Warnick

This case concerns the proper disposition in bankruptcy court of proceeds from the sale of property, the ownership of which was subject to dispute and in litigation in a pending adversary proceeding. While the debtor held legal title to the property, its partner claimed that the property was owned by the partnership and hence not the estate. The outcome of the ownership dispute, yet unresolved, would determine whether the indebtedness secured by liens on the property would be satisfied out of the proceeds from the sale or out of the debtor’s assets.

The Bankruptcy Appellate Panel (“BAP”) held that, since the sale had been consummated and was not subject to attack, the nonbánkrupt partner was entitled to disgorgement of the sale proceeds sufficient to protect the partnership’s claimed ownership interest in the property and his potential interest in the partnership. We have jurisdiction pursuant to 28 U.S.C. § 158 (d). We affirm, but for reasons other than those of the BAP.

FACTUAL AND PROCEDURAL BACKGROUND

The debtor is Rodeo Canon Development Corporation (“Rodeo”), which holds record title to a commercial property at 9615 Brighton Way in Beverly Hills, California (“the…