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Smart Summary

Factual and Procedural Background

The Debtor, Spicer Oaks Apartments, Ltd., a limited partnership organized under Florida law, filed a voluntary petition under Chapter 11 of the Bankruptcy Code on September 15, 1986. The Debtor owns and operates a multifamily apartment project located in Tampa, Florida. Prior to the bankruptcy filing, a receiver was appointed for the Debtor's property. The Debtor's general partner is a Missouri corporation located in St. Louis, Missouri, and the sole limited partner is a California corporation. The majority of the Debtor's unsecured creditors, including the sole secured creditor Meritor Savings Bank, are located in Florida. The Debtor's business records are spread across Florida, Texas, California, and are being transferred to Missouri. Meritor Savings Bank filed a Motion to Transfer the bankruptcy proceeding to the Middle District of Florida. The Court heard the parties' memoranda and arguments regarding this Motion.

Legal Issues Presented

  1. Whether the bankruptcy case filed by the Debtor in the Eastern District of Missouri should be transferred to the United States Bankruptcy Court for the Middle District of Florida pursuant to 28 U.S.C. § 1412.
  2. Determination of the appropriate venue for the Chapter 11 proceeding under the venue provisions of 28 U.S.C. § 1408.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Suttle v. Reich Bros. Construction Co., 333 U.S. 163, 166 (1948) The state of incorporation is the domicile of a corporation for venue purposes. Used by analogy to conclude that the State of Florida, which created the Debtor limited partnership, is its domicile for venue purposes.
Rosenfeld v. S.F.C. Corp., 702 F.2d 282, 283 (1st Cir. 1983) Legal existence, home, residence, and citizenship of a corporation is in the state of incorporation. Supported the analogy that the Debtor's domicile is Florida, the state of its creation.
Hawaiian Investors v. Thorndal, 339 F.2d 807, 809 (8th Cir. 1965) Factors to consider in transferring bankruptcy venue under 28 U.S.C. § 1412. Guided the Court's evaluation of factors such as creditor location, debtor proximity, witnesses, asset location, economic administration, and ancillary administration.
In re Dew Mortgage Company, Inc., 10 B.R. 242, 243-44 (Bankr. M.D. Fla. 1981) Factors for determining whether to transfer a bankruptcy case. Considered in conjunction with other authorities to assess the appropriateness of venue transfer.
In re Distributors Warehouse, Inc., 1 B.R. 539, 542 (Bankr. M.D. Fla. 1979) Criteria for transfer of venue in bankruptcy cases. Helped establish the relevant factors favoring transfer to the Middle District of Florida.

Court's Reasoning and Analysis

The Court began by applying the venue provisions under 28 U.S.C. § 1408, which provide four alternatives for proper venue in bankruptcy cases: domicile of the debtor, principal place of business, location of principal assets, or venue of a related affiliate's bankruptcy case. The Court determined that the Debtor's domicile is Florida, as the limited partnership was created there, citing precedent that a corporation's domicile is the state of incorporation and applying this analogy to the partnership.

The Court found the locus of the Debtor's principal assets to be in the Middle District of Florida and noted the absence of any affiliates in Missouri that would justify venue there. Although the Debtor's general partner is located in Missouri, the Debtor's business records are distributed across multiple states and not concentrated in Missouri. The Court then considered the factors relevant to transfer under 28 U.S.C. § 1412 and controlling case law, including the proximity of creditors, the Debtor, witnesses, assets, economic administration, and the necessity for ancillary administration. With most creditors and assets located in Florida, the Court concluded that transferring the case would serve the interests of justice and convenience of the parties.

Holding and Implications

The Court GRANTED the Motion to Transfer and ordered that the Chapter 11 proceeding be transferred to the United States Bankruptcy Court for the Middle District of Florida pursuant to 28 U.S.C. § 1412.

This decision directly affects the parties by relocating the bankruptcy case to the jurisdiction most closely connected to the Debtor’s assets and creditors. The opinion does not establish new precedent but applies established venue and transfer principles to the facts of this case.

In re SPICER OAKS APARTMENTS, LTD., Debtor.

MEMORANDUM OPINION

BARRY S. SCHERMER, Bankruptcy Judge.

This case is before the Court for determination of the issues raised in the Motion To Transfer filed by Meritor Savings Bank. The parties have filed their memoranda of law and been heard with respect to the Motion.

The Debtor filed its Voluntary Petition under Chapter 11 of the Bankruptcy Code ( 11 U.S.C. § 101 et seq.) on September 15, 1986. On October 6, 1986, the Debtor filed its Statement of Financial Affairs as well as its Schedules. On October 23, 1986, Meritor Savings Bank filed its Motion.

The Debtor is a limited partnership organized and existing under the laws of the state of Florida. The general partner is a Missouri corporation, Growth Capital, Inc. whose principal office is located in St. Louis, Missouri. The sole limited partner of the Debtor is American Resource Corporation, a corporation domiciled in the state of California. The business of the Debtor is the ownership and operation of a multifamily apartment project located in Tampa, Florida.

The Debtor has been cited by the Hillsborough Health Department as having a health hazard. The testimony at the trial established that the Debtor is discussing with the Health Department a resolution of this issue. In addition, a receiver, Robert Nenez, of Lakeland, Florida, was appointed receiver for the Debtor's property prior to its Chapter 11 filing period.

According to the Schedules and the testimony adduced at the hearing, 18 of the Debtor's 20 largest unsecured creditors are located within Florida (one in Texas and one with an unknown address) and none of the creditors of the estate are located within the state of Missouri. Approximately eighty percent (80%) of the unsecured creditors are located within the state of Florida with the vast majority located within the Middle District of Florida. The only secured creditor, Meritor Savings Bank, listed as having a debt due it of $1,097,884.00 is located within the Middle District of Florida.

The Debtor files its tax returns in the State of Florida. According to the Debtor's Schedules copies of its tax returns are located in Carrollton, Texas, although its business records are located in Florida, Texas, and California. Testimony at trial revealed that the Debtor's business records are being transferred to St. Louis, Missouri.

DISCUSSION

The venue provisions applicable to cases filed under the Bankruptcy Reform Act of 1978 (the "Code"), as amended, are codified at 28 U.S.C. § 1408. Section 1408 provides a statutory forum selection clause which includes the following alternatives:

1. The domicile of the Debtor entity.

2. The principal place of business of the Debtor within the United States.
3. The locus of the Debtor's principal assets; or
4. The venue of any pending case under Title 11 concerning such entity's affiliate, general partner or partnership.

Section 1408 does not define the term "domicile" for venue purposes. However, the state of incorporation of a corporation is to be the domicile of the corporation Suttle v. Reich Bros. Construction Co., 333 U.S. 163, 166, 68 S.Ct. 587, 589, 92 L.Ed. 614 (1948) and it has been held that the legal existence, the home and the habitat, the residence and the citizenship of a corporation can only be in the state that created the corporation Rosenfeld v. S.F.C. Corp., 702 F.2d 282, 283 (1st Cir. 1983). By analogy, the State of Florida which created the Debtor limited partnership is the domicile of the limited partnership.

It is without question that the locus of the Debtor's principal assets is the Middle District of Florida and that there are no affiliates of the Debtor upon which venue can be claimed in Missouri. The Debtor's principal place of business could be construed to be the place of business of the Debtor's management. While the Debtor's general partner is located in St. Louis, Missouri, the Court finds that the Debtor's business records are located in jurisdictions other than Missouri (including records of the Debtor's multi-family apartment project which is managed by a company located in California with an on-site manager in Florida).

The Bankruptcy Court is clothed with authority to transfer a bankruptcy proceeding that was originally properly filed to another Bankruptcy Court if such a transfer would serve the interest of justice and the convenience of the parties. 28 U.S.C. § 1412. In determining whether a transfer would serve the interest of justice and the convenience of the parties, both the Eighth Circuit Court of Appeals, as well as the Bankruptcy Court for the Middle District of Florida have considered the following factors:

1. Proximity of creditors of every kind to the Court;
2. The proximity of the Debtor to the Court;
3. The proximity of the witnesses necessary to the administration of the estate;

4. The location of the assets;

5. The economic administration of the estate;
6. The necessity for ancillary administration if a liquidation should result.
Hawaiian Investors v. Thorndal, 339 F.2d 807, 809 (8th Cir. 1965); In re Dew Mortgage Company, Inc., 10 B.R. 242, 243-44 (Bankr.M.D.Fla. 1981); In re Distributors Warehouse, Inc., 1 B.R. 539, 542 (Bankr.M.D.Fla. 1979). Other than the location of the Debtor, the criteria set forth above dictate that the proper venue of this Chapter 11 proceeding is the Middle District of Florida.

Accordingly, pursuant to 28 U.S.C. § 1412, the Motion of Meritor Savings Bank shall be GRANTED and the Chapter 11 proceeding transferred to the United States Bankruptcy Court for the Middle District of Florida.

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IN RE SPICER OAKS APARTMENTS, LTD., (Bankr.E.D.Mo. 1987)
(Jan 26, 1987)