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efforts was an attempt to preserve the value of its realty the role of Debtor's management in the financial affairs of the located at 12470 East Locke Road, Lockeford, California (the Debtor (collectively, "Future Trustee Action") . "Property"). The Debtor scheduled the Property as having a 2 value of $10,250,000, or equity of $6,361,327 above the 2 CAUSE EXISTS FOR THE CONVERSION OF THE scheduled secured debt of $3,888,673. CASE TO CHAPTER 7 � 3 3. The Debtor rented the Property to small wineries 8. Section 1112(b) of the Bankruptcy Code permits 4 that used the facilities for tasting room operations. The 4 the court, in its discretion, to convert or dismiss a Chapter Debtor also operated its own wine tastinb room at the facility 11 case, whichever is in the best interests of creditors and 5 for its own wine, using a fossil collection to attract members 5 the estate, for "cause." Any party in interest may move for 6 of the public. Also, the Debtor provided custom crushing and6 relief under the section and, in certain instances, the court storage facilities for the wineries that rented from it. may grant relief upon its own motion. ' 7 7 4. The purported equity in the Property turned out 9. With the abandonment of the Property by the s to be non-existent, and in light of the lack of cash to operate 5 bankruptcy estate, the need for this case to proceed in a the Property and service its secured debt, the failure of reorganization chapter diminished. Any Future Trustee Action B secured creditors to consent to the use of cash collateral, and B can be done in a liquidation framework. Moreover, the estate 16 environmental issues associated with the Property, on July 6, has no resources to pay Chapter 11 fees or expenses. 2009', the Court granted a motion by the Chapter 11 Trustee to 10 - 11 abandon the Property. (See generally., Motion to Abandon Real 11 30. With the abandonment of the Property and with it Property and Bulk Wine Inventory, SF-2j. At that time, the the cessation of the collection of rent by the estate and a 12 Court also granted stay relief motions filed by the secured 12 prospective foreclosure, the Debtor is no longer an operating creditors to enable the creditors to continue to pursue their entity. There is no prospect, much less a "reasonable 13 non-bankruptcy remedies against the Debtor's real andersonal 15 likelihood," of a reorganization. No further P purpose would be 14 property. . t 1e served by maintaining the case as a Chapter 11 case. 19 5. The Trustee has been informed that Scott is inWHEREFORE, Trustee respectfully requests that the the process of foreclosing on his junior lien secured by the 15 Court issue an order converting the case to Chapter 7. 16 Property, and that the foreclosure should be complete by the 16 time of the hearing on this motion. In the event that Scott DATED: September�, 2009 SUNTAG 6 FEUERSTEIN 17 completes its foreclosure, Scott will take title to the 17 A Professional Corporation Property subject to approximately $3 million owed to Pacific 18 State Bank. 18 1B 6. With respect to personal property used in the 78 By: 26 Debtor's operations or located at the Property, chiefly storage 25 Abram S. Feuerstein tanks, crushing equipment, and fossils, the Chapter 11 Trustee - Attorneys for Trustee 21 is in the process of abandoning the subject property. A motion 21 to abandon the personal property is scheduled to be heard on 22 the same calendar as this conversion motion. 22 23 7. At this stage of the 23 9 proceedings, among other 24 things, the Chapter 11 Trustee intends to review pre- and/or 24 postpetition transfers of assets, the collection of accounts 25 receivable, differences between scheduled property in the 25 Bankruptcy Case and property identified by the Trustee, 26 relationships between the Debtor and its secured creditors, and 26 NOTICE OF HEARING ON MOTION TO CONVERT NOTICE OF HEARING ON MOTION TO CONVERT CHAPTER 11 CASE TO CHAPTER 7 -3- CHAPTER 11 CASE TO CHAPTER 7 -4- i J e