In re Malkus, Inc.
United States Bankruptcy Court for the Middle District of Florida
2004 WL 3202212 (2004)
Charles Malkus (Malkus) and his wife owned and operated Malkus, Inc. (debtor). Malkus operated a motel. The motel was terminated from one franchise agreement and received a very low quality rating from its current franchisor. In 1998, Malkus obtained a first mortgage held by LaSalle. In 2000, Malkus obtained a second mortgage from First Community Bank despite restrictions in the LaSalle note prohibiting junior financing. Malkus defaulted on the LaSalle note in October 2002, and LaSalle began foreclosure in February 2003. Malkus filed for reorganization under chapter 11 of the bankruptcy code in July 2003, on the same day as the foreclosure’s summary judgment proceeding. Following the petition, Malkus and LaSalle entered into a stipulation agreement. The stipulation agreement included a budget for the motel. Under the agreement, Malkus had to pay its net cash to LaSalle monthly and meet other financial requirements. Malkus failed to operate within the stipulated budget, failed to meet its other financial requirements, and failed to deliver payments to LaSalle. The court entered an order requiring Malkus to comply with the stipulation, and Malkus failed to do so. Malkus entered a proposed reorganization plan. Creditors objected, arguing that the plan was not feasible under § 1129(a)(11).
Rule of Law
Holding and Reasoning (Proctor, J.)
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