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Opinion 123

Case Name: 

In re Lettuce Entertain You, Inc.

Judge: 
Judge Clark
Date: 
Apr-9-1984
Case Number(s): 
83C-3014
Status: 

UNPUBLISHED
See 151.pdf

Body: 

Creditor, the lessor of commercial mall space to chapter 11 debtor, filed a prepetition state court action against debtor seeking unpaid rent and recovery of the leased property. Over a period of more than a year, debtor made a number of payments to the clerk of the state court, in order to retain possession of the property during the lawsuit. When debtor filed its petition in bankruptcy, the amount being held by the state court was approximately $33,000, which was significantly less than the amount creditor was entitled to under the lease. Creditor filed a motion for relief from the automatic stay and to set a date by which debtor must assume or reject its lease, and debtor moved for turnover of the funds. Creditor argued that debtor had no interest in the funds, while debtor argued that the funds were estate property and that creditor's claim was unsecured. The court held that debtor's interest in the funds, although disputed, was part of debtor's estate, and that debtor had a right to use the funds for rehabilitation purposes under 11 U.S.C. §1107 and 1108, unless otherwise ordered. The court denied creditor's motion, granted debtor's motion for turnover, and set a date by which debtor must either assume or reject the lease. This order was vacated, with respect to debtor's motion for turnover, by the bankruptcy court's own order in 151.pdf.

Internal Ref: 
Opinion 123
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