Bankruptcy Appeal: Pal Family Credit Co. Inc. v. County of Albany

U.S. District Court, Northern District of New York

Bankruptcy Appeal

Chapter 11 — Bad Faith

Pal Family Credit Co. Inc. v. County of Albany
08-CV-656
Judge Mordue

Background: Before the court are several appeals involving the Pal Family Credit bankruptcy filed under Chapter 11. Two of the appeals challenge Judge Littlefield’s April 14, 2008 order dismissing with prejudice for 180 days all three cases and the related Three Real Estate case. All three Pal debtors and the Three Real Estate debtor have principals in common.  Between 1994 and 2008, a total of 12 bankruptcy cases have been filed by the four present debtors and by related debtors. Eleven of the 12 involve the same parcel of real property in Rensselaerville, in which the Pal debtors held fractional interests. As a result of an April 1, 2005 tax foreclosure proceeding by Albany County, they no longer hold title, therefore the Pal debtors’ primary asset is the adversary proceeding, in which they seek to set aside as fraudulent the conveyance to the county on the ground that the value of the property far exceeded the amount of taxes owed. The trustee characterizes the 11 bankruptcy cases as “all focus[ing] on avoiding the loss of 348-350 Albany Hill Road … or recovering it from Albany County.” The 12th case is the Three Real Estate case, a single-asset real estate case involving the residence of Sidney and Tamara Pal, 1 Lenore Ave., Monsey, N.Y. The trustee argued, among several other points, that the debtor’s multitude of actions forms “an epic of delay and obfuscation.”

Ruling: As to the order dismissing with prejudice, the court affirms Judge Littlefield’s order. Judge Littlefield fully adopted the trustee’s position that the record established cause for dismissal with prejudice based on §1112(b) and on the ground of bad faith. After reviewing the evidence, the court finds no error of fact and that the conclusions were correct. The other orders appealed from also are affirmed.

Bernard Weinreb for the appellants, Tonia L. Summers, Albany County Department of Law, for the county, and Kevin J. Purcell for the trustee