25 B 08821
The Debtor owns a non-residential industrial complex located in Chicago that rents space to various entities.  For at least two years its principals used its rental income to fund their personal and outside business interests, while failing to pay its mortgage, tax and insurance obligations. Its mortgagee, Wells Fargo Bank filed a foreclosure case in state court.  At the end of a trial there on the issue of the appointment of a receiver, the Debtor filed this bankruptcy case.  This court allowed the foreclosure case to proceed.  Although the state court appointed a receiver, the bankruptcy case was allowed to proceed; the Debtor remained in possession of its property.

Upon filing of a bankruptcy case receivers are required to deliver to the debtor property it manages.

Wells Fargo Bank filed a motion to excuse the receiver from turning over the property to the Debtor under Bankruptcy Code section 543(d).  After a contested hearing the Bankruptcy Court granted that motion and excused the receiver from turning over the property to the Debtor, finding that the interests of creditors, and the Debtor, would be best served by allowing the receiver to possess and manage the property.

The evidence showed that one of the Debtor’s principals used its funds to establish a bar in Nashville, Tennessee while the bankruptcy case was pending.  The Debtor has no business relationship with that bar.

The Debtor’s principals failed to appear at and participate in a March 2, 2026 hearing where allegations were aired that they continued to spend the Debtor’s funds on personal and outside business interests in violation of a Cash Collateral Order and Budget while the bankruptcy case was pending.