Quail Lake Estates Associates

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 08-41296 T
Chapter 11
QUAIL LAKE ESTATES ASSOCIATES,
L.P.,
Debtor.
______________________________/
MEMORANDUM IN PREPARATION FOR TELEPHONE CONFERENCE
The above-captioned chapter 11 case was filed on March 19, 2008.
The debtor concedes that it is a single asset real estate case. 	The
holder 	of 	the 	first 	deed 	of 	trust 	on 	the 	real 	property, 	BankFirst,
has filed a motion for relief from the automatic stay. 	Pursuant to
11 	U.S.C. 	§ 	362(d)(3), 	BankFirst 	was 	entitled 	to 	relief 	from 	the
automatic 	stay 	unless 	by 	June 	17, 	2008 	the 	debtor 	either 	commenced
payments on the secured debt or filed a reorganization plan that had
a reasonable possibility of being confirmed within a reasonable time.
The debtor did not commence payment on the secured debt by June 18,
2008. 	However, 	on 	June 	17, 	2008, 	the 	debtor 	filed 	a 	plan 	and
disclosure statement. 	A telephone status conference is scheduled for
July 1, 2008 to discuss how to proceed.
Signed: June 30, 2008
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
June 30, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-41296 Doc# 56 Filed: 06/30/08 Entered: 06/30/08 14:12:09 Page 1 of 3

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The Court has reviewed the plan and disclosure statement. 	The
Court concludes that, as presently drafted, the disclosure statement
is inadequate in that it does not contain a sufficient discussion of
the feasibility of the plan. 	Until that discussion is amplified, the
Court will be unable to determine whether the BankFirst is entitled
to 	relief 	from 	the 	automatic 	stay 	on 	nonfeasibility 	grounds.
However, before even reaching that question, the Court observes that,
as presently drafted, the plan is nonconfirmable.
The 	plan 	does 	not 	unconditionally 	promise 	any 	payment 	to
general, unsecured creditors. 	It proposes that holders of interests
will retain their interests. 	Section 1126(g) of the Bankruptcy Code
provides that a class of claims is deemed to have rejected a plan if
the plan does not provide for any payment to the claimants. 	Section
1129(b)(2)(B)(ii) provides that a plan can only be confirmed over the
rejection of the class of unsecured creditors if the interest holders
do not retain their interests.
Thus, 	to 	satisfy 	confirmation 	standards, 	the 	plan 	must 	be
revised 	to 	provide 	some 	meaningful 	payment 	to 	the 	unsecured
creditors. 	Because of the time limitation set forth in § 362(d)(3),
the 	Court 	would 	expect 	the 	debtor 	to 	do 	this 	without 	delay: 	e.g.,
within 10 days.
The 	Court 	will 	expect 	the 	debtor 	to 	address 	this 	issue 	during
the telephone conference.
END OF DOCUMENT
Case: 08-41296 Doc# 56 Filed: 06/30/08 Entered: 06/30/08 14:12:09 Page 2 of 3

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COURT SERVICE LIST
James D. Wood
Law Offices of James D. Wood
3675 Mt. Diablo Blvd. #250
Lafayette, CA 94549-3775
David M. Wiseblood
Seyfarth Shaw LLP
560 Mission St., Ste. 3100
San Francisco, CA 94105
Case: 08-41296 Doc# 56 Filed: 06/30/08 Entered: 06/30/08 14:12:09 Page 3 of 3