IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE-DISTRICT OF PENNSYLVANIA
IN RE : CHAPTER 11
:
C.B.G. LIMITED : CASE NOS. 5-92-00525
TRACHELE, INC. : 5-92-00615
VALLEY UTILITIES CO., INC. : 5-92-00617
THE ONEIDA WATERS CO., : 5-92-00619
CHEZ-RAEL, INC. : 5-92-00620
:
DEBTORS-IN-POSSESSION :
OBJECTION TO AMENDED PLAN OF REORGANIZATION OF CREDITOR
The Office of Attorney General, Bureau of Consumer
Protection, has been granted the leave of the Court to appear and
be heard on behalf of Consumers because said appearance is in the
public interest as set forth in the Bankruptcy Rule 2018 (b) , 11
U.S.C.A. This Order of the Court was entered and filed on August
31, 1994.
The intervention of the Office of Attorney General,
Bureau of Consumer Protection, was prompted by the receipt of
several dozen formal complaints from residents and property
owners of Valley of Lakes.
On October 31, 1994 the Office of Attorney General,
Bureau of Consumer Protection, filed an objection to the
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Disclosure Statements of the Debtor and Creditor (PNC Bank,
N.A.).
The Office of Attorney General believes that the
unsecured interests of both complaining and silent residents and
property owners will be adversely effected by the implementation
of the Amended Plan of Reorganization now submitted to the Court
by Creditor, PNC Bank, N.A.
Therefore, the Office of the Attorney General of the
Commonwealth of Pennsylvania, moves the Court as follows:
I. OBJECTIONS TO CREDITORIS AMENDED PLAN OF REORGANIZATION
1. The Office of Attorney General, Bureau of Consumer
Protection, moves this Court to refuse to approve the Amended
Plan of Reorganization filed by PNC Bank, National Association,
(hereinafter "Creditor") on or about November 29, 1994 on the
grounds that: (a) Creditor's Plan does not adequately address
the myriad of issues related to the health and safety of the
residents of Valley of Lakes; (b) the plan could never be legally
confirmed pursuant to 11 U.S.C. § 1129; as is more particularly
detailed hereinafter.
2. Said Creditor's Amended Reorganization Plan seeks
to liquidate the assets of the Debtors, while nonetheless
obtaining a discharge of the liabilities of the Debtors, pursuant
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to Chapter 11 of the bankruptcy laws. Creditor's Amended
Reorganization Plan proposes to have a trustee sell the assets of
the Debtors, free and clear of all liens, and to permit the
unsecured creditors to share in a fund of $500,000 "provided it
receives the entirety of its distribution from the Free and Clear
Sale."
3. Said Creditor's Amended Plan of Reorganization does
not contain sufficient information regarding measures to be taken
and expenses to be incurred by the Trustee to safeguard the
health and welfare of the residents of the Valley of Lakes
Development during the implementation of the Amended
Reorganization Plan.
4. Said Creditors Amended Plan of Reorganization does
not account for all expenses to be incurred by the Trustee to
maintain the Valley of Lakes Development to the benefit of
resident and nonresident property owners during the
reorganization period.
5. Said Creditor's Amended Plan of Reorganization does
not include a requirement that, as a contingency of sale, any
prospective purchaser or subsequent developer post a performance
bond for the maintenance and completion of the infrastructure
(e.g. water, sewer and roadways) of the Valley of Lakes
Development. Such a requirement is essential to ensure the
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integrity of the development and protect the residents and
property owners from the financial shortcomings or caprice of a
prospective purchaser or subsequent developer.
6. Said Creditor's Amended Plan of Reorganization is
made for a questionable purpose. Prior to the appointment of the
Trustee, the only reason that the Debtor's continued to operate
the Valley of Lakes Development is that the Creditor (PNC Bank,
N.A.) had refused to exercise their right to foreclose. As it
admits, the creditor has already obtained relief from the
automatic stay and can foreclose on the property. Yet, it has
refused to do so. As a result, the property owners in the Valley
of Lakes have been forced to live in a development that is
grossly mismanaged by a "developer" which deprived many of them
of their life savings, as a result of its mismanagement. The
only purpose in re-organizing the debtor pursuant to the
creditor's plan would be to discharge the debtor from its
liabilities. It would be an abuse of the bankruptcy laws to
discharge Debtors who have so abused their fiduciary duties, and
have engaged in unfair and deceptive acts and practices, both
during their Chapter 11 protection and prior to the filing of the
petition.
7. Said Creditor's Amended Disclosure Plan embodies a
plan which is not viable because it is highly unlikely that any
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funds would be left after the Creditor receives the entirety of
its distribution from the proposed Free and Clear Sale.
Consequently, the unsecured creditors would be receiving nothing
from creditor's plan.
WHEREFORE, the Office of Attorney General, Bureau of
Consumer Protection, prays that (a) the Court refuse to confirm
the Amended Plan of Reorganization of the creditor, PNC Bank,
N.A. as filed; (b) the Court directs the Creditor to modify the
Amended Plan of Reorganization in order to address the objections
presented herein; and (c) provide such other relief as this Court
deems just.
/s/
JAMES M. SYSKO
ATTORNEY I.D. NO. 73759
DEPUTY ATTORNEY GENERAL
OFFICE OF ATTORNEY GENERAL
BUREAU OF CONSUMER PROTECTION
214 SAMTERS BUILDING
101 PENN AVENUE
SCRANTON, PA 18503
TELEPHONE: 717-963-4913
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