U.S. Bankruptcy Judge John C. Cook signed an order which confirms an agreement between Bankruptcy Trustee Jerrold Farinash and Gladys Johnson, to whom the debt is owed on the track, which pays Johnson a little more than $4,166 per month through July.
The order also moves hearings on motions to dismiss the case and a motion for relief to Aug. 21, 10 a.m., in Chattanooga.
Originally filed in December 2011, the motion to dismiss contends the debtors in the case, Monty Morrow and Ronnie Wilcomm, are not eligible for Chapter 11 bankruptcy.
The two bought the property from Joe Lee Johnson for $1 million and it is his widow who is contesting the filings on behalf of his estate.
Johnson contends the debtors have only one asset in the Speedway itself; the asset was the subject of an immediate foreclosure action as a result of the debtors’ failure to pay $100,000 in arrears to Johnson. There are few other unsecured creditors whose claims are relatively small in relation to the more than $630,000 owed to Johnson (of which $100,000 is delinquent). And the debtor owes in excess of $30,000 in real property taxes.
Johnson’s case cites other cases where “similar factors are clear evidence of bad faith of the debtor which would cause an unreasonable delay and prejudice to the creditors while allowing a continued loss or diminution of the debtor’s estate without the absence of a likelihood of rehabilitation.”
She is asking the court to find that even if the debtors are legally eligible for bankruptcy protection, their petition for that protection be found to be “in bad faith,” and be dismissed.
The procedure is one used to protect the holder of the indebtness from having credit troubles while not receiving the anticipated revenue from the sale.
The motion for relief would lift the stay that prevents Johnson from seeking other recourse during the bankruptcy process and “allow Gladys Johnson to pursue her rights against the collateral.”