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This document is a motion filed in bankruptcy court by Kenneth Pasternak seeking relief from the automatic stay or adequate protection regarding loans made to debtor VWP, Inc. Pasternak holds two mortgage loans secured by VWP's real properties that have been in default since July 2011. The motion details the loan amounts and terms, VWP's failure to make any payments or pay taxes, and argues that cause exists to lift the stay due to lack of adequate protection and that the case appears to be a two-party dispute that is best resolved in state foreclosure actions. It also questions whether the property valuations in VWP's application to a FEMA flood relief program are realistic.
This document is a motion filed in bankruptcy court by Kenneth Pasternak seeking relief from the automatic stay or adequate protection regarding loans made to debtor VWP, Inc. Pasternak holds two mortgage loans secured by VWP's real properties that have been in default since July 2011. The motion details the loan amounts and terms, VWP's failure to make any payments or pay taxes, and argues that cause exists to lift the stay due to lack of adequate protection and that the case appears to be a two-party dispute that is best resolved in state foreclosure actions. It also questions whether the property valuations in VWP's application to a FEMA flood relief program are realistic.
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This document is a motion filed in bankruptcy court by Kenneth Pasternak seeking relief from the automatic stay or adequate protection regarding loans made to debtor VWP, Inc. Pasternak holds two mortgage loans secured by VWP's real properties that have been in default since July 2011. The motion details the loan amounts and terms, VWP's failure to make any payments or pay taxes, and argues that cause exists to lift the stay due to lack of adequate protection and that the case appears to be a two-party dispute that is best resolved in state foreclosure actions. It also questions whether the property valuations in VWP's application to a FEMA flood relief program are realistic.
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Attribution Non-Commercial (BY-NC)
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Descărcați ca PDF, TXT sau citiți online pe Scribd
Place of Hearing: Utica UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF NEW YORK ______________________________________
In re:
VWP, INC., Chapter 11 Case No. 13-60282
Debtor. ______________________________________
MOTION FOR RELIEF FROM THE AUTOMATIC STAY OR, IN THE ALTERNATIVE, ADEQUATE PROTECTION
Secured Creditor Kenneth Pasternak, through his attorneys Lemery Greisler LLC, as and for his motion for relief from the automatic stay pursuant to 11 U.S.C. 362 (d) (1) and (2) or, in the alternative, for adequate protection pursuant to 11 U.S.C. 361 respectfully states as follows: The Parties 1. Debtor VWP, nc. ("Debtor or VWP) filed its voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in this Court on February 26, 2013. 2. Debtor is a debtor in possession with no trustee or examiner having been appointed in its case 3. Kenneth Pasternak ("Pasternak) is, as more particularly described below, a secured creditor of the Debtor holding duly perfected mortgage liens on all of Debtor's real property. Jurisdiction 4. The Court has jurisdiction over this case and this motion, which is a core proceeding, pursuant to 28 U.S.C. 157 (b) (2) (G) and 28 U.S.C. 1334. !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 1 of 8 Summary of Relief Requested 5. This motion seeks relief from the automatic stay pursuant to 11 U.S.C> 362 (d) (1) for cause because Pasternak's security interests are not adequately protected and for other cause. 6. Debtor has not made any payments since defaulting in July 2011. 7. Upon information and belief, Debtor is in arrears in payment, although its schedules do not reveal as such, of real property taxes. 8. Indeed, to protect his interest and in the public interest, Pasternak advanced other tax payments to the taxing authorities. 9. Debtor has not made any offer of adequate protection to Pasternak. 10. This case is, literally, a two party dispute with the Debtor having not listed any other creditors aside from Pasternak. 11. As detailed below, other facts show that this Debtor should not be given the benefit of the automatic stay. 12. Further, the Debtor is not engaged in business and has no business to reorganize. Therefore, relief under 11 U.S.C. 362 (d) (2) is also appropriate. The Secured Claim 13. Pasternak is the owner and holder of two separate mortgage loans that encumber the real property set forth at Schedule A of the Debtor's Petition, 102 Depot Street and 717 Wagner Avenue, both in the Town of Middletown, Village of Fleischmanns, County of Delaware. 14. As a result of defaults which occurred in no later than July, 2011, Pasternak commenced two separate state court foreclosure actions which are pending before Supreme Court, Delaware County. 15. The mortgage loans are evidenced by the following loan documents: !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 2 of 8 Loan 1 102 Depot Street a. A Promissory Note Dated May 18, 2007 in the original principal amount of $600,000.00 ("Note 1) executed and delivered by Debtor as Borrower and Debtor's principal William Hrazanek as Guarantor. Exhibit "A. b. The unpaid principal balance due on Note 1, which was intended to be a short term loan, was due and payable in full on December 1, 2009. c. Interest accrues on the unpaid principal balance at 13% per annum. d. Late charges are also allowed under the mortgage of 2% of the overdue payment. e. Note 1 was secured by a Mortgage dated May 18, 2007 in the original principal amount of $600,000.00, with interest, which was recorded in the Delaware County Clerk's Office on June 1, 2007 at Liber of Mortgages 1454, Page 1. Exhibit "B. f. Note 1 was further secured by an Absolute Assignment of Rents and Leases dated May 18, 2007 which was also recorded in the Delaware County Clerk's Office on June 1, 2007 in Liber of Deeds 117, Page 127. Exhibit "C. g. A UCC -1 financing statement was also filed against the mortgaged premises on June 1, 2007 in the Delaware County Clerk's Office at index no. 07-000142. Exhibit "D. h. As of the date of filing of this case, February 26, 2013, the following amounts were due and owing on Note 1: principal $600,000.00; interest $130,000.00; late charges $17,070.00; tax advances $18,393.45; interest on tax advances of $1,839.35; legal fees of !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 3 of 8 $7,000.00 and late charges on tax advances of $367.87, for a total of $767,670.66. i. The loan documents also provide for reimbursement of Pasternak's costs of collection, including attorney's fees. Loan 2 717 Wagner Avenue j. Note and Mortgage dated October 27, 2008 in the original principal amount of $60,000.00 executed and delivered by Debtor to Pasternak and recorded in the Delaware County Clerk's Office on October 31, 2008 as Document No. 42811. Exhibit "E. k. Note and Mortgage dated March 15, 2010 in the original principal amount of $115,000.00 executed and delivered by Debtor to Pasternak and recorded in the Delaware County Clerk's Office on March 26, 2010 as Document No. 93762. Exhibit "F. l. The two Notes and Mortgages recited above, were consolidated, extended and modified by a Consolidation, Extension and Modification Agreement dated March 15, 2010 into a Consolidated Note and Mortgage dated March 15, 2010 in the original principal amount of $175,000.00 (collectively "Note 2) all of which were recorded in the Delaware County Clerk's Office on March 26, 2010 as Document No 93763. Exhibit "G. m. Loan 2 matures on April 1, 2013. n. Interest on the principal balance accrues at 10% per annum. o. Late charges accrue at the rate of 2% of the amount of each overdue payment. !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 4 of 8 p. As of the date of filing of this case, February 26, 2013, the following amounts were due and owing on Note 2: principal $175,000.00; interest $29,251.75; late charges $4,299.50, for a total of $208,551.25. q. The loan documents also provide for reimbursement of Pasternak's costs of collection, including attorney's fees. Relief Requested Stay Relief 16. Pasternak is entitled to relief from the automatic stay pursuant to 11 U.S.C. 362 (d) (1), for cause. 17. Cause in this case includes the following: a. Debtor's failure to pay Loan 1 at maturity and its failure to make any payments on Loan 1 or Loan 2 since June, 2011. b. Debtor's failure to pay real property taxes and, in turn, forcing Pasternak to pay such taxes to protect his interest and in the public interest. c. Debtor's failure to offer any adequate protection to Pasternak upon the filing of this case or since. d. Debtor's failure to provide evidence to Pasternak of adequate insurance on the mortgaged premises. e. In addition, there are other facts showing that this case is not deserving of the protection of the automatic stay: i. As evidenced by the Debtor's own schedules (Exhibit "H), this case is literally a two party dispute that is best resolved in state court in the context of ongoing foreclosure actions. !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 5 of 8 ii. The Debtor's schedules do not reveal that the Debtor has any going business operation to reorganize. It has no employees and no ongoing operations expenses. iii. The statement of financial affairs shows that the Debtor has not had income for more than two years. iv. Debtor's Schedule B shows that the Debtor has no personal property, not even a bank account. f. Under similar circumstances, Courts have found "cause to lift the stay. See In re Kaplan Breslaw Ash, LLC, 264 B.R. 309 (Bankr. S.D.N.Y 2001). g. It appears that the sole purpose in filing this case is an attempt to benefit the insider equity holder, to the prejudice of Pasternak who has not been paid in years, by allowing the Debtor time to apply for and negotiate a purchase of certain of its property under a flood control program administered through the Federal Emergency Management Administration ("FEMA). Exhibit ". h. Delaware County has applied to FEMA for approval of a grant program to purchase certain properties to redress ongoing flood plain issues and to attempt to protect against future flood damage. Notice of the County's application was recently published on February 13, 2013. Exhibit "J. i. Whether FEMA will approve the grant and whether Delaware County will then, in turn, approve Debtor's application, or if approved at the price level Debtor suggests, is speculative at best. !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 6 of 8 j. Debtor indicates in its application under the FEMA program that its property at 102 Depot Street has a fair market value of $1,200,000.00. Exhibit ", Page 54. k. The tax assessment on that property is, however, $291,600.00. Exhibit "K. l. Therefore, in addition to all the other facts constituting "cause, it does not appear that there is, in fact, any equity in the 102 Depot Street property that would benefit the estate and, ultimately its shareholder and that Debtor's hope to realize $1,200,000.00 from the property is a fantasy. m. And, the 717 Wagner Avenue property does not appear to be subject to the FEMA application and therefore the probable justification to be offered by Debtor for continuation of the automatic stay, to sell under the FEMA program, does not exist for that property. n. In any event, any equitable arguments Debtor wishes to make to continue to delay foreclosure can be made to state court. 18. For many of the same reasons, that the Debtor conducts no business, has no business to reorganize and that this case appears to be for the sole benefit of the insider, relief under 11 U.S.C. 362 (d) (2) is also appropriate. 19. Even if the Court were inclined to give this Debtor a chance, there is no reason to not grant limited stay relief to allow the foreclosure to proceed up to the point of sale such that if Debtor is not successful with FEMA after what could be many months, Pasternak could then promptly proceed to notice foreclosure sales. !ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 7 of 8 20. The usual justification for not allowing such relief, ongoing foreclosure would chill the market, does not exist in this case as it appears that Debtor's only hope is the FEMA program which is not a market driven outcome. 21. In balancing the equities, to deny even limited stay relief would seriously prejudice Pasternak who has not received any payments since June 2011, almost two years by the time this motion will be heard, and who would then be delayed several more months in the exercise of his contractual remedies. Adequate Protection 22. In the alternative, should the court not grant stay relief, it is respectfully requested that the Court direct the Debtor to provide adequate protection pursuant to 11 U.S.C. 361 including interest payments, a tax escrow and proof of insurance. WHEREFORE it is respectfully requested that the Court grant relief from the automatic stay or, in the alternative, adequate protection and such other and further relief as may be deemed just, necessary and proper. Dated: March 22, 2013 Respectfully submitted,
LEMERY GREISLER LLC /s/Paul A. Levine, Esq. Paul A. Levine, Esq. Attorney for Secured Creditor Kenneth Pasternak 50 Beaver Street, 2 nd Floor Albany, NY 12207 (518) 433-8800 plevine@lemerygreisler.com
!ase 13-60282-6-dd Doc 14 Filed 03/22/13 Entered 03/22/13 15:07:28 Desc Main Document Page 8 of 8
United States of America On Behalf of Its Agency Internal Revenue Service v. William H. Norton, Carrie W. Norton, F/k/a Carrie A. Woodward, 717 F.2d 767, 3rd Cir. (1983)
United States v. Max Pollack, Formerly D/B/A Max Pollack Co., and Shirley Mestel and Ida Mestel, D/B/A King Holding Company, 370 F.2d 79, 2d Cir. (1966)
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