1 FOR PUBLICATION 2 UNITED STATES BANKRUPTCY COURT 3 EASTERN DISTRICT OF CALIFORNIA 4 5 6 In re: ) Case No. 25-24205-C-11 ) 7 TOWN & COUNTRY EVENT CENTER LLC,) ) 8 Debtor. ) ________________________________) 9 10

FINDINGS OF FACT AND CONCLUSIONS OF LAW AND

11 ORDER GRANTING RELIEF FROM AUTOMATIC STAY AND AUTHORIZING IN REM REMEDY PRESCRIBED BY 11 U.S.C. § 362(d)(4) 12 13 CHRISTOPHER M. KLEIN, Bankruptcy Judge: 14 This stay relief motion presents a paradigm case for the “in 15 rem” remedy provided by 11 U.S.C. § 362(d)(4). 16 This is the fourth related chapter 11 case in the past year 17 involving the same real property subject to a secured loan in 18 foreclosure that fully matured more than two years ago. 19 The pattern of filings warrants the conclusion that the 20 present petition was filed in furtherance of a scheme to hinder, 21 delay, or defraud creditors that involved multiple bankruptcy 22 filings affecting the subject real property within the meaning of 23 § 362(d)(4). 24 25 Findings of Fact 26 Town & Country Event Center LLC (“Event Center”) and Town & 27 Country West LLC (“West”) are related shopping center entities 28 whose principal is Waqar Khan. 1 Event Center owns real property located at 11354 White Rock 2 Road, Rancho Cordova, California. 3 West owns two adjacent real property parcels located at 2961 4 Fulton Avenue and 2501 Marconi Avenue, Sacramento, California. 5 The Event Center and West properties collateralize a loan 6 from Qualfax, Inc., that matured August 1, 2023, with an 7 outstanding balance of $3,441,176.28. 8 In second secured position is PMF CA REIT, LLC (”PMF”), 9 asserting it is owed $13,359,014.83 plus default interest of 10 $1,901,250.00. 11 The Sacramento County Tax Collector is owed $732,298.51. 12 There is a judgment lien in favor of Cap Holdings, LLC for 13 $107,358.00. 14 Qualfax contends the property value is $14 million in the 15 face of total secured debt of $19,541,097.62. 16 Event Center and West filed chapter 11 cases on October 7, 17 2024. As their affairs were intertwined and cross-collateralized, 18 Bankruptcy Judge Ronald Sargis ordered them to be jointly 19 administered: No. 24-24492 (Event Center) and No. 24-24493 20 (West), Bankr. E.D. Cal. 2024. 21 The Event Center and West cases were later converted to 22 chapter 7 by order of Judge Sargis. The lead chapter 7 trustee 23 concluded the three parcels of West and Event Center were of 24 inconsequential value and benefit to the estates and should be 25 abandoned. Judge Sargis’ abandonment order was entered July 16, 26 2025. 27 Those two chapter 7 cases remain open because there are 28 other real property assets that have surfaced and are being 1 administered by the chapter 7 trustees. 2 On August 8, 2025, Judge Sargis granted relief from stay as 3 to the three West and Event Center shopping center properties. 4 The cases were reassigned on August 11, 2025, from Judge 5 Sargis to the undersigned on account of the imminent retirement 6 of Judge Sargis. 7 Waqar Khan, acting pro se, filed another chapter 11 case No. 8 25-24206, for Town & Country West, LLC on August 11, 2025, three 9 days after entry of Judge Sargis’ stay relief order. That case 10 was dismissed by Chief Judge Clement on September 2, 2025, for 11 failure timely to file required documents. 12 Event Center filed its instant second chapter 11 case No. 13 25-24205 also on August 11, 2025. 14 Also on August 11, 2025, Khan sued Event Center and West in 15 Sacramento County Superior Court with a “Verified Complaint for: 16 1. Declaratory Relief; 2. Quiet Title as to Leasehold Priority; 17 3. Injunctive Relief (Protecting Unrecorded Lease Against Pending 18 Foreclosure).” Waqar A. Khan v. Town & Country West LLC; Town & 19 Country Event Center LLC; Does 1-10, Case No. 25CV019279, 20 Superior Court of California, County of Sacramento (filed Aug. 21 11, 2025, 3:14pm). 22 Khan admitted to the undersigned judge in open court on 23 October 8, 2025, that he either has recorded or plans to record a 24 lis pendens on the properties in connection with his state-court 25 action so as to function as a cloud on title in the event of 26 27 28 1 foreclosure.1 2 Qualfax filed its motion for stay relief and/or adequate 3 protection (DCN RDW-1) on September 4, 2025, in which it also 4 seeks a § 362(d)(4) determination that the filing of No. 25-24205 5 was in furtherance of a scheme to hinder, delay, or defraud 6 creditors involving multiple bankruptcy case filings. 7 Event Center did not file opposition to the Qualfax motion 8 made pursuant to the terms of Local Bankruptcy Rule 9014-1(f)(1), 9 which requires a written response if there is to be opposition. 10 Although entitled to treat the motion as unopposed, this Court 11 exercised its discretion to entertain an evidentiary hearing. 12 However, in the new Event Center case No. 25-24205 a 13 putative buyer, Prime Party Rentals, LLC, (“PPR”) filed on 14 September 10, 2025, a motion to sell the Event Center property 15 (DCN LP-2) pursuant to 11 U.S.C. § 363. 16 The PPR § 363 motion has attracted universal opposition as a 17 sham because Khan, as managing member of PPR, is on both sides of 18 the transaction. The opponents allege it is further evidence of a 19 § 362(d)(4) scheme to hinder, delay, or defraud creditors. 20 Further evidence of the scheme is that the LP-2/PPR motion papers 21 do not disclose that Khan is PPR’s managing member.2 22 23 1 If and when the state-court action is removed pursuant to 28 U.S.C. § 1452, this Court will be able to 24 deal with any lis pendens that may be recorded. See Mora v. 25 SBS Trust Deed Network (In re Bula Developments, Inc.), Memorandum on Motion to Expunge Lis Pendens, 2025 WL 1338271 26 (Bankr. E.D. Cal. 2025). 27 2PPR’s counsel will be given a due process opportunity 28 1 The United States trustee objects on multiple counts: (1) 2 stay relief has already been granted in favor of the same parties 3 on the financial facts; (2) there has not been disclosure that 4 Khan is managing member of PPR; (3) PPR does not have standing to 5 bring a § 363 motion to sell; (4) the sale is not an arm’s-length 6 transaction; (5) sale would not benefit the estate; and (6) sale 7 of substantially all estate assets without sufficient information 8 early in the case is not appropriate. 9 Creditor PMF CA REIT, LLC (”PMF”), asserting it is owed 10 $13,359,014.93 plus default interest of $1,901,250.00, objects 11 that: (1) Event Center lacked authority to file this chapter 11 12 case while Event Center is still a chapter 7 debtor; (2) the sale 13 is a sham evidenced by the presence of Khan on both sides of the 14 transaction; (3) the requirements of § 363(f)(4) and (5) have not 15 been satisfied; and (4) PMF’s interest is not adequately 16 protected. 17 Creditor Qualfax filed an opposition reiterating the other 18 objectors’ points about PPR’s lack of standing, insufficiency of 19 facts for a § 363(f)(4) and (5), and lack of benefit to the 20 estate. 21 In addition, Qualfax asserts the new chapter 11 case No. 25- 22 24205 and the motion to sell were brought in bad faith and that 23 Khan’s state-court lawsuit against Event Center and West was an 24 effort to obstruct Qualfax by clouding title on the properties. 25 26 making of a § 363 motion without standing do not violate 27 Federal Rule of Bankruptcy Procedure 9011 and provisions of the California Rules of Professional Conduct regarding 28 1 Conclusions of Law 2 The main issues are, first, whether to grant relief from the 3 automatic stay under 11 U.S.C. § 362(d) and, second, whether to 4 authorize the in rem remedy permitted by § 362(d)(4). 5 6 I 7 Relief from the automatic stay is appropriate for multiple 8 reasons. 9 10 A 11 First, the issues resolved in the August 8, 2025, order 12 vacating the automatic stay with respect to all three parcels of 13 West and of Event Center on the same facts remains entitled to 14 preclusive effect. 15 It involves the identical properties and debt profile. It is 16 sufficiently close in time and without any indication of a change 17 in circumstances that it functions to establish both “cause” (§ 18 362(d)(1)) and “lack of equity + not necessary for an effective 19 reorganization” (§ 362(d)(2)). 20 21 B 22 Viewed independently, the secured intertwined and cross- 23 collateralized debt exceeding $19.5 million against value in the 24 range of $14 million establishes lack of adequate protection for 25 purposes of § 362(d)(1). 26 Likewise, “cause” also follows from the shenanigans of Waqar 27 Khan following the August 8 order, including filing the second 28 voluntary Event Center and West chapter 11 cases, concocting a 1 sham § 363 sale, and suing his voluntary debtors at the same 2 time. 3 4 C 5 Second, § 362(d)(2) lack of equity follows from the August 8 6 stay relief order because no facts have been advanced to change 7 the equity equation. If anything, the passage of time has 8 deepened the insolvency at a time that real property values are 9 not regarded as rising. 10 Nor is there an “effective” reorganization in prospect 11 within the meaning of § 362(d)(2), which requires a reasonable 12 possibility of a confirmed reorganization within a reasonable 13 time. 14 Khan’s proposal for a § 363 sale to another Khan-controlled 15 entity on which he is on both sides of the transaction merits 16 zero credibility. For him to establish credibility after all his 17 gamesmanship would require him to bring into the courtroom $20 18 million greenback dollars to stack on the table. 19 20 II 21 The § 362(d)(4) “in rem” remedy is available with respect to 22 real property if the court finds that the filing of the petition 23 was “part of a scheme to delay, hinder, or defraud creditors” 24 that involved, among other possibilities, “multiple bankruptcy 25 filings affecting such real property.” 11 U.S.C. § 362(d)(4). 26 Alakozai v. Citizens Equity First Credit Union (In re Alakozai), 27 499 B.R. 698, 702-03 (9th Cir. BAP 2013); Johnson v. TRE Holdings 28 LLC (In re Johnson), 346 B.R. 190, 195-96 (9th Cir. BAP 2006). 1 The terms of § 362(d)(4) require the Bankruptcy Court to 2 make specific findings of fact and conclusions of law addressed 3 to the elements of that provision. First Yorkshire Holdings, Inc. 4 v. Pacifica L 22, LLC (In re First Yorkshire Holdings, Inc.), 470 5 B.R. 864, 870-71 (9th Cir. BAP 2012). 6 7 A 8 Parsing the syntax of § 362(d)(4) reveals that all that is 9 required is proof either of a “scheme to hinder” creditors or a 10 “scheme to delay” creditors. “Hinder” and “delay” are 11 independently sufficient grounds for such relief against a 12 background of multiple bankruptcy filings. Likewise, a “scheme to 13 defraud” creditors is a third independent ground that need not be 14 proved. 15 It suffices to prove either a purpose to hinder or a purpose 16 to delay. In other words, intent to defraud is not essential. 17 The quantum of proof is the standard civil standard of 18 preponderance of evidence. 19 A “scheme” need not exist from the outset of a series of 20 multiple bankruptcy filings. 21 Here, the initial cases for West and Event Center were filed 22 in October 2024 by reputable chapter 11 counsel with a record of 23 achieving plan confirmations. 24 The onset of a scheme began with Khan’s failure during the 25 initial cases to cooperate with his counsel and his unwillingness 26 to perform his duties as a debtor-in-possession. Those failures 27 by Khan served as the cause for conversion of the cases to 28 chapter 7. 1 Khan’s successive failures to perform his debtor-in- 2 possession duties and the three subsequent filings of chapter 11 3 cases for West and Event Center evince “schemes” to hinder and to 4 delay for purposes of § 362(d)(4). 5 Khan’s filing of the state-court action against West and 6 Event Center, with the specter of lis pendens was, beyond cavil, 7 for a purpose to hinder and to delay. The intent is palpable. 8 9 B 10 The “in rem” effect of a § 362(d)(4) order granting stay 11 relief takes effect only after the Bankruptcy Court’s order is 12 “recorded in compliance with applicable State Laws governing 13 notices of interests or liens in real property.” 11 U.S.C. 14 § 362(d)(4) (second sentence). 15 16 1 17 18 Any Federal, State, or local governmental unit that accepts 19 notices of interest or liens must, as a matter of federal 20 supremacy law, “accept any certified copy of an order described 21 in this subsection for indexing and recording.” 11 U.S.C. 22 § 362(d)(4) (final sentence). 23 If, and only if, there is such a recording, then the order 24 “shall be binding in any other case under this title [11] filed 25 not later than 2 years after the date of the entry of such order 26 by the court.” 11 U.S.C. § 362(d)(4). 27 28 1 2 2 A safety valve procedure designed to ameliorate unfairness 3 is available to a debtor who “may move for relief from such order 4 based upon changed circumstances or for good cause shown, after 5 notice and a hearing.” 11 U.S.C. § 362(d)(4). 6 7 3 8 The loop is closed by the corresponding statutory exception 9 to the automatic stay prescribed by § 362(b)(20): 10 (b) The filing of a petition ... does not operate as a stay – ... 11 (20) under subsection (a), of any act to enforce any lien against or security interest in real property following 12 entry of the order under subsection (d)(4) as to such real property in any prior case under this title, for a period of 13 2 years after the date of the entry of such an order, except that the debtor, in a subsequent case under this title, may 14 move for relief from such order based upon changed circumstances or for other good cause shown, after notice 15 and a hearing. 16 11 U.S.C. § 362(b)(20). 17 18 4 19 In any motion and hearing seeking the relief of the safety 20 valve, the debtor bears the burden of persuasion, and correlative 21 risk of nonpersuasion, that there are “changed circumstances or 22 other good cause.” 23 24 5 25 The entry of a § 362(d)(4) order binds any party asserting 26 an interest in the affected property, including every non-debtor, 27 co-owner, and subsequent owner of the property. Alakozai, 499 28 B.R. at 704; First Yorkshire Holdings, Inc., 470 B.R. at 871. 1 KEK 2 Having made the requisite findings of fact and conclusions 3 law and being mindful of the consequences, burdens, and 4 ||) procedures for future relief, and the Court being persuaded that 5 || Khan’s bad-faith scheme warrants immediate effect as permitted by 6 Rule 4001 (a) (4), 7 IT IS ORDERED: the motion for relief from stay is GRANTED 8 || because cause exists for relief under § 362(d) (1) and, independently under § 362(d) (2) because the debtor lacks equity 10 |} in the subject real property (2961 Fulton Avenue, Sacramento, CA; 11 |} 2501 Marconi Avenue, Sacramento, CA; and 11354 White Rock Road, 12 || Rancho Cordova, CA) and that no effective reorganization is in 13 |} prospect. 14 AND, IT IS FURTHER ORDERED: this Court finds that the filing of the petition was part of a scheme to delay and to hinder 16} creditors that involved multiple bankruptcy filings affecting the 17 || subject real property (2961 Fulton Avenue, Sacramento, CA; 2501 18 || Marconi Avenue, Sacramento, CA; and 11354 White Rock Road, Rancho 19 || Cordova, CA) within the meaning of 11 U.S.C. § (4). 20 AND, IT IS FURTHER ORDERED: the 14-day stay provided by 21} Federal Rule of Bankruptcy Procedure 4001 (a) (4) is waived such that this order shall take immediate effect. 23 || patea: October 10, 2025 24

26 United § ates Eaxknister Judge 27 28