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Robert A. Sears, Ch. 11, BK10-40275 (Mar. 24, 2016)

After a trial on a creditor's motion to appoint a Chapter 11 trustee, with a joinder by the U.S. Trustee, the court granted the motion, finding clear and convincing evidence that such an appointment is warranted under subsections (1) and (2) of 11 U.S.C. § 1104(a). The court identified the debtor's "vendetta" against family members who were more interested in protecting their own financial interests than in helping him reorganize as an obstacle to the debtor in possession's ability to exercise his fiduciary duties and to act in the estate's best interests. For that reason, the court ruled that an independent trustee should be appointed under § 1104(a)(2). In addition, the debtor's trial testimony demonstrated incompetence and gross mismanagement of the case, as well as possible fraud and dishonesty, leading the court to also find cause for appointment of a trustee under § 1104(a)(1).

Date: 
Thursday, March 24, 2016
Judge: 
Judge Thomas L. Saladino