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4-S RANCH: Wants Solicitation Period Extended Thru Feb. 2021

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4-S Ranch Partners, LLC, requests the U.S. Bankruptcy Court for the Eastern District of California to extend the period within which it has the exclusive right to solicit acceptance of a Chapter 11 plan to February 25, 2021.

The Debtor has won approval of the disclosure statement explaining its Chapter 11 plan, and a confirmation hearing is set to be held on September 29, 2020 at 9:30 a.m. at Fresno Courtroom 13, Department B. The Order established a deadline of August 18, 2020, for the Debtor to mail the ballot regarding Plan acceptance, the Plan and Amended Disclosure Statement to the United States Trustee, creditors, equity security holders, and other parties in interest. Further, the Order set September 14 as the last day for filing written acceptances or rejections of the Plan and written objections to confirmation of the Plan.

Absent an extension, the 180-day exclusivity period to obtain plan approval was slated to expire August 29, 2020.

A hearing on the extension request is also set for September 29.

4-S Ranch Partners says it has made good faith progress toward reorganization by filing and satisfying the steps to reach a hearing on confirmation of the Plan in the face of pressure, a motion for relief from stay against its 4-S Property, and oppositions to its initial Disclosure Statement amidst a global pandemic that has slowed most processes.

On March 16, 2020, 14 days after the bankruptcy filing, creditor Sandton Credit Solutions Master Fund IV, LP filed its Motion for Relief from Stay seeking stay relief to foreclose on its secured interest in the 4-S Property, but the Debtor filed its Objection to Sandton’s motion on March 31. On April 24, 2020, the Court issued a Scheduling Order setting an evidentiary hearing on Sandton’s Motion for September 17.

The Debtor continues its efforts to raise capital or obtain financing or to sell the Property. Sandton has opposed the Debtor’s efforts by its motion for relief from stay and its opposition to the initial Disclosure Statement. The Debtor contends its case is complex as it involves many potential investors, water districts and water purchasers, and multiple governmental agencies.

The Debtor says the primary reason necessitating the extension request is the Merced County’s anticipated decision to amend its claim from unsecured priority to secure.

On June 14, 2020, Merced County filed a claim for unpaid real estate taxes for the years 2018 and 2019 in the amount of $396,700.28 (Court Claim Register, Claim 4-1). Merced County characterized its claim as being fully secured but also as entitled to unsecured priority treatment pursuant to 11 U.S.C. 507(a)(8). A priority claim pursuant to 507(a)(8) is limited to allowed unsecured claims of governmental units including property taxes. As such, Merced County’s claim was inconsistent as both a secured and unsecured priority claim. The Debtor understood the claim be an unsecured priority claim.

The Disclosure Statement indicated that Merced County’s claim would be treated as a priority tax debt that is unimpaired and not permitted to vote on the Plan.

On August 18, 2020, counsel for the Debtor had a telephone conversation with Lorraine Gonzalez of Merced County regarding their claim after a review of court’s claim register for balloting service purposes. In the course of that conversation, Merced County’s advised counsel that its claim of an unsecured priority property tax debt was incorrect and it intended to amend Merced County’s claim to being treated as fully secured as opposed to an unsecured priority tax claim.

The Debtor filed a revised Chapter 11 Plan and Disclosure Statement on August 28.

4-S Ranch Partners says the gap period between the termination of the exclusivity period and the Plan confirmation hearing will expose creditors, the estate, and other parties in interest to more costs, disruption, and delay by opening up the door to address a competing plan.

According to the Debtor, “declining to grant the Debtor’s first request to extend the exclusivity period from August 29 to December 31, 2020 (rather than the full 20 months from the petition date), would provide an unfair bargaining position to those with the aim of foreclosing on the property, and leave the Debtor little room to amend the Plan if needed.”

“That would result in nullifying all the Debtor’s effort to realize the value of 4-S’ Property for all parties in interest,” 4-S Ranch Partners states.

About 4-S Ranch Partners

4-S Ranch Partners, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). 4-S Ranch Partners filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Cal. Case No. 20-10800) on March 2, 2020.

The petition was signed by Stephen W. Sloan, the Debtor’s managing member. At the time of filing, the Debtor was estimated to have $500 million to $1 billion in assets and $50 million to $100 million in liabilities.

Judge Rene Lastreto II oversees the case. Reno F.R. Fernandez III, Esq., at Macdonald Fernandez LLP, is the Debtor’s legal counsel.