In re Buena Park Development Corp.

ORDER REVERSING BANKRUPTCY COURT AND REINSTATING FEES UNDER BOTH § 40(c)(2)(A) and § 40(c)(2)(B) OF THE BANKRUPTCY ACT

This appeal arises out of a petition of Bankruptcy filed by Buena Park Development Corporation on August 15, 1978. In the initial Chapter (“Ch.”) 11 proceeding about $400,000 in cash was accumulated. The action was then converted to a Ch. 7 proceeding, the $400,000 was deposited with the Ch. 7 trustee, and an additional $200,000 was realized during the Ch. 7 proceeding from the sale of Ch. 11 receivables and certain other assets that had pre-existed the original petition, among them the debtor’s “Holiday Inn of Buena Park.” Also, the Ch. 7 trustee realized a net amount from his two-week operation of the debtor’s hotel. In addition, all other property owned or held by the debtor passed to the Ch. 7 trustee upon the conversion.

The conversion came about because the debtor had not complied with the Bankruptcy Court’s order directing debtor to file a plan of arrangement by May 31, 1980. The conversion entitled the trustee to sell the debtor’s assets, with Court approval. When they applied for an order adjudicating the debtor a bankrupt for failure to file a plan of…