Opinion ID: 541385
Heading Depth: 2
Heading Rank: 3

Heading: Procedure Governing Sale of Dock System

Text: 33 Even assuming that the Bankruptcy Trustee was empowered to convey the Dock System by virtue of the Associates' interest in the property, the conveyance did not comply with the statutory requirements governing sales outside of the ordinary course of business. As alluded to supra, the Bankruptcy Trustee's abandonment of the Dock System amounted to a sale of the property outside the ordinary course of business. As such, the sale must comport with the requirements of 11 U.S.C. Sec. 363. According to Sec. 363(e), on request of an entity that has an interest in property to be sold by the trustee, the court shall condition such sale as is necessary to provide adequate protection of such interest. Section 363(o) places the burden of proof on the issue of adequate protection on the trustee and the burden of proving the validity, priority, or extent of its interest in the Dock System by means of an adversary proceeding as is contemplated by Sec. 363(o) and Bankruptcy Rule 7001(2). For this reason alone, the Court must reverse the district court's approval of the abandonment and remand the case to allow the parties adequate opportunity to conduct a sale pursuant to 11 U.S.C. Sec. 363. 34 The Court notes the presence of Sec. 363(m), which provides that the reversal or modification on appeal of an authorization under subsection (b) or (c) of Sec. 363 does not affect the validity of a sale to an entity that purchased that property in good faith, unless the authorization and sale were stayed pending appeal. This provision does not affect the Court's decision, because Sec. 363(m) applies to sales under Sec. 363(b), which requires authorization to sell property of the estate. As it has been established that the Trustee attempted to convey the entire Dock System when the debtor only had a limited interest in it, the attempted conveyance was not a sale of property of the estate as contemplated by Sec. 363(b), and, consequently, Sec. 363(m) does not apply in this instance.