U.S. Bankruptcy Court, WDNY
Amending Settlement Stipulation
Equitable Considerations — Death in the Family
In re Select Tree Farms Inc.
Background: After the debtors filed for Chapter 11 relief, entered a settlement with a creditor, requiring the debtor to liquidate certain assets by a date certain. The debtors failed to liquidate its equipment and the creditor threatened to submit an order lifting the automatic stay. The debtors moved to modify a paragraph in the stipulation to extend for 45 days the deadline for the sale and payment because one of the debtors suffered a massive stroke and passed away just prior to the deadline.
Ruling: The Bankruptcy Court reasoned that, regardless that the stipulation and order the bank had a conditional entitlement to relief from the automatic stay, the bank had a contractual right to enforce its security interest. However, this right is subjected to equitable considerations. At the time the debtors signed the conditional stipulation for stay relief, the personal crisis of the debtor’s family was unexpected. The extension of time requested was reasonable and the debtor avers that no further extension will be sought.
Garry M. Graber and Steven W. Wells of Hodgson Russ for Evans Bank N.A.; William F. Savino of Damon Morey for the debtors