Platinum Capital, Inc. v. Sylmar Plaza, L.P.

Platinum Capital, Inc. (“Platinum”) appeals a decision of the Bankruptcy Appellate Panel (“BAP”) affirming the bankruptcy court’s order that confirmed the chapter 11 plan of reorganization of appellees Sylmar Plaza, L.P. and Rita H. and Roberta M. Hornwood (“the Hornwoods”). 1 We must decide whether the bankruptcy court erred in finding a plan of reorganization was proposed in good faith under 11 U.S.C. § 1129 (a)(3) where its sole purpose was to enable the debtors to “cure and reinstate” an obligation, thereby avoiding a contractual liability for default interest. We have jurisdiction under 28 U.S.C. § 1158 (d) and affirm.

FACTUAL BACKGROUND

The Hornwoods have a diverse real estate portfolio worth more than $55 million in which they have a net equity exceeding $15 million. Their assets included Sylmar Plaza, a shopping center, which is the focus of the litigation between the Horn-woods and Platinum. The dispute arises over a secured loan of $8,073,237 made to the Hornwoods in 1992 by Platinum’s predecessor, Tokai Bank of California. In 1995, Tokai consented to the transfer of Sylmar to revocable family trusts, ostensibly created for estate planning purposes. The “Loan…