Open Range Property LLC

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NOT FOR PUBLICATION
POSTED TO THE WEBSITE
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF CALIFORNIA
In re:
OPEN RANGE PROPERTY, LLC,
Debtor.
Case No. 25-24089-A-7
CZ-1
Memorandum Regarding Motion to
Vacate Order Converting Case from
Chapter 11 to Chapter 7
Argued and submitted on November 3, 2025
at Sacramento, California
Honorable Fredrick E. Clement, Bankruptcy Judge Presiding
Appearances: Parham Shekarlab for Debtor Open Range Property, LLC;
Sharon Z. Weiss Attorney for Creditor U.S. Bank
Filed 11/03/25 Case 25-24089 Doc 78

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Chapter 11 debtor must file a list of equity security holders not
later than 14 days after the petition is filed. 	Fed. R. Bankr. P.
1007(a)(3). 	After three warnings and almost two months, the court
converted the case for failure to file that document. 	Debtor’s
counsel is “at a loss” to explain how this mistake occurred. 	The
debtor moves for relief under Rule 60(b). 	Should the court grant the
motion?
I. 	FACTS
Open Range Property LLC filed a skeletal Chapter 11 petition.
Pet., ECF No. 1. 	Paul A. Warner was counsel for the debtor in
possession. 	The petition indicates that Abolghassem Alizadeh is the
“manager” of the limited liability corporation. 	The “list of equity
security holders” was not filed. 	On the same day, the Clerk of the
Court issued a “Notice of Incomplete Filing.” 	Not. Incomplete Filing,
ECF No. 2. 	In the pertinent part of the list of deficient documents,
it provided: “The following document(s) must be received by the
bankruptcy clerk's office by 8/18/25...List − Equity Security
Holders[,] Master Equity Security Holder Address List...” Id. 	The
Notice of Incomplete Filing also warned that the failure to file the
documents in a timely manner or otherwise appropriately resolve the
delinquency, may result in dismissal. 	Id. 	The same notice also
provided creditors an opportunity to oppose dismissal. 	The notice
offered creditors the opportunity to oppose dismissal. 	Id. at p. 2.
The notice also provided:
THIS IS THE ONLY NOTICE YOU WILL RECEIVE. Failure to timely
file the missing documents, to timely seek an extension of
time, or to timely file a Notice of Hearing on the Court's
Notice of Intent to Dismiss Case may result in the
automatic dismissal of this bankruptcy case without further
notice...
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Id.
One week after the case was filed, creditor U.S. Bank availed
itself of the right to oppose dismissal, requested a hearing and filed
a 10-page brief in opposition to dismissal. 	Among other things, the
bank provided evidence of Abolghassem Alizadeh’s conviction of wire
fraud, bank fraud and false statements to a federally insured
institution, which included almost five years of prison and
$15,000,000 in restitution, and other bad acts intended to frustrate
creditors.
The Clerk of the Court issued an order convening a Chapter 11
Status Conference. 	Order, ECF No. 14. The order indicating that the
scope of the issues to be considered was broad and included “[a]ny
other matters which might materially affect the administration of this
chapter 11 case.” Id. (emphasis added). 	It warned, “This is notice
that the court may, sua sponte, at the status conference, order the
case dismissed or converted to chapter 7, or may order the appointment
of a chapter 11 trustee.” Id.
The schedules and statements were filed on the last day to do so.
Summary of Assets and Liabilities, Schedules A/B-H and Statement of
Financial Affairs. 	Schedules and Statements, ECF No. 17-22, 24. 	The
list of equity security holders was not filed.
About a month after the petition was filed, Open Range Property,
LLC substituted Cyrus Zal, in place of Paul A. Warner, as its attorney
of record.
Just short of two months after the petition, the court convened
the status conference and the hearing on the Clerk’s Notice of
Incomplete Filing. 	The court discussed the incomplete filing, viz.,
the list of equity security holders, with counsel Cyrus Zal. 	He
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explained that he only recently substituted into the case and asked
for a little more time to file the list of equity holders. 	The civil
minutes reflect the following resolution:
As more fully set forth on the record,
The prior attorney for this case did not file the List of
Equity Security Holders and the Master Equity Security
Holder Address List as required. Since new counsel has been
retained, the Court will drop this matter but requires the
lists to be filed by close of business Friday, September
26, 2025. Additionally, the Court requests that a notice of
the continued meeting of creditors be filed and served on
all equity holders by the same deadline.
The Court will monitor for the filing of these required
documents. If Mr. Zal fails to comply by the deadline, the
case will be converted without further notice or hearing.
Civ. Minutes, ECF No. 43.
Within the deadline set by the court the debtor-in-possession,
re-uploaded the creditors master address list, Fed. R. Bankr. P.
1007(a)(1), but not the list of equity security holders. 	Fed. R.
Bankr. P. 1007(a)(3).
Thereafter, the court converted this case to Chapter 7.
II. 	PROCEDURE
Open Range Property LLC moves for relief under Rule 60(b)(1)
(mistake, inadvertence, surprise of excusable neglect). 	In support of
the motion, the debtor offers the declaration of counsel, who admits
knowledge of the deadline but who is unable to explain the error.
I offer no excuse for failing in my duties as the Debtor's
attorney to file the two required documents, and I must
confess that I am shocked and dismayed at how I could make
such a grievous and fundamental mistake that has greatly
damaged the interests of my client to such a high degree. I
wish I could offer an explanation as to how I came to make
such a damaging and inexplicable mistake, but I myself am
at a loss as to how I came to commit this mistake.
Zal. decl. 2:110-16, ECF No. 66.
U.S. Bank opposes the motion.
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III. 	JURISDICTION
This court has jurisdiction. 	28 U.S.C. §§ 1334(a)-(b), 157(b);
see also General Order No. 182 of the Eastern District of California.
Jurisdiction arises under 11 U.S.C. §§ 348, 1112(b) and is core. 	28
U.S.C. § 157(b)(2)(A), (O).
IV. 	LAW
A. 	Equity Security List
The equity security list is due not later than 14 days after the
petition.
Chapter 11--List of Equity Security Holders. Unless the
court orders otherwise, a Chapter 11 debtor must, within 14
days after the order for relief is entered, file a list of
the debtor's equity security holders by class. The list
must show the number and type of interests registered in
each holder's name, along with the holder's last known
address or place of business.
Fed. R. Bankr. P. 1007(a)(3).
B. 	Rule 60(b)
Rule 60 applies to bankruptcy proceedings. 	Fed. R. Civ. P. 60,
incorporated by Fed. R. Bankr. P. 9024. 	In the pertinent part, it
provides: “On motion and just terms, the court may relieve a party or
its legal representative from a final judgment, order, or proceeding
for...mistake, inadvertence, surprise, or excusable neglect.” 	Fed. R.
Civ. P. 60(b)(1).
The party seeking relief bears the burden of proof. In re
Peralta, 317 B.R. 381 (9th Cir. BAP 2004), citing TCI Group Life Ins.
Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir.2001). The court should
consider three factors: “(1) whether the defendant's culpable conduct
led to the default; (2) whether the defendant has a meritorious
defense; and (3) whether reopening the default judgment would
prejudice the plaintiff.” In re Peralta, 317 B.R. 381, 388 (B.A.P. 9th
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Cir. 2004), citing TCI, 244 F.3d at 695–96; Falk, 739 F.2d at 463.
V. 	DISCUSSION
The debtor has not sustained its burden of proof. 	First,
culpable conduct exits. 	In re Wilson, 349 B.R.831 (Bankr. D. Idaho
2006) (unjustified failure to check mail deemed culpable conduct). The
debtor and counsel received at least three warnings of the need to
file the list of equity security holders. 	Notice Incomplete Filing,
ECF No. 2; Hr’g on Notice of Incomplete Filing, September 22, 2205;
Civ. Minutes, ECF No. 43. 	Moreover, the list of equity security
holders was 43 days late, when the case was converted. 	While the
motion purportedly addresses the court’s oral warnings at the
September 22, 2025, hearing and the minutes emanating therefrom, it
fails to address the prior warning and the passage of time from the
filing of the case until the hearings.
While the motion to vacate the conversion order includes exhibits
that purports to cure the deficiency, Ex., ECF No. 68, and which
appear to reveal but a single shareholder, i.e., Abolghassem Alizadeh
(the manager who signed the petition), the later filing does not erase
the culpable conduct from which the default arose.
Second and more importantly, Open Range Property has not
sustained its burden of proof as to a meritorious defense. 	Where a
Chapter 11 case is converted to a Chapter 7 case and the debtor seeks
relief under Rule 60(b), the debtor must make some showing of a viable
plan. Peralta, 317 B.R. at 388 (meritorious defense).
It has not done so. 	The motion is supported by the declaration
of its manager and only shareholder, Abolghassem Alizadeh. 	The entire
declaration is less than one page and consists of four paragraphs. 	In
the pertinent part it states:
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If this case remains a Chapter 7 bankruptcy, that would
result in great harm to the Debtor and to a huge loss of
funds available to pay the creditors. I am currently close
to putting together a reorganization plan wherein an
investor developer and builder would partner with the
Debtor to construct a high value residence on the Debtor's
high value property consisting of bare land in an exclusive
area of Granite Bay, where there are already residences
valued in the range of $6 Million to $10 Million.
Alizadeh decl. § 3, ECF No. 67 (emphasis added).
Finally, creditors, at least U.S. Bank, will be harmed. 	The bank
informs the court that its loan has been in default since October
2011. 	Not. Hr’g on Not. Intent to Dismiss 1:15-23, ECF No. 10. 	Open
Range Property LLC, who bears the burden of proof, does not dispute
this fact and, aside from a one sentence conclusion, has offered no
evidence that creditors would be better served in Chapter 11.
VI. 	CONCLUSION
For each of these reasons, the motion will be denied. 	The court
will issue an order from chambers.
November 03, 2025
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Instructions to Clerk of Court
Service List - Not Part of Order/Judgment
The Clerk of Court is instructed to send the Order/Judgment or other court generated
document transmitted herewith to the parties below. The Clerk of Court will send the document
via the BNC or, if checked ____, via the U.S. mail.
Debtor(s) 	Attorney for the Debtor(s) (if any)
Bankruptcy Trustee (if appointed in the case) Office of the U.S. Trustee
Robert T. Matsui United States Courthouse
501 I Street, Room 7-500
Sacramento, CA 95814
All Creditors
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