JPK Newco, LLC

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF COLUMBIA
In re: Case No. 25-00200-ELG
JPK Newco, LLC, Chapter 11
Debtor.
MEMORANDUM OPINION ON MOTION TO DISMISS
The Court has before it the Motion to Dismiss Chapter 11 Petition Filed in Bad Faith (the
“Motion to Dismiss”) filed by Developer RE1, LLC and 423 Kennedy St Holdings, LLC (the
“Movants”) and the oppositions filed by WCP Fund I LLC (“WCP”) and JPK Newco, LLC (the
“Debtor”).1 The Court heard arguments on July 30 and 31, 2025 (the “Hearing”). Upon
consideration of the pleadings and the arguments from the Hearing, and for the reasons set forth
in an oral ruling at the conclusion of the Hearing, the Court denied the Motion to Dismiss. An
Order Denying Motion to Dismiss Case (the “Dismissal Order”) was entered on September 2,
2025, memorializing the Court’s oral ruling.2 This Memorandum Opinion documents the Court’s
1 Developer RE1, LLC and 423 Kennedy St. Holdings, LLC’s Mot. to Dismiss Chapter 11 Petition Filed in Bad Faith,
ECF No. 19; Opp’n of WCP Fund I LLC to Developer RE1 LLC’s and 423 Kennedy St. Holdings, LLC’s Mot. to
Dismiss Chapter 11 Petition Filed in Bad Faith, ECF No. 29; Debtor’s Opp’n to Developer RE1 LLC’s and 423
Kennedy St. Holdings, LLC’s Mot. to Dismiss Chapter 11 Petition Filed in Bad Faith, ECF No. 30.
2 ECF No. 59. The Dismissal Order stipulated that the Court “reserve[d] the right to supplement its oral ruling and/or
[the] Order with written findings of fact and conclusions of law.” Id. After the Dismissal Order was entered, the
Movants timely filed an appeal and corresponding Motion for Leave to File Appeal of an Interlocutory Order. Notice
of Appeal, ECF No. 63; Mot. for Leave to File an Appeal of an Interlocutory Order, ECF No 65 (the “Motion for
Leave”). At the time of entry of this Opinion, the appeal and Motion for Leave remain pending.
The order below is hereby signed.
Signed: June 12 2026
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oral ruling as to the denial of the Motion to Dismiss, and to the extent that there is any inconsistency
or conflict, this Memorandum Opinion shall control.
I. Background
A. Motion to Dismiss Hearing
The Court is familiar with the long, sordid history of litigation between the Movants and
the Debtor.3 In many cases, the Court has had a front-row seat to the continuing litigation,
including the extensive motions practice in both a previous chapter 11 case and numerous
adversary proceedings. Much of this history is repeated and detailed in the pleadings by the parties
herein. However, for the purposes of the Motion to Dismiss, as discussed below, the relevant facts
are much narrower.
At the Hearing, and for the limited purpose of the Court’s consideration of the Motion to
Dismiss, the Debtor and WCP both stipulated to the Court’s consideration facts in the Motion to
Dismiss as pled by the Movants while reserving all rights to oppose or defend the factual
allegations in the future. Despite the stipulation to all of their facts as alleged, at the onset of the
Hearing, the Movants argued that they needed discovery prior to a hearing on the merits of the
Motion to Dismiss.4 However, when questioned by the Court as to their general declarations
regarding the need for discovery, the Movants could not identify one factual area that, if their
allegations as pled were taken as true, would require additional discovery prior to consideration of
the question of dismissal.5 Further, the Movants could not articulate any portion of the legal
3 The Debtor and Movants have been embroiled in a number of legal disputes before this Court that are not relevant
to the Motion to Dismiss but provide context for the current litigation, as described in both the Motion to Dismiss and
Opposition. ECF No. 29; see Case Nos. 24-00262-ELG, 24-10023-ELG, 25-10015-ELG, 25-10037-ELG.
4 Hearing Recording at 5:10–34:59, ECF No. 40; see also ECF No. 19, at 2. As noted at the Hearing, despite having
over a month to do so, the Movants did not propound discovery on WCP and the Debtor until a week prior to the
Hearing, which the Movant’s self-scheduled. Furthermore, the Movants questioned the Debtor’s representative at the
§ 341 Meeting, which was concluded a month prior to the Hearing.
5 Hearing Recording at 5:10–34:59, ECF No. 40.
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argument on the appropriate standard to consider the requested dismissal based on a bad faith filing
that required discovery, instead pointing to tangential issues of jurisdiction or collusion between
non-debtor parties related to WCP. Therefore, the Court ordered that argument would go forward
on the legal question of whether the case should be dismissed as a bad faith filing based on the
stipulated facts, specifically the Court ordered it would first address the legal standard to be applied
to such argument. The Court reserved the right to enter a scheduling order so that discovery could
be conducted, if necessary. Based on this ruling, argument proceeded with the legal question of
the standard to apply to the question of whether the Debtor’s filing was a bad faith filing, and then
the application of the stipulated facts to the standard. Because the Court found there was no
objective futility to the filing of the Petition, the Court found that no discovery was necessary as
the Movant’s solely identified areas regarding subjective intent for which they desired to conduct
discovery.
B. Summary of Relevant Stipulated Facts
The Debtor filed a voluntary petition under chapter 11 (the “Petition”) on May 27, 2025.6
The Debtor is a limited liability company whose principal place of business is in McLean, VA.
The Debtor has no secured claims and three unsecured claims, two of which are contingent,
unliquidated, and disputed claims from the Movants arising out of prepetition litigation.7 The
Debtor is a special purpose entity formed to own and hold two junior promissory notes (the
“Promissory Notes”), one from each of the Movants, secured by corresponding junior liens on
419–423 Kennedy St. NW and 55501 1st St. NW, parcels of real property located in Washington,
DC. The Debtor’s only other asset is an unsecured note payable from an entity known as Energy
Morocco, LLC, which originally matured in December 2024 (the “Energy Morocco Note”). At all
6 Voluntary Petition for Non-Individuals Filing for Bankruptcy, ECF No. 1.
7 See Schedule E/F: Creditors Who Have Unsecured Claims, ECF No. 1.
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times the Debtor has been candid that this case was filed in an attempt to resolve the ongoing
litigation between the Movants and the Debtor as to the Promissory Notes.8
The Debtor filed a previous chapter 11 case ( “JPK I”), which was dismissed consensually
after a Motion to Dismiss filed by the United States Trustee (the “UST”) remained pending for
approximately nine months.9 The Movants’ arguments and factual recitation implicitly raise issue
with the entry of the consensual dismissal in JPK I because it was entered without a hearing
thereon, despite the fact the Movants had not filed their own motion, only “supported” the UST’s
motion.10 The Movants had the opportunity to, but did not, engage in discovery against the Debtor
and WCP in JPK I in connection with the UST’s motion.11
On June 23, 2025, less than one month into this case, the Movants filed the Motion to
Dismiss seeking dismissal for cause, specifically alleging that the Debtor’s case was not filed in
good faith. The Movants self-scheduled the hearing on the Motion to Dismiss for July 30, 2025,
with responses due July 23, 2025.12 The Debtor and WCP timely objected to the Motion to
Dismiss, creating a contested matter for which discovery was immediately available.13 On June
30, 2025, the UST held and concluded the § 341 meeting of creditors (the “§ 341 Meeting”), where
counsel for the Movants appeared and had the opportunity to question the Debtor’s representative
under oath.14 On July 28, 2025, the Debtor timely submitted its Chapter 11 Small Business
Subchapter V Plan (the “Plan”).15 The funding of the Debtor’s plan is contingent upon the
8 ECF No. 29, at 21.
9 Consent Order Granting the U.S. Tr.’s Mot. to Dismiss Chapter 11 Case Pursuant to 11 U.S.C. § 1112(b), In re JPK
Newco LLC, No. 24-262-ELG (Bankr. D.D.C. Feb. 24, 2025), ECF No. 85.
10 Statement in Supp. of the U.S. Tr.’s Mot. to Dismiss Chapter 11 Case Pursuant to 11 U.S.C. § 1112(b), In re JPK
Newco LLC, No. 24-262-ELG (Bankr. D.D.C. Oct. 14, 2024), ECF No. 57.
11 Scheduling Order, In re JPK Newco LLC, No. 24-262-ELG (Bankr. D.D.C. Nov. 13, 2024), ECF No. 70.
12 These periods were significantly longer than the 21-day notice period required by Federal Rule of Bankruptcy
Procedure 2002.
13 See Fed. R. Bankr. P. 9014(c).
14 See ECF No. 37-1 (§ 341 Transcript).
15 ECF No. 31; see also 11 U.S.C. § 1189 (requiring a debtor to file a plan within 90 days after filing).
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resolution of litigation with the Movants and recovery on the Promissory Notes and the Energy
Morocco Note. The Movants objected to confirmation of the plan and filed an objection to the
Debtor’s eligibility under subchapter V.16
II. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334.17 This
is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue is proper before this Court
pursuant to 28 U.S.C. §§ 1408 and 1409. This Memorandum Opinion sets forth the Court’s
findings of fact and conclusions of law in accordance with Bankruptcy Rule 7052.18 Subject to the
caveat that the facts in the Motion to Dismiss were stipulated to for the limited purpose of
consideration thereof and reserving all rights to contest the same in the future, findings of fact shall
be construed as conclusions of law and conclusions of law shall be construed as findings of fact
where appropriate.19
16 Obj. to Subchapter V Designation, ECF No. 42; Obj. to Plan of Reorganization, ECF No. 58.
17 Despite the fact that the Motion to Dismiss avers that the Court has jurisdiction, in the argument section of the
Motion to Dismiss and at the Hearing, the Movants contended that the Debtor, along with other entities, “colluded to
manufacture federal jurisdiction” over the proceedings between the Movants; WCP Fund I, LLC; DP Capital, LLC
d/b/a Washington Capital Partners; Daniel Huertas; Russell Drazin; SF NU LLC; and the Debtor. ECF No. 19, at 31.
The argument appears not to challenge the Court’s 28 U.S.C. § 1334 jurisdiction over the case but instead is part of
the Movant’s argument on subjective bad faith and/or challenge to the Court’s jurisdiction over the removed related
adversary proceedings. The authorities cited by the Movants focus not on the eligibility of an entity to be a debtor but
on the limitations on parties to litigation to collude to manufacture federal jurisdiction under 28 U.S.C. § 1359.
Furthermore, §109(a) establishes that “a person that resides or has domicile, a place of business, or property in the
United States, or a municipality, may be a debtor under this title,” and § 101(41) defines “person” as any “individual,
partnership, and corporation.” The Debtor is a limited liability corporation and voluntarily filed a petition for relief
under title 11 over which this Court has jurisdiction through 28 U.S.C. § 1334 and DCt.LBR 5011-1 (“Pursuant to 28
U.S.C § 157(a), all cases under Title 11 and all proceedings arising under Title 11 or arising in or related to a case
under Title 11 are referred to the bankruptcy judges of this District”).
18 Unless specified otherwise, all chapter, code, and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101–
1532, and the Federal Rules of Bankruptcy Procedure, Rules 1001–9037. The Federal Rules of Civil Procedure are
referred to as the “Civil Rules,” and the Federal Rules of Bankruptcy Procedure are referred to as the “Bankruptcy
Rules.”
19 See Fed. R. Bankr. P. 7052.
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III. Analysis
A. Standard to Determine Bad Faith Under § 1112
Under § 1112, on request of a party in interest, a court may dismiss a case “for cause.”20
Section 1112(b)(4) provides a non-exhaustive list of circumstances that constitute “cause”
including “substantial or continuing loss to or diminution of the estate and the absence of a
reasonable likelihood of rehabilitation,” “gross mismanagement of the estate,” “failure to comply
with an order of the court,” and “failure to file a disclosure statement, or to file or confirm a plan,
within the time fixed by [title 11] or by order of the court.”21 Courts have also identified an implicit
“good faith filing” requirement for chapter 11 cases whereby a finding that a petition has been
filed absent good faith may be sufficient cause to dismiss a case.22 While the Court has previously
recognized that a lack of good faith may be sufficient cause to dismiss a petition, there is no
controlling precedent in the District of Columbia Circuit as to the standard that must be applied to
determine whether a case was not filed in good faith.23
There is a split among the circuit courts on what standard to apply to determine whether a
case was filed in bad faith.24 In one of the earliest circuit-level opinions, the Fourth Circuit adopted
a two-part test for determining bad faith filing in Carolin Corp. v. Miller, which requires movants
to prove that a bankruptcy was filed with both objective futility (i.e., whether a reorganization was
realistically possible) and subjective intent of bad faith based on the totality of the circumstances
20 11 USC § 1112.
21 Id. § 1112(b) (4) (A), (B), (E), (J).
22 Carolin Corp. v. Miller, 886 F.2d 693, 699 (4th Cir. 1989); see also Little Creek Dev. Co. v. Commonwealth Mortg.
Corp. (In re Little Creek Dev. Co.), 779 F.2d 1068, 1071 (5th Cir. 1986) (“Every bankruptcy statute since 1898 has
incorporated literally, or by judicial interpretation, a standard of good faith for the commencement, prosecution, and
confirmation of bankruptcy proceedings.”).
23 In re Franklin Mortg. & Inv. Co., 143 B.R. 295, 302 (Bankr. D.D.C. 1992).
24 See id.
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(the “Carolin Test”).25 Similar standards have been adopted by the Second26 and Third Circuits.27
Conversely, the Eleventh Circuit held that subjective intent based upon the totality of the
circumstances alone may establish bad faith for dismissal, expressly declining to include an
objective futility element.28 Somewhat in the middle, the Fifth Circuit articulated that courts must
conduct a fact-specific inquiry of all factors – objective and subjective.29 Regardless of the test
used, all circuits that have considered this issue agree that the subjective intent component is a
totality of the circumstances analysis, although there are different articulated lists of factors for
consideration.30
25 Carolin Corp., 886 F.2d at 700–01. In 2023, the Fourth Circuit reaffirmed the requirement of both subjective intent
and objective futility. In re Bestwall LLC. Bestwall LLC v. Off. Comm. of Asbestos Claimants (In re Bestwall LLC),
71 F.4th 168 (4th Cir. 2023).
26 C-TC 9th Ave. P’ship v. Norton Co. (In re C-TC 9th Ave. P’ship), 113 F.3d 1304, 1310 (2d Cir. 1997) (“When it is
clear that, from the date of filing, the debtor has no reasonable probability of emerging from the bankruptcy
proceedings and no realistic chance of reorganizing, then the Chapter 11 petition may be frivolous.”) (citing Baker v.
Latham Sparrowbush Assoc. (In re Cohoes Indus. Terminal, Inc.), 931 F.2d 222, 227 (2d Cir. 1991)).
27 In re LTL Mgmt. LLC, 64 4th 84, 100–01 (3d Cir. 2023) (“Though a debtor's subjective intent may be relevant, good
faith falls more on [an] objective analysis of whether the debtor has sought to step outside the ‘equitable limitations’
of Chapter 11.”); In re 15375 Mem’l Corp. v. BEPCO, L.P., 589 F.3d 605, 618 n.8 (citing In re SGL Carbon Corp.,
200 F.3d 154, 165 (3d Cir. 1999)). “[T]wo inquiries . . . are particularly relevant”: “(1) whether the petition serves a
valid bankruptcy purpose [;] and (2) whether [it] is filed merely to obtain a tactical litigation advantage.” Id. at 618
(internal quotation marks omitted) (citing NMSBPCSLDHB L.P. v. Integrated Telecom Express Inc. (In re Integrated
Telecom Express Inc.), 384 F.3d 108, 119–20 (3d Cir. 2004)).
28 Phoenix Piccadilly, Ltd. v. Life Ins. Co. of Va. (In re Phoenix Piccadilly, Ltd.), 849 F.2d 1393, 1395 (11th Cir. 1988)
(“Instead, the courts may consider any factors which evidence ‘an intent to abuse the judicial process and the purposes
of the reorganization provisions’ or, in particular, factors which evidence that the petition was filed ‘to delay or
frustrate the legitimate efforts of secured creditors to enforce their rights.’”) (citing Albany Partners Ltd. v. Westbrook
(In re Albany Partners Ltd), 749 F.2d 670, 674 (11th Cir. 1984)).
29 In re Little Creek Dev. Co., 779 F.2d at 1071 (“Determining whether the debtor’s filing for relief is in good faith
depends largely upon the bankruptcy court’s on-the-spot evaluation of the debtor’s financial condition, motives, and
the local financial realities. Findings of lack of good faith in proceedings based on §§ 362(d) or 1112(b) have been
predicated on certain recurring but non-exclusive patterns, and they are based on a conglomerate of factors rather than
on any single datum.”)
30 The Court has previously identified factors that courts have looked to:
[1.] The debtor has one asset, such as a tract of undeveloped or developed real property.
[2.] The secured creditors' liens encumber this tract.
[3.] There are generally no employees except for the principals, little or no cash flow, and no
available sources of income to sustain a plan of reorganization or make adequate protection
payments . . . .
[4.] Typically, there are only a few, if any, unsecured creditors whose claims are relatively small.
[5.] The property has usually been posted for foreclosure because of arrearages on the debt and the
debtor has been unsuccessful in defending actions against the foreclosure in state court.
Alternatively, the debtor and one creditor may have proceeded to a stand-still in state court litigation
. . . .
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This Court has two published opinions considering the standard of dismissal for bad faith.
In both opinions, the Court recognized the Carolin Test, but found that the case before it involved
very fact-specific, limited exceptions to the applicability of the Carolin Test. The most recent
opinion, In re Allen, involved the question of a “good faith test” in the context of annulment of the
automatic stay in the case of a serial bankruptcy filer.31. In stating the standard to be applied when
analyzing whether a serial bankruptcy filer was proceeding in “bad faith,” Allen stated that “both
objective evidence of a fundamentally unfair result and subjective evidence that the debtor filed a
petition for a fundamentally unfair purposes . . . are relevant to the good faith inquiry.”32 Allen
found that that when applied to serial filers, the Carolin Test may be modified to eliminate the
need to consider objective futility when the debtor’s actions inherently constitute an abuse of the
bankruptcy system.33
Allen relied upon the Court’s previous case of In re Franklin Mortgage & Investment
Company, Inc., where the question of the debtor’s good faith filing was framed by another
exception to the application of the Carolin Test — the “new debtor syndrome” debtor.34
Specifically, Franklin found that in a case with the inherent unfair delay of a debtor who meets the
[6.] Bankruptcy offers the only possibility of forestalling loss of the property.
[7.] There are sometimes allegations of wrongdoing by the debtor or its principals.
In re Franklin Mortg. & Inv. Co., 143 B.R. 295 at 299–300.
31 300 B.R. 105 (Bankr. D.D.C. 2003).
32 Id. at 123 (quoting In re Love, 957 F.2d 1350, 1357 (7th Cir. 1992)) (considering the standard for good faith filings
in chapter 13, adopting a totality of the circumstances test. The good faith requirement was later codified by
amendments to § 1325 by the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005). The Court
specifically stated in a heading that good faith may be found lacking when absent on objective grounds, regardless of
subjective intent but went on to consider a totality of all circumstances. Id.
33 Id. at 124.
34 The “new debtor syndrome” – where a one-asset entity is created on the eve of foreclosure to isolate insolvent
property from its creditors – might be more accurately referred to as the “new debtor exception” or “new debtor
presumption” as to bad faith in very limited circumstances, the facts of which are not present in this case. See In re
Franklin Mortg. & Inv. Co., 143 B.R. 295 at 300.
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elements of “new debtor syndrome,” it “makes no sense to require objective futility” but
acknowledged in cases without the syndrome objective futility should be required.35
The Court is also guided by two District of Columbia District Court (the “District Court”)
cases that implicitly adopt elements of the Carolin Test.36 In the more recent case, In re Rudd, the
District Court affirmed the bankruptcy court’s denial of a motion to dismiss because the petition
was not objectively futile.37 Similarly, 1210-1216 Massachusetts Ave., explicitly held that
“[o]bjective futility must be determined based on the totality of the circumstances.”38 The
Massachusetts Ave opinion further upheld the bankruptcy court’s dismissal of a petition for cause
on the basis of objective futility as well as subjective bad faith and emphasized:
Since the court finds adequate support for the conclusion that the
Carolin standard for dismissal based on bad faith was met in this
case, it need not decide if, as [opposing creditor] argues, the standard
in this circuit is less stringent than that set forth in Carolin.39
Based upon the foregoing, including the consistent explicit and implicit recognition and
adoption of the Carolin Test by both this Court and the District Court in all but certain, limited,
enumerated, and specific circumstances such as the abusive serial filer and “new debtor syndrome”
cases, the Court finds that the appropriate standard for a motion to dismiss for bad faith is the
Carolin Test requiring a movant to prove both (1) objective futility and (2) subjective intent for
bad faith based upon the totality of the circumstances.40
35 Id. at 301.
36 In re 1210-1216 Massachusetts Ave., No. 92-0074, 1992 U.S. Dist. LEXIS 8912 (D.D.C. June 23, 1992); In re
Rudd, No. 94-0751, 1995 U.S. Dist. LEXIS 7855 (D.D.C. Apr. 13, 1995).
37 In re Rudd, 1995 U.S. Dist. LEXIS 7855, at *15. The underlying decision in Rudd was not published; however, the
recitation of the underlying bankruptcy opinion clearly evidences that the bankruptcy court applied the Carolin Test
analysis considering both objective futility and subjective bad faith based on a totality of the circumstances. Id. at
*12–15.
38 In re 1210-1216 Massachusetts Ave., No. 92-0074, 1992 U.S. Dist. LEXIS 8912 at *23 (D.D.C. June 23, 1992).
39 Id. at *24.
40 Carolin Corp., 886 F.2d at 700–01.
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B. The Debtor’s Case is Not Objectively Futile
Under the Carolin Test adopted herein, if a movant is unable to prove objective futility,
the court need not reach the analysis of subjective intent of bad faith.41 Objective futility is
designed to ensure that “some relation to the statutory objective of resuscitating a financially
troubled debtor” is embodied in the petition and the analysis requires assessing whether or not
there is a going concern to preserve and/ hope of rehabilitation.42 In general, in considering the
question of objective futility, a court must look to whether the debtor is moving towards confirming
a plan and/or whether there exists a realistic possibility of an effective reorganization.43
The Debtor filed the Petition electing treatment under subchapter V on May 27, 2025. Since
filing, the Debtor has met all of its debtor in possession procedural requirements, including
attending the § 341 Meeting; filing all required schedules, statements, and other case initiation
documents; filing its monthly operating reports; filing its required subchapter V status report;
hiring counsel and special counsel; and timely (in fact, almost 60 days prior to its deadline) filing
the Plan.44 At the time of the Hearing, a scheduling order had been entered setting a confirmation
hearing, and the Debtor had timely noticed and served the Plan and ballots.45
The Plan is necessarily contingent upon the resolution of the litigation between the Debtor
and the Movants. While the determination of whether the Plan is ultimately confirmable was not
before the Court at the Hearing, the Court examined the Plan prior to the Hearing to ensure it was
not simply a “placeholder” document. Without making any specific findings, the Court notes that
41 Id. at 701.
42 See id. at 701–02 (quoting In re Coastal Cable TV, Inc., 709 F.2d 762, 765 (1st Cir. 1983) and Little Creek, 779
F.2d at 1073) (citation modified).
43 Id. at 698 (quoting In re Albany Partners, Ltd., 749 F.2d at 674); see also In re Rudd, 1995 U.S. Dist. LEXIS 7855,
at *14–15 (affirming bankruptcy court finding that the filing was not objectively futile because “reorganization was
possible and . . . there was a confirmable plan in prospect”).
44 See Chapter 11 Plan of Reorganization, ECF No. 31.
45 These dates were later suspended while the parties pursued mediation.
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the Plan is not patently unconfirmable on its face as it contains (i) the history of the Debtor, (ii) a
liquidation analysis, and (iii) projections, as required by § 1190. The Debtor’s case is unlike most
cases evaluating objective futility where the only available evidence on the likelihood
reorganization are a debtor’s representations as to potential reorganization plans.46
The objective factors in this case, such as the filing and timing of the petition and the fact
that the Debtor was created as a holding company used for reorganization to repay creditors, do
not point to objective futility. While the reorganization may provide the Debtor with a litigation
advantage, such factor itself does not lead to a finding of objective futility. As the Third Circuit
acknowledged in In re LTL Management, the purpose of filing a petition may very well be to beat
litigation, but “still, it is not bad faith to seek to gain an advantage from declaring bankruptcy —
why else would one declare it?”47 Therefore, examining the totality of the facts and circumstances,
the Court finds that the Debtor has a reasonable likelihood of reorganization and there is a
potentially confirmable plan pending. As such, the filing of the Debtor’s case is not objectively
futile, the Movants have failed to meet the first element of the Carolin Test, and the Motion to
Dismiss must be denied.
C. The Court Need Not Reach Subjective Intent, the Element for Which the Movants
Seek Discovery
Because the Court denies the Motion to Dismiss for the Movants’ failure to establish
objective futility, it does not need to reach the question of subjective intent – the element on which
the Movants assert they needed additional discovery and sought to continue the Hearing. Denial
of the Motion to Dismiss does not deprive the Movants from seeking discovery on and arguing the
46 See e.g., Md. Port Admin. v. Premier Auto. Servs. (In re Premier Auto. Servs.), 492 F.3d 274, 280 (4th Cir. 2007);
In re WSG Dulles L.P., No. 12-11149, 2013 Bankr. LEXIS 34, at *20–25 (Bankr. E.D. Va. Jan. 3, 2013) (finding a
proposed plan that was patently unconfirmable was insufficient to overcome the objective futility standard); In re
Rudd, 1995 U.S. Dist. LEXIS 7855, at *14–15; In re Tucker, 5 B.R. 180, 184 (Bankr. S.D.N.Y. 1980).
47 In re LTL Management, 64 F.4th at 110 n.19 (quoting In re James Wilson Assocs., 965 F.2d 160, 170 (7th Cir.
1992)).
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Debtor’s good faith during the pendency of the case.48 The Movants have objected to confirmation,
thus creating a contested matter in which they are entitled to discovery.49 Therefore, the Court need
not enter a scheduling order to allow for further discovery on the question of subjective bad faith
in the filing of the petition due to its above findings.
IV. Conclusion
For the reasons stated herein, the Motion to Dismiss filed by Developer RE1, LLC and 423
Kennedy St Holdings, LLC is DENIED.
[Signed and dated above.]
Service to: recipients of electronic notice.
48 The Bankruptcy Code provides for ample opportunity to assess the good faith of the Debtor, including, but not
limited to, as part of the consideration of confirmation of the Plan as required by § 1129(a)(3) (incorporated into
subchapter V by § 1191(a)).
49 Fed. R. Bankr. P. 9014(c).
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