*Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be

published and is not precedent except under the limited circumstancesset forth in 5

TH CIR. R. 47.5.4.

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 98-30610

LIFEMARK HOSPITALS OF LOUISIANA, INC.,

Plaintiff-Appellant,

VERSUS

LILJEBERG ENTERPRISES, INC.,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Louisiana

(97-CV-3312-T)

March 15, 1999

Before WISDOM, STEWART, and DENNIS, Circuit Judges.

PER CURIAM:*

The plaintiff-appellant, Lifemark Hospitals of Louisiana, Inc. (Lifemark) appeals the

district court’s order affirming bankruptcy court orders (1) confirming the plan of reorganization

of the defendant-appellee, Liljeberg Enterprises, Inc. (LEI); (2) denying Lifemark’s Motion to

Dismiss LEI’s bankruptcy; (3) granting LEI’s Motion to Modify Plan of Reorganization and Have

Modifications be Deemed Immaterial; and (4) denying approval of Lifemark’s disclosure

statement. We affirm.

The instant matter is the most recent chapter in a long history of litigation between

Lifemark and LEI. LEI is the operator of a pharmacy in a hospital owned and operated by

Lifemark. LEI’s operation of the pharmacy is governed by a Clinical Pharmacy Management
2

Agreement between Lifemark and LEI. In January 1993, LEI filed a voluntary Chapter 11

petition in the United States Bankruptcy Court for the Eastern District of Louisiana. LEI filed its

First Plan of Reorganization in June 1993. In October 1993, LEI filed its Second Amended

Disclosure Statement and Third Amended Plan of Reorganization. The bankruptcy court

approved LEI’s Second Amended Disclosure Statement in November 1993.

In September 1996, Lifemark filed a Motion to Dismiss LEI’s bankruptcy proceedings.

The bankruptcy court denied this motion in March 1997. In the meantime, LEI moved to modify

its plan. In May 1997, Lifemark filed a competing plan of reorganization and disclosure

statement. The bankruptcy court denied approval of Lifemark’s disclosure statement in June

1997. In August 1997, the Bankruptcy Court confirmed LEI’s Third Amended Plan of

Reorganization, and then confirmed the plan as modified in September 1997.

Lifemark appealed to the United States District Court for the Eastern District of

Louisiana. The district court affirmed the bankruptcy court’s approval of LEI’s plan, holding that

the bankruptcy court’s findings were not clearly erroneous. The district court also affirmed the

bankruptcy court’s order denying the motion to dismiss and its order denying approval of

Lifemark’s disclosure statement and approving LEI’s plan modifications. Lifemark now appeals

these determinations to this Court. After the parties submitted their briefs, LEI filed a motion to

dismiss this appeal on the basis of equitable mootness, which we ordered carried with the case. 

Lifemark first contends that LEI did not file and prosecute its bankruptcy proceedings in

good faith and did not propose its plan of reorganization in good faith, and that the findings of the

bankruptcy court and the district court’s review of these findings were clearly erroneous. 

Lifemark argues that LEI’s bankruptcy and plan of reorganization were not in good faith because

(1) LEI was in good financial condition, and therefore did not need to reorganize; (2) LEI failed

to use its substantial assets to pay its creditors; and (3) LEI’s bankruptcy was filed solely as a

litigation tactic. 
 

2 Matter of T-H New Orleans, Ltd., 116 F.3d 790, 796 (5th Cir. 1997).

 

3 Matter of Elmwood Development Co., 964 F.2d 508, 510 (5th Cir. 1992).

 

4 Matter of Cajun Electric Power Cooperative, Inc., 150 F.3d 503, 513 (5th Cir. 1998)

(quoting Chamberlain v. Commissioner, 66 F.3d 729, 732 (5th Cir. 1995)).

 

5 Matter of Elmwood, 964 F.2d at 510.

 

6

In re James Wilson Assocs., 965 F.2d 160, 170 (7th Cir. 1992).

 

7

In re Albany Partners, Ltd., 749 F.2d 670, 674 (7th Cir. 1984).

 

8 Matter of Cajun Electric Power Cooperative, 964 F.2d at 510.

3

“This Court, acting as a second review court, reviews the bankruptcy court’s findings of

fact under the clearly erroneous standard, and the bankruptcy court’s conclusions of law de

novo.”2 A factual finding that a Chapter 11 petition was filed in good faith is reviewed for clear

error.3 A bankruptcy court’s factual finding is clearly erroneous only if the court is “left with the

definite and firm conviction that a mistake has been made.”4 

Our review of the record in this case leads us to the inescapable conclusion that the

determinations of the bankruptcy court and the district court were not clearly erroneous. With

regard to LEI’s filing of the Chapter 11 proceedings, “[t]he good faith determination depends

largely upon the bankruptcy court’s on-the-spot evaluation of the debtor’s financial condition,

motives, and the local financial realities.”5 While LEI may arguably have been relatively

financially healthy, “the Bankruptcy Code permits [a] firm that has debts to declare bankruptcy

even though [it] is not insolvent.”6 In this case, it cannot be said that there was “no realistic

possibility of an effective reorganization” and it is not evident that LEI is seeking “merely to delay

or frustrate the legitimate efforts of secured creditors to enforce their rights”.7 Our review of the

record does not leave us “with the definite and firm conviction that a mistake has been made.”8

Thus, with regard to LEI’s bankruptcy filing, the bankruptcy court and district court’s

determinations were not clearly erroneous.
 

9 Matter of T-H New Orleans, Ltd., 116 F.3d at 802 (internal citation and quotation marks

omitted).

 

10 Matter of Texas Extrusion Corp., 844 F.2d at 1160.

 

11 See Matter of Cajun Electric Power Cooperative, 964 F.2d at 510.

 

12 See Matter of Texas Extrusion Corp., 844 F.2d at 1156-57.

 

13 See id. at 1157.

4

With regard to LEI’s plan of reorganization, the bankruptcy court and district court could

have found that the plan in this case was “proposed with the legitimate and honest purpose to

reorganize”.9 In this case, the bankruptcy judge, who was “in the best position to assess the good

faith of the proposal,” found no problem with LEI’s plan of reorganization.10 Again, we are not

firmly convinced that either the bankruptcy court or the district court made a mistake.11

Accordingly, the bankruptcy court and district court determinations on this matter were not

clearly erroneous.

Lifemark also contends that the bankruptcy court erred by denying approval of its

disclosure statement. This is so, argues Lifemark, because LEI’s disclosure statement does not

accurately reflect LEI’s financial condition and its ability to handle its debts, and therefore, does

not provide the “adequate information” required under 11 U.S.C. § 1125(a). 

In reviewing orders regarding disclosure statements, we apply a “clearly erroneous”

standard of review to findings of fact, and a de novo standard of review to issues of law.12 When

reviewing a bankruptcy court’s determination regarding whether “adequate information” is

contained in a disclosure statement, we apply an “abuse of discretion” standard of review.13

Lifemark’s assertions that its disclosure statement was better than LEI’s disclosure statement

simply do not provide sufficient basis to support a finding by this Court that the determinations of

the bankruptcy court and the district court on this matter were either clearly erroneous or an

abuse of discretion. Accordingly, the bankruptcy court properly denied approval of Lifemark’s

disclosure statement.
5

For the foregoing reasons, we affirm the judgment of the district court. Because we reach

the merits of this case, we need not consider LEI’s Motion to Dismiss on the basis of equitable

mootness, and this motion is therefore denied.

AFFIRMED.