In re San Francisco Industrial Park
United States District Court for the Northern District of California
307 F. Supp. 271 (1969)
- Written by Daniel Clark, JD
Facts
San Francisco Industrial Park, Inc. (SF) (debtor) purchased land on which to develop an industrial park. SF needed approximately $4 million to develop the land, which was worth approximately $2 million. SF entered into financing negotiations with John Hancock Mutual Life Insurance Company (Hancock). The parties negotiated a sale and leaseback transaction. Hancock purchased the land from SF for $1 million and leased it back to SF for 50 years. SF had an option to repurchase the land after 25 years. Additionally, Hancock extended $3 million in construction loans to SF. After approximately eight years, SF filed for bankruptcy in violation of its lease agreement with Hancock. At the bankruptcy court, SF sought a judgment that the purported sale and leaseback transaction with Hancock was actually a mortgage. SF argued to the bankruptcy referee that SF’s president never intended to sell the property but merely to secure construction financing. The referee ruled that the transaction was a sale and a leaseback, as purported, and not a mortgage. SF sought review of the referee’s decision.
Rule of Law
Issue
Holding and Reasoning (Levin, J.)
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