In Re Bibo, Inc., a California Corporation, Debtor. Robert Fukutomi v. United States Trustee

We affirm the bankruptcy judge’s sua sponte decision to appoint a Chapter 11 trustee.

Facts

Fukutomi owned Bibo, Inc. which owned an apartment complex. He operated the corporation as debtor in possession, after Bibo filed for relief under Chapter 11 of the Bankruptcy Code. Fukutomi also was a principal in at least one other apartment complex.

This case arose out of proceedings on Fu-kutomi’s attempt to get bankruptcy court approval for his and his daughter’s management fees. Creditors objected, so the court scheduled a hearing. The court consolidated the Bibo hearing with a hearing in another bankruptcy case, In re El Prado, involving another of Fukutomi’s apartment complexes. In El Prado, the court granted a creditors’ motion for the appointment of a trustee, based on an examiner’s report.

At the time of the hearing, there was no motion by the creditors for appointment of a trustee in the Bibo case. But the judge discovered in the papers a declaration which stated in the plainest terms, by a person with personal knowledge, that Fukutomi was siphoning money out of Bibo by means of a kickback scheme.

Mark Thomas, a property manager, submitted a sworn declaration establishing…