In Re Farmers Markets, Inc.

MEMORANDUM OPINION AND DECISION

FACTS

The debtor in possession, Farmers Markets, Inc., filed its Chapter 11 petition on June 15, 1983. Concurrently, five other related entities, including Capitol City Farmers Markets, Inc., filed voluntary petitions for reorganization. On June 22, 1983 the court ordered joint administration of the six estates.

At the time the petitions were filed, Capitol City Farmers Markets, Inc. owned two liquor licenses which it desired to sell. On September 19,1983 the court authorized the sale of the two licenses upon the terms and conditions set forth in the sales agreement attached to the debtor’s application. The agreement provided that Shortstop would purchase the licenses for $23,000 each and that this amount would be paid directly to the debtor. An escrow account would be opened to handle the transaction. Subsequently, on October 26, 1983, the California State Board of Equalization (Board) ordered the Department of Alcoholic Beverage Control to withhold transfer of the liquor licenses until the debtor paid the Board $27,717 in pre-petition taxes. On December 8, 1983 the Board informed the debtor that its claim against the liquor license escrows had…