391 F. App'x 802

In re: PEGASUS WIRELESS CORPORATION, Debtor. Pegasus Wireless Corporation, Plaintiff-Appellant, v. Alex Tsao, Defendant-Appellee.

No. 09-14683

Non-Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

Aug. 9, 2010.

Kevin C. Gleason, Kevin C. Gleason, P.A., Hollywood, FL, for Plaintiff-Appellant.

Gregory S. Grossman, Annette C. Esco-bar, Astigarraga Davis Mullins & Gross-man, P.A., Miami, FL, Gina Lynn Martin, Goodwin Procter LLP, Boston, MA, for Defendant-Appellee.

Before BLACK, BARKETT and HULL, Circuit Judges.

PER CURIAM:

Pegasus Wireless Corporation (Pegasus) appeals the district court’s order affirming the bankruptcy court’s dismissal of Pegasus’s voluntary Chapter 11 bankruptcy case for cause under 11 U.S.C. § 1112(b). On appeal, Pegasus contends: (1) the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) precluded dismissal of the case, (2) the bankruptcy filing was required by Nevada law, and (3) dismissal is a severe remedy.1 After review, we conclude all of Pegasus’s arguments lack merit.2

I.

Pegasus contends BAPCPA circumscribed the bankruptcy court’s discretion to dismiss the case for cause. With regard to § 1112, BAPCPA made dismissal or conversion mandatory upon a showing of *803cause subject to specified exceptions. .Pegasus does not explain how BAPCPA precludes, rather than mandates, dismissal.

Section 1112(b) provides in pertinent part that a bankruptcy court “shall” dismiss or convert a bankruptcy case for “cause” unless “unusual circumstances specifically identified by the court ... establish that the requested conversion or dismissal is not in the best interests of creditors and the estate....” 11 U.S.C. § 1112(b)(1). We have held cause for dismissal exists when a bankruptcy petition was not filed in good faith. See In re Phoenix Piccadilly, Ltd., 849 F.2d 1393, 1394 (11th Cir.1988); In re Albany Partners, Ltd., 749 F.2d 670, 674 (11th Cir.1984). Dismissal is particularly appropriate “when there is no realistic possibility of an effective reorganization and it is evident that the debtor seeks merely to delay or frustrate the legitimate efforts of secured creditors to enforce their rights.” In re Albany Partners, 749 F.2d at 674.

Here, the bankruptcy court determined cause for dismissal existed because the case was not filed in good faith.3 The bankruptcy court based its decision on, inter alia, Pegasus’s repeated violation of California state court orders, the “fabricated” testimony of Pegasus’s Chief Financial Officer at the evidentiary hearing, and Pegasus’s failure to demonstrate any attempt at reorganization after its bankruptcy filings. The bankruptcy court explicitly noted there were no “unusual circumstances” and concluded dismissal, rather than conversion, was m the best interests of the creditors and the estate.4 Based on the bankruptcy court’s findings, which Pegasus does not dispute, the dismissal for cause was not an abuse of discretion. Pegasus’s contention that BAPCPA somehow precluded this result is wholly without merit.

II.

Pegasus argues the bankruptcy filing was required under Nevada law, which imposes fiduciary duties on officers and directors with respect to creditors of an insolvent corporation. This issue is merit-less, as Pegasus fails to cite any authority holding that state law can abrogate the authority vested in federal bankruptcy judges to dismiss actions for cause under § 1112(b).

III.

Finally, Pegasus contends dismissal is a “severe remedy reserved for the most severe behavior.” As explained above, the bankruptcy court did not abuse its discretion by dismissing this case for cause under § 1112(b). Moreover, it is clear Pegasus filed this bankruptcy petition for the purpose of avoiding its obligations to Ap-pellee. Pegasus’s egregious conduct easily constitutes “severe behavior.”

AFFIRMED.

Pegasus Wireless Corp. v. Tsao
391 F. App'x 802

Case Details

Name
Pegasus Wireless Corp. v. Tsao
Decision Date
Aug 9, 2010
Citations

391 F. App'x 802

Jurisdiction
United States

References

Referencing

Nothing yet... Still searching!

Referenced By

Nothing yet... Still searching!