Appeal from the United States Bankruptcy Court for the Northern District of California Honorable Dennis Montali, Bankruptcy Judge, Presiding Bk. No. 10-32303
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Submitted on January 19, 2012 at San Francisco, California
Before: SALTZMAN,*fn2 DUNN and HOLLOWELL, Bankruptcy Judges.
This appeal arises from the bankruptcy court's order granting the chapter 7*fn3 trustee's motion to sell the debtor's 100% interest in stock of Starble International, Ltd. ("Starble") to D. Chan Investment Co. (Cayman) Ltd. ("Chan Investment") as designee of Burlingame Investment Corporation ("Burlingame"). For the reasons set forth below, we AFFIRM the bankruptcy court's order authorizing the sale of the Starble stock to Chan Investment.
On June 22, 2010, Global Reach Investment Corp. (the "Debtor") filed a voluntary chapter 7 petition. In its bankruptcy schedules, the Debtor listed 100% ownership of the Starble stock as an asset with a value of $4.7 million. Before the Debtor's bankruptcy filing, Herman Kwai ("Kwai"), the Debtor's sole shareholder, and Burlingame, among other entities, were involved in litigation in at least three different courts regarding a variety of issues related to the Debtor and Starble, including matters that could impact the ownership rights to the Starble stock.
During the bankruptcy, Andrea Wirum, the chapter 7 trustee (the "Trustee"), sought to sell the Debtor's interest in the Starble stock under section 363. After some negotiations, Burlingame offered $20,000*fn4 to purchase the Debtor's interest in the Starble stock by quitclaim deed. Kwai, among others,*fn5 raised several objections to the sale, asserting that: (1) the bankruptcy court could not approve a sale where ownership of the Starble stock was in dispute based on this panel's decision in Darby v. Zimmerman (In re Popp), 323 B.R. 260, 265 (9th Cir. BAP 2005); and (2) Chan Investment was not a "good faith purchaser" under section 363(m).
Over Kwai's objections, the bankruptcy court approved the Trustee's sale of the Debtor's interest in the Starble stock to Chan Investment. In approving the sale, the bankruptcy court concluded that In re Popp did not apply because the Trustee sought only to sell the Starble stock by quitclaim deed (i.e., the dispute over ownership of the stock did not matter because the Trustee sought only to sell whatever interest the Debtor owned in the Starble stock, even if that interest was nothing). The bankruptcy court further concluded that Chan Investment was a good faith purchaser within the meaning of section 363(m) because it had negotiated a deal with the Trustee at arms' length, did not engage in fraud and did not collude with the Trustee to purchase the Starble stock.
3 Subsequently, the bankruptcy court denied both Kwai's timely 4 motion to reconsider the order approving the sale and Kwai's 5 timely motion for a stay pending appeal. This appeal followed, 6 and Kwai immediately moved this Panel for a stay pending appeal. 7 By order entered April 28, 2011, this Panel denied Kwai's motion 8 for stay pending appeal for lack of evidence supporting a 9 discretionary stay pending appeal under the factors outlined in 10 Wymer v. Wymer (In re Wymer), 5 B.R. 802, 806 (9th Cir. BAP 11 1980).
13 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 14 §§ 1334 and 157(b)(1) and (b)(2)(N). This Panel has jurisdiction 15 over ...