or other highest and best bidder, is entitled to the protections under Section 363(m) of the Bankruptcy Code. Notice 16. A copy of this Motion with attached Exhibits is being served on all creditors and parties in interest, as set forth on the attached matrix. Accordingly, the Debtors request that the Court enter an order finding that such notice is adequate and sufficient and complies with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules of this Court. 17. At the hearing on this Motion, the Debtors will request that the Court enter an order waiving the 14-day stay set forth in Bankruptcy Rule 6004(g) and providing that the order granting this Motion be immediately enforceable and that the closing under the Plan and the Purchase Agreement may occur immediately. 6
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 7 of 28 WHEREFORE, the Debtors respectfully request entry of an order granting the relief requested herein, and providing such other and further relief as is just and proper. Dated: December 1, 2014 /s/ Edward J. Peterson, III Edward J. Peterson, III Florida Bar No. 0014612 Michael J. Hooi Florida Bar No. 65377 Stichter Riedel Blain & Prosser, P.A. 110 East Madison Street, Suite 200 Tampa, Florida 33602 (813) 229-0144 Phone (813) 229-1811 Fax epeterson@srbp.com mhooi@srbp.com Attorneys for Debtors 7
Case 8:14-bk-07040-CPM Doc 101 Filed 12/01/14 Page 8 of 28 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Debtors Motion for Order Authorizing the Sale of Substantially All of its Assets Free and Clear of All Liens, Claims, and Encumbrances Pursuant to 11 U.S.C. 363, 1123, and 1129 has been furnished on this 1 st day of December, 2014, by either the Court s CM/ECF electronic noticing, overnight mail, or email, to: J. Steven Wilkes, Esquire Office of the U.S. Trustee Via CM/ECF Christian P. George, Esquire Attorney for CenterState Bank Via CM/ECF Ryan Lewis Snyder, Esquire Attorney for C1 Bank ryan@snyderlawgroup.com Via email Eduardo F. Morrell, Esquire Attorney for Purchaser emorrell@morrellpa.com Via email All creditors and parties in interest as set forth on the attached matrix Borchard Farms 13058 Gore Road Dover, FL 33527 Via overnight mail Earlow Costine 8430 Tom Costine Rd. Lakeland, FL 33809 Via overnight mail /s/ Edward J. Peterson, III Edward J. Peterson, III 8
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