U.S. Trustee’s Motion to Appoint aChapter 11 Trustee – Page
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Allegations Regarding Conflicts of Interest:
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The other founder of Bob’s Steak and Chop House incorporated the LenoxRestaurant Group, Inc. (“Lenox”), and Lenox now franchises Bob’s Steak and Chop Houses.8.
With court approval, Lenox has provided funds to the Debtor during the post-petition time period.9.
Sambol and the Debtor’s counsel have indicated that they contemplate selling theDebtor as a going concern.10.
Lenox has indicated that it will participate in bidding on the Debtor. As Sambol andLenox have a lengthy history, it is likely that Sambol will negotiate a position for himself when theDebtor is sold.11.
In addition, at the creditors’ meeting, Sambol testified that another bidder wasinterested in acquiring the Debtor, using another name, and retaining Sambol.12.
While one cannot predict who will bid, other Bob’s Steak and Chop Housefranchisees or other restauranteurs may be interested in acquiring the Debtor but not in retainingSambol.
Legal Analysis and Argument
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Under the Bankruptcy Code the court must direct the appointment of a chapter 11trustee when “cause” exists or when “such appointment is in the interests of creditors.”
11 U.S.C.§1104(a)(1),(2).
“Cause” exists for the appointment of a chapter 11 trustee. First, the indictmentand inability to testify about the use of the $300,000 is “cause, including fraud, dishonesty,incompetence, or gross mismanagement.”
11 U.S.C. §1104(a)(1).
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Second, “cause” exists because
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Because Sambol controls the Debtor, the U.S. Trustee’s filing of this motion is compelled by 11 U.S.C. § 1104(e). That subsectionrequires that the U.S. Trustee move for the appointment of a trustee under § 1104(a) if he has “reasonable grounds to suspect” that either
Case 09-33211-hdh11 Doc 62 Filed 07/14/09 Entered 07/14/09 11:44:14 Desc MainDocument Page 3 of 12
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