The Legacy Estate Group LLC

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
THE LEGACY ESTATE GROUP, LLC, No. 05-14659
Debtor(s).
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Memorandum on Counter-Motions re Exclusivity
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The debtor has moved the court for an order extending the time in which it has the exclusive right
to propose a plan of reorganization pursuant to § 1121(b) of the Bankruptcy Code. The Creditors’
Committee and the principal secured creditor have filed a joint counter-motion to shorten the exclusivity
period so that they can file a competing plan even if the debtor were to file a plan within the statutory
exclusivity period. This counter-motion is supported by the Growers Committee, meaning that almost all
of the constituent interests in the case have lined up against the debtor.
A party seeking to reduce or increase the exclusivity period has the burden of establishing cause
for it. In re Hoffinger Industries, Inc., 292 B.R. 639, 643 (8th Cir. BAP 2003). The transcendent
consideration in determining if cause exists is whether the adjustment will facilitate moving the case
forward to a fair and equitable resolution. In re Henry Mayo Newhall Memorial Hospital, 282 B.R.
444, 453 (9th Cir. BAP 2002). Factors to be considered by the court include the existence of good faith
progress, whether the debtor has demonstrated reasonable prospects for a viable plan, and whether the
debtor has made progress in negotiating with creditors. In re Central Jersey Airport Services, LLC,
Entered on Docket
March 13, 2006
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-14659 Doc# 243 Filed: 03/13/06 Entered: 03/13/06 11:00:47 Page 1 of
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282 B.R. 176, 184 (Bkrtcy. D.N.J. 2002). The court may also consider wither the motion is motivated
by a desire to exert pressure on another party. Id.
The counter-motion clearly fails the above tests. It is motivated by a desire to reach an unfair
resolution, which is to terminate the interests of the equity ownership by means of a thinly-disguised
strict foreclosure, which is abhorrent to a court of equity. It is also brought primarily for the purpose of
pressuring the already-harried equity interests. The court rejects it for these reasons.
On the other hand, the equity ownership of the debtor is in real jeopardy of being sold down the
river despite any responsibility the court may have to see it treated fairly. When the entire creditor body
is united against the debtor, it cannot show reasonable prospects for a viable plan or good progress in
negotiating with creditors. The court is fairly certain that unless ownership comes up with a substantial
influx of capital very quickly it will see its position eroded beyond the possibility of redemption. It
certainly has not met its burden of showing cause for an extension of exclusivity.
For the foregoing reasons, both motions will be denied. Any party may submit an appropriate
form of order.
Dated: March 13, 2006
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 05-14659 Doc# 243 Filed: 03/13/06 Entered: 03/13/06 11:00:47 Page 2 of
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