Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Goldberg

United States District Court, N.D. Illinois, Eastern Division

October 17, 2016

In re ARNOLD GOLDBERG, Debtor
v.
ARNOLD GOLDBERG, LINCOLNSHIRE PROPERTIES, LP, LPLP, INC., THE PONDS, LLC, LINCOLNSHIRE LIVING & REHAB CENTER, LLC, LINCOLNSHIRE ASSISTED LIVING CENTER LLC, AND LS PROPERTY HOLDINGS, LLC, Defendants. STUART GILMAN, not personally but as Trustee of the ISADORE GOLDBERG REVOCABLE TRUST, Plaintiff,

          MEMORANDUM OPINION AND ORDER

          JAMES B. ZAGEL, UNITED STATES DISTRICT JUDGE

         In this bankruptcy appeal, Arnold Goldberg (the “Debtor”) argues the bankruptcy court erred when it entered a preliminary injunction which restrained and enjoined the Debtor from disbursing and transferring deposits from two real estate entities. For the reasons stated below, I am declining to exercise jurisdiction over this appeal and remanding to the bankruptcy court for further proceedings.

         BACKGROUND

         On August 24, 2015, the Debtor filed a Chapter 11 bankruptcy petition. Among the Debtor's assets are his membership and partnership interests in two real estate entities, Lincolnshire Properties Limited Partnership (“LPLP”) and The Ponds, LLC (“The Ponds”). The Debtor is the only person authorized to act for either of these entities. He owns 99% of the limited partnership interests of LPLP and is the owner and president of the entity that is LPLP's 1% general partner. He is the manager of The Ponds and owns 51% of the membership interests of that entity.

         LPLP and The Ponds own healthcare facilities in Lincolnshire, Illinois. These real estate properties are leased to unrelated third parties with an option to buy. These entities have lease and option purchase agreements with the third parties. This dispute before me deals with the proceeds the Debtor is entitled to under these lease and option purchase agreements (the “Base Rents and Option Deposits”).

         In particular, the dispute deals with the legal relationship between those proceeds and the Isadore Goldberg Trust. The Debtor's father, Isadore Goldberg, developed and operated health care facilities. In the mid-1990s, the Debtor himself began developing similar facilities. The Debtor relied on financial assistance from his father to take on these health care projects. From 2002 through 2008, Isadore Goldberg loaned his son substantial sums of money.

         After Isadore passed away in 2010, Arnold Goldberg entered into a settlement agreement (“the Family Settlement Agreement”) with his mother, his siblings, the Isadore Goldberg Trust, and Isadore's estate. This settlement required Arnold to repay the loans his father provided. The Family Settlement Agreement provided that Arnold would settle his loans with payments totaling around $5 million. To ensure that this sum was paid, the Family Settlement Agreement provided the Isadore Goldberg Trust with two forms of security: (1) a security interest in and to Arnold's membership interests in LPLP, The Ponds, and other entities and (2) the collateral assignments of rents and other payments due from certain third parties.

         The Debtor's proposed plan of reorganization provides that Debtor intends to fund his plan using the Base Rents and Option Deposits. Stuart Gilman, as the trustee of the Isadore Goldberg Trust, filed an Adversary Complaint in the bankruptcy court on April 4, 2016, challenging whether the Debtor can use the Base Rent and Option Deposits. Gilman alleges that the income from the lease transactions was earmarked by the Family Settlement Agreement to repay the Isadore Goldberg loans and that LPLP and The Ponds are prohibited from making distributions due to the Debtor's mismanagement of the entities.

         The Debtor moved to dismiss Gilman's Complaint. On June 22, 2016, the Bankruptcy Court denied the Debtor's Motion to Dismiss, finding that the Isadore Goldberg Trust:

has pled with sufficient particularity a plausible cause of relief here, that the agreements in question are susceptible to the reading that the plaintiff has alleged, and that if that reading is in fact adjudicated by this Court to be the appropriate reading of those agreements, then the rights that are alleged by the plaintiff and the Court would then be determining could in fact result in the plaintiff having a right to the matters that it is seeking to enjoin, the payments.

         After denying the Debtor's motion to dismiss, the bankruptcy court entered temporary injunctive relief, enjoining the Debtor from disbursing and transferring the Base Rents and Option Deposits out of LPLP and The Ponds. The court explained that if Gilman was correct in his interpretation of the Family Settlement Agreement and the agreements between the Debtor and his tenants, then Gilman would have some legal rights to the Base Rents and Option Deposits. Given the bankruptcy court's judgment that it was at least plausible at an early stage in the litigation that Gilman's interpretation of the agreements was correct, the court concluded it would be appropriate to enjoin any payments from LPLP and the Ponds to the Debtor.

         The bankruptcy court specifically limited the duration of the injunction, setting it to expire about four months after entering it. The court confirmed at the June 22, 2016 hearing that it would reevaluate the issue of further injunctive relief in October 2016, before the preliminary injunction would expire.

         I have before me the Debtor's appeal of that preliminary injunction. The Debtor has not appealed the bankruptcy court's denial of his Motion to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.