VOX II, LLC

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In re: 	:
VOX II, LLC 	: 	Case no. 05-20299-PM
Chapter 11
:
Debtor.
___________________________________
In re: 	:
VOX III, LLC 	: 	Case no. 05-20307
Chapter 11
Debtor. 	:
: 	Jointly Administered Under
Case no. 05-20299
_____________________________________________________________________________
Memorandum of Decision
On July 12, 2005, July 19, 2005, and August 16, 2005, this court heard the motion filed
by Pulte Home Corporation for the Termination of the Exclusive Period Within Which the
Debtor may file a Plan of Reorganization. At the conclusion of the hearing, the court announced
its ruling on the record in open court. This Memorandum of Decision supplements the court’s
oral ruling.
The motion is filed pursuant to 11 U.S.C. § 1121(d) that provides:
On request of a party in interest made within the respective periods specified in
subsections (b) and (c) of this section and after notice and a hearing, the court
may for cause reduce or increase the 120-day period or the 180-day period
referred to in this section.
As noted in the case of First American Bank of New York v. Southwest Gloves and Safety
Equipment, Inc. 64 B.R. 963, 965 (D. Del. 1986), “[t]he central purpose of section 1121(c) is to
Date signed September 02, 2005
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allow the debtor an exclusive period of time in which to file a reorganization plan without
pressure from creditors. Section 1121 (d) provides the Bankruptcy Court with flexibility to
either reduce or increase that period of exclusivity in its discretion.” In Section 102 of the
Section-by-Section Description of H. R. 5611, The Bankruptcy Reform Act of 1994, Pub. L. No.
103-394, it is noted that “[e]xclusivity is intended to promote an environment in which the
debtor’s business may be rehabilitated and a consensual plan may be negotiated.” (H 10764).
Here the period of exclusivity operates, not as a shield but as a sword. Nothing in this
debtor’s action so far into this bankruptcy case resembles anything close to seeking to achieve
consensus. Shortly after the filing of this case under Chapter 11 on May 2, 2005, the debtor
moved to reject its lot purchase agreement with Pulte, and filed its Plan of Reorganization on
July 8, 2005, within the exclusive period allowed it. The centerpiece of the Plan is the rejection
of the Pulte agreement. The Plan provides for the payment of all creditors in full. Under 11
U.S.C. § 1126(f), all creditors, including Pulte, are conclusively presumed to have accepted the
plan and solicitation of acceptances from them is not required. This careful manipulation of the
bankruptcy code results in the termination of Pulte’s rights to develop the properties and
possibly limit its recovery under the contract. In summary, the debtor’s plan was formulated and
financed well before the filing of this case. The party that was the source of the financing holds
the junior secured position on the debtor’s real estate. There is no reason to maintain its period
of exclusivity, particularly so when this works solely to the benefit of the debtor and to no other
party. Pulte should have the right to have its plan laid out side by side with that of the debtor in
a fair contest on a level playing field.
The situation is akin to that strategy attempted in the case of In re Integrated Telecom
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Express, 384 F.3d 108 (CA3 2004), cert. denied, 125 S.Ct. 2542 (2005), where a solvent debtor
that had ceased doing business sought to file a plan and use 11 U.S.C. § 502(b)(6) to cap a
landlord’s claim under a commercial lease. See also, Dunes Hotel Associates v. Hyatt Corp.,
245 B.R. 492, 506 (D.S.C. 2000) (Finding that solvent chapter 11 debtor would not be allowed to
avoid unrecorded lease, where the only beneficiaries were the debtor and its equity holder. Such
action was held to be in conflict with the fiduciary responsibilities as a debtor-in-possession.) In
Integrated and Dunes Hotel, as in this case, the debtor sought to use a protective provision of the
bankruptcy code as an offensive weapon.
An order will be entered in accordance with the foregoing.
cc:
Debtors
Debtors’ counsel
Janet M. Nesse, Esq.
United States Trustee
All creditors
End of Memorandum of Decision
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