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Alterna Mortgage Income Fund, LLC v. Gs Holdings-Brookside, Ltd

United States District Court, Sixth Circuit

August 8, 2013

ALTERNA MORTGAGE INCOME FUND, LLC Plaintiff,
v.
GS HOLDINGS-BROOKSIDE, LTD., Defendants.

ORDER GRANTING MOTION OF RECEIVER FOR APPROVAL OF (1) SALE OF ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES AND INTERESTS; BY AUCTION; (2) FORM OF PURCHASE AGREEMENT; AND (3) OTHER RELATED RELIEF

TIMOTHY S. BLACK, District Judge.

This Matter is before the Court pursuant to the Motion filed by April Rose, the courtappointed Receiver ("Receiver") of the GS Holdings Brookside, Ltd. ("Debtor"), by her attorney, for the entry of an order authorizing the Receiver to sell substantially all of the assets of the Debtor free and clear of liens, claims and encumbrance and other interests, through a sealed bidding procedure, and approving the form of purchase agreement (the "Sale Motion"). [Doc. # 60] The Court hereby finds the following:

1. This Court has jurisdiction because complete diversity is present as required by 28 U.S.C. § 1332. Because the subject property is located in the Southern District of Ohio substantive provisions of Ohio Rev. Code §§ 2735.01 et seq. apply.

2. The Debtor owns a mobile home park, which includes real property, improvements, fixtures, personal property, options to buy certain mobile home within the park, and other assets, located in Clark County, Ohio, at the address of 1962 Mahar Road, South Vienna, Ohio 45369. Alterna Mortgage Income Fund ("Alterna") has a first and best security interest in the real property, improvements, fixtures, and other assets in connection with the business (collectively "Assets") of the Debtor.

3. The Debtor is in unequivocally in default on its obligations to first mortgage holder and prime secured creditor Alterna, and Alterna filed a foreclosure action in the instant case. The Court entered default judgment against Debtor GS Holdings Brookside on February 25, 2013, in the amount of $2, 908, 250, plus prejudgment interest and post judgment interest. (Doc. 47). Alterna also motion for the appointment of April Rose as receiver.

4. On November 1, 2012 [Doc. # 33], the Court entered an Order ("Appointment Order") which appointed April Rose the Receiver of Debtor and its assets. The Appointment Order under paragraph 4 authorized the Receiver to immediately and exclusively possess and control the Property, and under paragraph 13 authorized the Receiver to effectuate the sale of the Assets free and clear of all liens, claims, and encumbrances.

5. The Debtor has marketable title to the Assets and, accordingly, the transfer of the Assets by the Receiver as contemplated by the Purchase and Sale Agreement (the "Agreement") (a) is a legal, valid, and effective transfer of the property of the Debtor's receivership estate to the Successful Buyer; and (b) will vest in the Successful Buyer all right, title, and interest of the Debtor in and to all of the Assets, free and clear of all liens, claims, encumbrances, and other interests of any other party/creditor in and to the Receivership Assets.

6. Since being appointed by the Court, the Receiver has taken control of the Assets and operated the mobile home park. The Receiver has brought the mobile home park through a difficult period, and has instituted measures that have stabilized the park's operations.

7. The Receiver has enlisted the assistance of real estate broker John Blain in Clark County, Ohio (the "Broker"). Prior to contacting the Broker, the Receiver made numerous inquiries and had numerous discussions with players active in the mobile home park market, to determine interest in locating a purchaser of the Assets. Such efforts produced a viable purchaser (the "Stalking Horse Buyer") which represents that it is ready, willing, and able to enter into a purchase agreement with Receiver to purchase the Assets for the amount of $2, 100, 000.00. This represents the highest and best offer the Receiver received prior to commencing the marketing campaign. The Receiver and Buyer have agreed to enter into the Sale and Purchase Agreement attached to the Motion as Exhibit A.

8. Through consultation with the Receiver and at her direction, the Broker developed and implemented a plan to market the Assets on a national level, which plan was designed to produce as many prospective bidders for the Assets. The Buyer agreed to serve as the stalking horse bidder, i.e., the opening bidder, subject to certain bidding protections described and approved herein. The marketing activity was designed to achieve the Receiver's goal of meeting or exceeding the standard of commercial reasonableness in locating the highest and best bidder for the Assets.

9. The Broker engaged in an extensive, multi-media marketing campaign, commencing on or before the date of the Sale Motion. The Broker listed the Assets for sale in the Multiple Listing Services for the following seven counties: Clark, Champaign, Logan, Miami, Mercer, Auglaize, and Shelby. The Broker also listed the Assets for sale through internet sources known to be widely viewed nationally by players in the mobile home park arena, including LoopNet.com, the largest commercial real estate service online, MobileHomeParkStore.com, a well-known and active internet site for buying selling mobile home parks, and other sites specializing in commercial real estate sales, CoStar.com and GlobeSt.com. The Broker further listed the Assets for sale in the local Springfield News and Sun. The Broker also listed the assets in the Wall Street Journal, the Cincinnati Enquirer, and the Cincinnati Business Courier. Forthcoming are ads to be placed in business journals and newspapers in Columbus and Cleveland. Moreover, the Receiver or Broker contacted approximately ten major players in the mobile park business within the region, to advise them of the sale of the Assets.

10. To date, the marketing campaign has generated between 35 and 40 leads, and 26 informational summaries have been provided to prospective bidders. The Broker and Receiver are still in the process of receiving inquiries and will continue to do so until the August 16, 2013 bidding deadline. The marketing plan for the sale of the Assets is thorough and exhaustive, and the Receiver thereby (a) is adequately and effectively soliciting potential purchasers of the Assets and marketing the Assets for sale; and (b) providing potential purchasers of the Assets with adequate information concerning the Assets together with a full and fair opportunity to conduct due diligence concerning the same.

11. The Motion was served on all creditors and interested parties for whom counsel has filed a notice of appearance via the Court's electronic service mechanism, as well as by regular U.S. Mail on the parties to the action not filing a notice of appearance.

12. On July 26, 2013, the Court entered a Notation Order providing a deadline of August 5, 2013, 4:00 p.m. for filing memoranda in response to the Sale Motion. The Receiver has not received service of any memoranda in response to the Sale Motion, nor does the Case Docket indicate that any memoranda were filed. The Court's July 26, 2013 Notation Order also required that proposed orders concerning the Sale ...


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