U.S. Bank N.A. Ex Rel. CWCapital Asset Management LLC v. Village at Lakeridge, LLC (In Re Village at Lakeridge, LLC)

concurring in part and dissenting in part:

I agree with the legal conclusion that a person does not necessarily become a statutory insider solely by acquiring a claim *1004 from a statutory insider, as discussed in section III.A of the majority opinion. As long as the interest previously owned by a statutory insider was acquired by an independent party, for bona fide reasons, uninfected with the unique motivations of the insider, there is no reason that the insider taint should always be unshakeable. The consideration of whether the insider status should stick to the interest properly depends on the particular circumstances and is appropriately treated as something to be determined based on the facts of the situation. But it is clear to me, based on the facts of this case, that Robert Rabkin should be viewed as a non-statutory insider, and the bankruptcy court should treat his claim as such. I respectfully dissent as to Section III.B.

The majority opinion, at 1001, defines a creditor as a non-statutory insider when “(1) the closeness of its relationship with the debtor is comparable to that of the enumerated insider classifications in § 101(31), and (2) the relevant transaction…

I. Factual Proceedings

A. The Parties

The debtor, Village at Lakeridge, LLC (“Lakeridge”), has only one member: MBP Equity Partners 1, LLC (“MBP”). MBP is managed by a board of five members, one of whom

1 11 U.S.C. § 1129(a)(10) (“The court shall confirm a plan only if all of the following requirements are met: . . . If a class of claims is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider.”). 2 In this opinion, we address only Rabkin’s statutory and non-statutory insider status. We resolve the remaining claims in a memorandum disposition filed concurrently with this opinion. 6 IN RE THE VILLAGE AT LAKERIDGE

is Kathie Bartlett.3 Bartlett shares a close business and personal relationship with Rabkin, which is unrelated to Bartlett’s position with MBP.

U.S. Bank National Association (“U.S. Bank”) is successor trustee to Greenwich Financial Products, Inc., the company through which Lakeridge financed a property purchase. At the time Lakeridge filed for bankruptcy, U.S. Bank was one of two creditors holding a claim on Lakeridge’s…

Opinion by Judge N.R. SMITH; Partial Concurrence and Partial Dissent by Judge CLIFTON.

OPINION

Before a bankruptcy court may confirm a reorganization plan in a Chapter 11 bankruptcy, it must determine if any of the-persons voting to accept the plan are insiders. 1 Insiders are either statutory or non-statutory. To be a “statutory insider,” a creditor must fall within one of the categories listed in 11 U.S.C. § 101 (31). A creditor does not become an insider simply by receiving a claim from a statutory insider. To be a non-statutory insider, the creditor must have a close relationship with the debtor and negotiate the relevant transaction at less than arm’s length. Thus, Dr. Robert Rabkin does not qualify as a statutory or non-statutory insider. 2

I. Factual Proceedings

A. The Parties

The debtor, Village at Lakeridge, LLC (“Lakeridge”), has only one member: *997 MBP Equity Partners 1, LLC (“MBP”). MBP is managed by a board of five members, one of whom is Kathie Bartlett. 3 Bartlett shares a close business and personal relationship with Rabkin, which is unrelated to Bartlett’s position with MBP.

U.S. Bank National Association (“U.S. Bank”) is successor trustee to Greenwich…