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In re Virginia Broadband, LLC (Case No. 12-62535) 09/09/2013

The official committee of unsecured creditors filed a motion to dismiss the chapter 11 case pursuant to 11 U.S.C. § 1112(b), alleging that a majority of the debtor’s board did not authorize the filing of a chapter 11 petition.  The court concluded that the motion to dismiss rested entirely on the allegedly flawed authorization for the petition due to a member’s individual bankruptcy filing.  The court concluded that that member’s economic and non-economic interest in the debtor became property of his estate under section 541(c)(1) despite Virginia Code section 13.1-1040.1(6)(a) and revested in him upon the dismissal of his case pursuant to Bankruptcy Code section 349(b)(3).  As such, his vote in authorizing the petition was valid.

Date: 
Monday, September 9, 2013
Category: 
Chapter 11 Issues
Conversion and Dismissal
Creditors Committee
Property of the Estate
Chapter: 
11