When a company is in bankruptcy in Pennsylvania or any other jurisdiction, the debtor company must reveal the existence of all assets, including all real estate owned. The company cannot simply sell real estate or other assets without court approval. In one Chapter 11 case, a developer from Montgomery County allegedly sold a property while it was still in the bankruptcy without pre-approval to do it.
The Chapter 11 has since closed. A creditor of the developer came into bankruptcy court recently and asked the court to reopen the case. Reopening a closed bankruptcy case is allowed for reasons having to do with some relevant matter that must be processed or corrected or for other equitable reasons.
The creditor pointed out to the court that the debtor sold a property that was not included within the bankruptcy estate but which should have been listed as an owned asset. The court had approved a bankruptcy plan in January 2012. The complaining creditor was an unsecured creditor who would have benefitted if there had been more assets to distribute.
The company, TH Properties, said it was investigating why it was not listed that the company was sold but that it objected, in any event, to reopening the case. It argued that its reorganization momentum would be disrupted if the bankruptcy were to be reopened. However, a bankruptcy judge did order the case reopened. The dispute could take a number of twists, but generally the rapid reorganization of the company will likely not be disrupted because numerous consumer purchasers in Pennsylvania are waiting for their homes to be completed. The matter will likely be settled after a period of negotiations and could be resolved by a modification of the Chapter 11 bankruptcy plan to provide an extra payment to unsecured creditors.
Source: mcall.com, “Federal judge reopens bankruptcy case of TH Properties“, Crissa Shoemaker DeBree, April 30, 2015