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UNITED STATES BANKRUPTCY COURT 

FOR THE SOUTHERN DISTRICT OF FLORIDA 

WEST PALM BEACH DIVISION 

IN RE: : CHAPTER 11 

: 

LITESTREAM HOLDINGS, LLC, : CASE NO. 19-26043-MAM 

 : 

Debtor. : 

UNITED STATES TRUSTEE’S MOTION TO CONVERT CASE TO CHAPTER 7 

COMES NOW the United States Trustee for Region 21, in furtherance of the 

administrative responsibilities imposed pursuant to 28 U.S.C. §586(a), and respectfully moves this 

Court to enter an order converting to Chapter 7, the above-styled case. As cause therefore, the 

United States Trustee shows as follows. 

1. The Debtor filed a Chapter 11 voluntary petition on November 27, 2019. 

2. The Debtor was in the business of providing telecommunication services to 

homeowners. 

3. The Debtor’s schedules reflect no real property, personal property valued at 

$5,652,000, consisting of cash, accounts receivables and equipment, secured claims 

totaling at $1.1 million, priority tax claims of $379,356 and general unsecured claims 

totaling $3,141,358. 

4. The sole manager of the Debtor is Paul Rhodes. 

5. On July 2, 2020, the Court entered the Order Approving Sale of Substantially All of 

the Debtor’s Assets to JMF Solutions, Inc. (ECF #119). Pursuant to this order, the 

Court granted the sale of the Debtor’s assets for $750,000. The sale resulted in a 

partial distribution in the approximate amount of $526,000 to the secured creditor and 

allowed tax claims to St. Johns County Tax Collector. 

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6. Upon information and belief, the sale closed, and the Debtor is no longer operating. 

7. The Debtor has not paid U.S. Trustee’s fees for the second quarter, 2020 and 

currently owes $4,875. 

8. On July 28, 2020, the Court entered the Order Granting in Part Debtor’ in 

Possession’s Second Motion to Extend Exclusivity Period to File a Plan and 

Disclosure Statement and Extend Exclusivity Period to Solicit Acceptances Thereto 

and Setting Status Conference (the “Status Conference Order,” ECF 129). Pursuant 

to the Status Conference Order, the Court extended the Debtor’s exclusive period to 

August 11, 2020 to file a plan and disclosure statement. The Court further set a status 

conference for August 11, 2020 at which time the Court may consider conversion of 

this case to Chapter 7. 

9. Yesterday, the U.S. Trustee received notice from the Debtor’s counsel that the Debtor 

made approximately $75,000 in payments to the Internal Revenue Service for 

prepetition debts. These payments were made without the Debtor’s counsel’s 

knowledge and without Court approval. The payments were also made in violation of 

any cash collateral order entered in this case. 

10. Upon information and belief, due to the sale of assets, the Debtor has no ability to 

reorganize and any plan if filed would be a plan of liquidation. Debtor’s counsel does 

not intend to file a plan at this time. 

11. Section 1112(b)(1) provides that, absent unusual circumstances, the Court shall 

dismiss or convert a case to Chapter 7 if the movant establishes cause. Section 

1112(b)(4) provides a list of causes that would meet the requirements of 11 U.S.C. 

§1112(b)(1). 

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12. Debtor’s failure to pay U.S. Trustee’s fees is cause for conversion pursuant to 11 

U.S.C. §1112(b)(4)(K). 

13. Debtor’s payment of pre-petition debt is an unauthorized use of cash collateral and 

has favored one priority creditor over other priority creditors, case for conversion 

pursuant to 11 U.S.C. §1112(b)(4)(D). 

14. The Debtor’s payment of pre-petition debt is gross mismanagement of the estate, 

cause for conversion pursuant to 11 U.S.C. §1112(b)(4)(B). 

15. The U.S. Trustee submits that is not in the best interest of this estate and its creditors 

to remain in Chapter 11. 

WHEREFORE, the United States Trustee respectfully request this Court enter an Order 

converting this case to Chapter 7 and granting any other or further relief the Court deems just 

and appropriate. 

 NANCY J. GARGULA 

 United States Trustee 

 /s/ 

 HEIDI A. FEINMAN 

 Trial Attorney 

 Florida Bar No. 0879460 

Office of the U.S. Trustee 

51 SW First Avenue 

Room 1204 

Miami, FL 33130 

(305) 536-7285 

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CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of the UNITED STATES TRUSTEE’S 

MOTION TO CONVERT CASE TO CHAPTER 7 was electronically filed with the Court 

using the CM/ECF system, which sent notification to all parties of interest participating in the 

CM/ECF system and via First Class U.S. Mail to the following: 

Heidi A Feinman Heidi.A.Feinman@usdoj.gov 

Robert C Furr ltitus@furrcohen.com, atty_furrcohen@bluestylus.com; 

cworkinger@furrcohen.com; staff1@furrcohen.com 

Alvin S. Goldstein agoldstein@furrcohen.com, atty_furrcohen@bluestylus.com; 

ltitus@furrcohen.com; cworkinger@furrcohen.com; staff1@furrcohen.com 

IPFS Corporation (Chandler) lisa.chandler@ipfs.com 

Linda M Leali lleali@lealilaw.com, featon@lealilaw.com 

Peter H Levitt plevitt@shutts-law.com, sboisvert@shutts.com 

Brandon C Meadows bmeadows@jimersonfirm.com, samanthab@jimersonfirm.com 

Office of the US Trustee USTPRegion21.MM.ECF@usdoj.gov 

David A Ray dray@draypa.com, draycmecf@gmail.com; sramirez.dar@gmail.com; 

drabrams620@gmail.com 

David L Rosendorf dlr@kttlaw.com, rcp@kttlaw.com; ycc@kttlaw.com 

Allan E Wulbern awulbern@smithhulsey.com, busey@smithhulsey.com; 

czeigler@smithhulsey.com; khettinger@smithhulsey.com 

 

I hereby certify that I am admitted to the Bar of the United States District Court for the Southern District of Florida 

and I am in compliance with the additional qualifications to practice in this court set forth in Local Rule 2090-1(A). 

DONE this the 6th day of August, 2020. 

 /s/ 

 HEIDI A. FEINMAN 

 Trial Attorney

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