In re Vermont Real Estate Investment Trust
Docket: Bankruptcy No. 82-33
Court: United States Bankruptcy Court, D. Vermont; August 19, 1983; Us Bankruptcy; United States Bankruptcy Court
Vermont Real Estate Investment Trust (VREIT), as debtor in possession, intended to sell two properties: 267-271 Pearl Street in Burlington and 1306 Ethan Allen Drive in Colchester. A hearing was held regarding these sales, with no objections to the Pearl Street sale. However, objections were raised concerning the Colchester property by representatives of Howard Bank, the unsecured creditors committee, and an individual creditor. They argued that the sale agreement with Terre Enterprises favored VREIT's shareholders at the expense of unsecured creditors, particularly when compared to a higher cash offer from Mr. Kaushal, which VREIT had rejected. The Terre agreement was criticized for yielding $35,000 less in cash, requiring VREIT to finance $165,000 of the purchase price, and generating no immediate cash from the sale, unlike the Kaushal offer, which could produce around $100,000 for creditor distribution. The brokers' fee for Terre was reduced, but no similar concession was requested from Kaushal's broker, raising further concerns about fairness. The court emphasized the need to balance the interests of equity holders and creditors, particularly unsecured creditors. It found that the Terre proposal would prejudice the unsecured creditors' interests and recommended that VREIT actively seek the Kaushal offer or other alternatives that would not disadvantage creditors. The court's order concluded by approving the sale of the Pearl Street property while disapproving the sale of the Colchester property to Terre Enterprises.