You are here

In re: Novus Structures, Inc.

23 B 06723
Lender asked the court to excuse a state court receiver from compliance with its obligation to turn over real property to a chapter 11 debtor.  HELD: Motion denied.  Congress mandated that a custodian of property of the debtor must turn it over at the commencement of a bankruptcy case.  The court has significant latitude to exercise its discretion to excuse that obligation, but the burden is on the Lender to convince the court that it should do so.  The facts of this case do not rise to the level required to flip the statutory presumption.  First, the Lender has other remedies available under the Code, which may be more appropriate.  Allowing the Lender to achieve a similar result under a lesser standard of proof would be contrary to the purposes of chapter 11.  Second, an “abstention” from turnover would render the Debtor unable to pursue a reorganization for the benefit of all creditors.  Finally, the judicially-created factors for analyzing a motion to excuse compliance weigh in favor of denying the Lender’s motion.  For all of these reasons, the Receiver should not be excused from his turnover obligation.

Monday, September 11, 2023