Spartan Holding Company, Inc.

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
SPARTAN HOLDING COMPANY, INC.
DEBTOR
CHAPTER 11
CASE NO. 11-02355-8-RDD
ORDER GRANTING MOTION TO TRANSFER VENUE
Pending before the Court is the Motion to Transfer Case Outside District filed by the
Bankruptcy Administrator on April 7, 2011, the Response in Support of the Motion to Transfer Case
Outside District filed by Macon Bank on May 2, 2011 and the Objection to the Motion to Transfer
Case Outside District filed by Spartan Holding Company, Inc. (the “Debtor”) on April 27, 2011.
A hearing took place in Wilson, North Carolina on May 5, 2011.
Spartan Holding Company, Inc. filed a petition for relief under Chapter 11 of the Bankruptcy
Code on March 28, 2011. 	The Bankruptcy Administrator contends, that venue in the Eastern
District of North Carolina is improper and that the petition should have been filed in the Western
District of North Carolina. The motion seeks either dismissal or transfer of venue.
The Debtor’s petition lists its address as 211 E. Six Forks Rd. Suite 204, Raleigh, NC 27609.
Raleigh is located in the Eastern District of North Carolina. However, the first page of the petition
also indicates that the principal assets of the Debtor are located in Henderson County, NC which is
SO ORDERED.
SIGNED this 24 day of May, 2011.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
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in the Western District of North Carolina. The Bankruptcy Administrator contends that venue is
improper in the Eastern District pursuant to 28 U.S.C. § 1408, and that the case must be transferred
or dismissed. 	If venue is proper, the Bankruptcy Administrator maintains the case should
nonetheless be transferred for the convenience of the parties.
Title 28 section 1408 provides, in relevant part:
Except as provided in section 1410 of this title, a case under title 11 may be
commenced in the district court for the district–
(1) in which the domicile, residence, principal place of business in the United
States, or principal assets in the United States, of the person or entity that is the
subject of such case have been located for the one hundred and eighty days
immediately preceding such commencement, or for a longer portion of such one-
hundred-and-eighty-day period than the domicile, residence, or principal place of
business, in the United States, or principal assets in the United States, of such
person were located in any other district[.]
28 U.S.C. § 1408.
It is undisputed that the Debtor’s principal assets are located in the Western District of North
Carolina. The Debtor’s schedules list three pieces of real property with the total current value listed
at $734,400.00. 	The properties consist of a car wash building, commercial buildings and a
condominium all of which are located in the Western District of North Carolina. The Debtor’s
schedules list no personal property. 	The Debtor maintains that on July 9, 2010, it changed its
principal office with the North Carolina Secretary of State’s Office from 1875 Spartanburg Hwy.
Hendersonville, NC 28792 to 211 E. Six Forks, Suite 204, Raleigh, NC 27609. 	Therefore, the
Debtor argues that its principal office was located in the Eastern District of North Carolina within
the 180 day period preceding the petition date. The Debtor’s address as listed on the petition is the
same business address as Jack B. Styles, attorney for the Debtor. 	Ralph Ledford is the sole
shareholder and president of the Debtor. 	Mr. Ledford resides in Charleston, South Carolina.
Debtor’s counsel acknowledged that Mr. Ledford spends little time in North Carolina and that the
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Debtor’s only business activities conducted in the Eastern District of North Carolina, were activities
related to legal matters.
Macon Bank is the largest secured creditor of the Debtor and filed a proof of claim in the
amount of $1,364,676.21. 	Macon Bank is located in Franklin, North Carolina in the Western
District of North Carolina.
The Debtor’s principal assets are located in the Western District of North Carolina.
Therefore, pursuant to 28 U.S.C. § 1408, venue in the Eastern District of North Carolina is improper.
Other than the address where the debtor receives legal notices, the debtor has no connection, assets
or other business dealings in the Eastern District of North Carolina. The Debtor argues that because
its principal office changed to the Eastern District of North Carolina, venue is proper. However, the
principal office is not the same as the principal place of business as is required in 28 U.S.C. § 1408.
Therefore, the Court finds that venue in the Eastern District of North Carolina is improper.
Having determined that venue is improper, the court next turns to the question of whether
the case should be transferred pursuant to 28 U.S.C. § 1412 1 or dismissed pursuant to Bankruptcy
Rule 1014(a)(2).2 The moving parties bear the burden of showing by a preponderance of the
evidence that the interests of justice or the convenience of the parties would be served by a transfer
of this case. Mid Atlantic, 2008 WL 612287 at *3 (citing In re Industrial Pollution Control, 137
B.R. 176, 181 (Bankr. W.D. Pa. 1992)). If the court determines venue is improper then retention
1 Section 1412 provides, "A district court may transfer a case or proceeding under title 11
to a district court for another district, in the interest of justice or for the convenience of the parties."
2Bankruptcy Rule 1014(a)(2) provides, “[i]f a petition is filed in an improper district, on
timely motion of a party in interest and after hearing on notice the petitioners and other entities as
directed by the court, the case may be dismissed or transferred to any other district if the court
determines that transfer is in the interest of justice or convenience of the parties.”
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of the case is not proper. Micci v. Bank of New Haven, 188 B.R. 697, 700 (Bankr. S.D.Fl. 1995).
The factors to be considered in determining the convenience of the parties are:
(1) the proximity of creditors of every kind to the court;
(2) the proximity of the debtor to the court;
(3) the proximity of the witnesses necessary to the administration of the estate;
(4) the location of the assets;
(5) the economic administration of the estate; and
(6) the necessity for ancillary administration if a liquidation should occur.
Mid Atlantic, 2008 WL 612287 at *3 (citing In re Commonwealth Oil Refining Co., 596 F.2d 1239,
1247 (5th Cir. 1979)).
The first factor is the proximity of creditors to the court. 	The primary secured creditor,
Macon Bank is located in the Western District of North Carolina and is represented by an attorney
located in Asheville, North Carolina. Macon Bank supports the motion to transfer venue. The three
tax creditors are located in the Western District of North Carolina. Schedule F lists 2 creditors with
addresses in the Western District of North Carolina. As of the date of this order, the claims register
contains 4 claims. All four creditors are in the Western District. This factor weights in favor of
transferring the case to the Western District of North Carolina.
The second factor is proximity of the Debtor to the court. Mr. Ledford, the Debtor’s sole
shareholder and president resides in Charleston, South Carolina. Based upon the representation of
counsel it does not appear that Mr. Ledford chose the Eastern District as a preferred venue based on
its proximity. Instead, the attorney for the Debtor represented that Mr. Ledford was his brother-in-
law and that the Debtor was not currently able to afford local counsel in the Western District of
North Carolina.
The third factor is the proximity of witnesses necessary to the administration of the estate.
Agents of the Debtor engaged in operating the Debtor’s real estate rental business are located in the
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Western District. However, the Debtor states the agents are neither executives nor decision makers
of the Debtor. Other than Mr. Ledford and the Debtor’s agents, there is no evidence of the location
of other witnesses necessary to the administration of the estate.
The fourth factor is the location of assets. 	The petition and schedules reveal all of the
Debtor’s assets are located in the Western District. 	Therefore, this factor weighs in favor of
transferring the case to the Western District.
The fifth factor is the economic administration of the estate. 	The Debtor has a pending
motion to convert its case from one under Chapter 11 to one under Chapter 7. The Debtor generates
all of its revenue in the Western District. A trustee or Bankruptcy Administrator located in the
Western District would be able to efficiently and economically administer the estate.
The sixth factor is the necessity for ancillary administration if a liquidation should occur.
Because the principal assets are located in the Western District, the assets would be more efficiently
administered by a trustee in the Western District. This factor weighs in favor of transferring the case
to the Western District.
Considering all the factors enumerated in 28 U.S.C. § 1412, the interest of this estate will
best be served by transferring this case to the Western District of North Carolina. Further, neither
party seeks dismissal for lack of venue. 	Therefore, the case will be transferred to the Western
District of North Carolina. The motion to transfer venue to the Western District of North Carolina
is GRANTED.
SO ORDERED.
END OF DOCUMENT
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