Debtor’s motion seeking approval of the sale of real property was granted by the Court, but the Court denied the 5% commission and reimbursement of expenses requested by the realty company. The sale was conducted by auction pursuant to the terms of the confirmation order. The Debtor subsequently filed a response to his own motion alleging that the sales price was insufficient. During the evidentiary hearing, the Court was advised that the auctioneer purchased the property through a corporation wholly owned and controlled by that auctioneer and that no disclosure of this relationship was made at or prior to the sale. The Court held that the auctioneer and the realty company violated the regulations of the Virginia Auctioneers Board by the auctioneer bidding on his own behalf without providing notice that his bidding would be permitted. The Court then found that the auctioneer was neither a statutory insider nor a non-statutory insider and was disinterested at the time he was employed to conduct the auction under 11 U.S.C. § 327(a). However, once the auctioneer began bidding without prior disclosure, the question of whether he violated his fiduciary duties as a professional employed pursuant to an order of the Court came into play. The court adopted the “inherently fair” approach and allowed the sale as it was in the estate’s best interest, shown by arm’s length, good faith negotiations with full disclosure. However, the Court denied the requested commission and reimbursement of expenses of the realty company in line with the Court’s duties to maintain disinterestedness, avoid the appearance of impropriety and ensure impartiality in the administration of the estate.
Friday, July 29, 2016
Burden of Proof
Disinterestedness and Conflicts of Interest
Employment of Professionals
Sale of Property