Court Opinion

ID: 3151472
Source: CourtListenerOpinion
Date Created: 2015-11-03 01:01:09.173803+00
Date Added: 2024-06-11T11:55:34.817752
License: Public Domain

FILED
 1                         NOT FOR PUBLICATION                 NOV 02 2015

 2                                                        SUSAN M. SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
                                                            OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.    CC-14-1576-FKiKu
                                   )
 6   PROMETHEUS HEALTH IMAGING,    )      Bk. No.    8:14-bk-10250-CB
     INC.,                         )
 7                                 )
                    Debtor.        )
 8   ______________________________)
                                   )
 9   PROMETHEUS HEALTH IMAGING,    )
     INC.,                         )
10                                 )
                    Appellant,     )
11                                 )
     v.                            )      MEMORANDUM*
12                                 )
     UNITED STATES TRUSTEE,        )
13                                 )
                    Appellee.      )
14   ______________________________)
15                  Argued and Submitted on October 22, 2015
                           at Los Angeles, California
16
                            Filed – November 2, 2015
17
              Appeal from the United States Bankruptcy Court
18                for the Central District of California
19       Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding
20
     Appearances:     Alan F. Broidy argued for appellant Prometheus
21                    Health Imaging, Inc.
22
     Before: FARIS, KIRSCHER, and KURTZ, Bankruptcy Judges.
23
24
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                                INTRODUCTION
 2        Appellant Prometheus Health Imaging, Inc. appeals from the
 3   bankruptcy court’s order dismissing its chapter 111 bankruptcy
 4   petition for bad faith.     While dismissal may be appropriate in
 5   this case, we are unable to find any evidentiary support for the
 6   factual findings supporting the court’s bad faith determination.
 7   Accordingly, we VACATE the bankruptcy court’s order and REMAND
 8   this case to the bankruptcy court for further proceedings.
 9                                    FACTS
10        On January 14, 2014, Prometheus filed a petition under
11   chapter 11.2    Wendee Luke signed the petition as Prometheus’s
12   president.     In its Schedule B, it listed its sole asset as a
13   “[c]laim for damages and lost profits against General Electric
14   Medical Systems Europa, which damages are at least $10,000,000.”
15   In its Schedule F, it identified six creditors claiming a total
16   of $5,980,000 in unsecured, nonpriority claims.
17        Ms. Luke filed a declaration in which, among other things,
18   she advised the court that Prometheus is prosecuting an appeal in
19   France and filed for chapter 11 bankruptcy so that it may proceed
20   with that appeal.     In her declaration, she stated:
21             [2a.] The Debtor does not currently operate a
          business. The focus of the bankruptcy is the Debtor’s
22        litigation with General Electric Medical Systems Europe
          (“GEM”) regarding an imaging machine that was
23        wrongfully delivered to Saudi Arabia in 2002. The
24
          1
            Unless specified otherwise, all chapter and section
25   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
26   all “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037.
27
          2
            Prometheus filed an Amended Voluntary Petition on or
28   around April 7, 2014.

                                        2
 1        Debtor had requested a specific, high quality machine,
          but GEM sent a different, slower machine that was not
 2        suitable for the Debtor’s needs in Saudi Arabia.
          Litigation ensued in the District Court in Ohio, and
 3        GEM obtained a judgment against the Debtor for the
          principal sum of $951,000. In 2010, the Debtor brought
 4        action against GEM in Paris, where the court also ruled
          against the Debtor. In 2012, the Debtor filed an
 5        appeal of the Paris court decision, and that appeal is
          currently pending. It is my understanding that an
 6        appeal in Paris is a new matter and that the court is
          not bound by the lower court ruling. However, the
 7        Debtor has no assets to post a bond, and filing a
          bankruptcy is the only way that the appeal can proceed.
 8        If the Debtor prevails on its appeal and recovers sums
          from GEM, there will be some recovery for creditors.
 9        If the Debtor loses on the appeal, there will be no
          distribution to any creditors.
10
               . . . .
11
               bl. The bankruptcy had to be filed in order to
12        proceed with the Debtor’s appeal in Paris.
13        On June 10, 2014, Prometheus filed its chapter 11
14   reorganization plan and disclosure statement.   Ms. Luke’s
15   declaration attached to the disclosure statement advised the
16   court that the appeal was to be heard on February 5, 2015, with a
17   decision expected within thirty to sixty days thereafter.
18        Prometheus also filed a declaration by Frederic Jeannin, its
19   counsel in the French proceedings.   He explained that, under
20   French law, the appellate court would decide the case de novo.
21   He also explained that:
22        GEM sought to stay the Appeal on the ground that the
          Debtor had not paid the Judgment, which is a
23        prerequisite for the Appeal to be heard under French
          law. Since the Debtor had no money to pay the
24        Judgment, the only way to proceed with the Appeal was
          for the Debtor to demonstrate that it was prevented to
25        pay the Judgment and file a chapter 11 petition and
          seek to reinstate the appeal.
26
27        On September 3, 2014, Appellee United States Trustee for
28

                                     3
 1   Region 163 objected to the disclosure statement (“Objection”).
 2   The U.S. Trustee argued generally that “[t]he disclosure
 3   statement filed in this case [Docket No. 45] does not contain
 4   sufficient information to allow for the formation of an informed
 5   judgment and the Court is urged to deny approval absent amendment
 6   or supplement.”   In response, Prometheus filed its First Amended
 7   Disclosure Statement Describing Original Chapter 11 Plan.    The
 8   hearing to approve the disclosure statement was set for
 9   October 22, 2014.
10        On September 19, 2014, the bankruptcy court issued its Order
11   to Show Cause Whether Case is Properly Filed in this Court
12   (“OSC”).   The court set a hearing for October 15 and ordered
13   Prometheus’s counsel to show cause:
14        (1) why venue is proper in this division, (2) why this
          case should not be transferred to the United States
15        Bankruptcy Court, Central District, Los Angeles
          Division, (3) why this case should not be dismissed for
16        failure to comply with Section 2.1(a)(5)(A) of the
          Central District Court Manual, (4) as to Counsel’s
17        potential conflict of interest in representing Debtor
          and creditor Munir Uwaydah, (5) why Counsel failed to
18        disclose debtor’s involvement in an ongoing adversary
          proceeding, case # 2:12-ap-02042-TD in the Central
19        District, Los Angeles Division, and (6) why sanctions
          should not be imposed and/or this case dismissed for
20        what appears to be an improper filing.
21   The court additionally stated that it “will determine whether the
22   above entitled bankruptcy case should be dismissed as a bad faith
23   filing . . . .”
24        Prometheus’s counsel filed a declaration in response to the
25   OSC, addressing each of the court’s concerns.   Regarding the
26
27
          3
            The U.S. Trustee did not file a brief in this appeal or
28   otherwise make an appearance.

                                      4
 1   final issue of an improper filing, counsel stated:
 2             8. The Debtor’s bankruptcy case should not be
          dismissed as a bad faith filing. As I previously
 3        advised the Court, this case is the most unusual
          chapter 11 case I have ever handled. The Debtor ceased
 4        business operations in 2004, and the Debtor’s primary
          asset is the Appeal of litigation pending in Paris. As
 5        previously disclosed to the court, Frederic Jeannin,
          counsel for the Debtor for the Paris Appeal, advised me
 6        that the Debtor had to file bankruptcy in order to
          proceed with the Appeal. As I advised the Court at one
 7        of the initial status conferences, this was not a bad
          faith filing, a la Marsch v. Marsch (In re Marsch),
 8        36 F.3d 825 (9th Cir. 1994), where the Ninth Circuit
          affirmed the ruling of the bankruptcy court that it was
 9        bad faith for debtors to file a chapter 11 petition to
          obtain a stay of a pending appeal when the debtor had
10        the necessary funds to bond the appeal. Here, the
          Debtor has no funds, and the Appeal cannot proceed
11        unless the bankruptcy case remains active.
12   Similarly, Ms. Luke, as the sole officer and director of
13   Prometheus, stated:
14             6. The Debtor needed to file a chapter 11 case to
          proceed with the litigation in Paris against GEM. I
15        believed it was appropriate for the Debtor to file its
          chapter 11 case in Orange County because (i) the
16        Debtor’s principal place of business is in Orange
          County; (ii) the Debtor’s sole officer and director
17        lives in Orange County; and (iii) the Debtor’s agent
          for service of process lives in Orange County.
18
19        The bankruptcy court held the hearing on its OSC on
20   October 15, 2014.   According to the hearing transcript, the
21   hearing lasted roughly four minutes.   Excluding the introductions
22   and discussion concerning fees, the entirety of the hearing
23   consisted of a short exchange between the court and Prometheus’s
24   counsel, culminating in the court’s dismissal of Prometheus’s
25   chapter 11 petition:
26             THE COURT: So I saw the information from the
          person who I guess is the president of Prometheus or
27        what is her role?
28             MR. BROIDY: She is the sole - she is the

                                      5
 1   president, the sole officer and director of Prometheus.
 2        THE COURT: Okay. And it’s said that she does - I
     left the paperwork on my desk, unfortunately, but works
 3   out of Orange County. And I did - it’s a tax prep
     bill. It’s a stip mall with - she’s a tax prep -
 4   preparer.
 5        MR. BROIDY: That’s where she works out of, Your
     Honor. That’s where her building is. But if Your
 6   Honor is concerned about the proper jurisdiction here
     before this court, we will consent that the matter goes
 7   - is referred to the district - to the Bankruptcy Court
     in Los Angeles -
 8
          THE COURT: Well, I’m -
 9
          MR. BROIDY: - before Judge Donovan.
10
          THE COURT: Prometheus is a Delaware corporation.
11   Is that -
12        MR. BROIDY: Yes, it is, Your Honor.
13        THE COURT: Thank you so much. It’s a Delaware
     corporation and this whole thing just looks so
14   fraudulent to me. I’m sorry. It’s an attempt to get
     an automatic stay so he can relitigate in a French
15   court what you’ve already lost here and already lost in
     France. And this strip mall tax preparer person seems
16   to be a front for somebody else.
17         I mean, let’s brass tacks here. I’m not buying
     it, you know. This is not - there is – there’s
18   somebody in the background and I know who it is and
     this woman is not that person, and I’m not happy about
19   this at all. And from day one I wanted to dismiss this
     case and I’m going to dismiss it because this is not
20   real.
21        This fellow in the background, who I believe is a
     fugitive at this point in time, he’s using this woman,
22   paying her to work out of the strip mall to file this
     bankruptcy, to continue to litigate what has been
23   decided in two different countries already and I’m not
     going to let it go on anymore. I’m not. They bought
24   time. They bought more time than I ever should have
     given them, but we’re not stupid. [We] know what’s
25   really going on.
26        MR. BROIDY: I understand, Your Honor.   I’ll
     prepare the order of dismissal.
27
28   On or around November 26, 2014, the bankruptcy court entered

                                   6
 1   its Order Dismissing Chapter 11 Case.       Prometheus timely filed
 2   its notice of appeal on December 10, 2014.
 3                               JURISDICTION
 4        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 5   §§ 1334 and 157(b)(1).   We have jurisdiction under 28 U.S.C.
 6   § 158.
 7                                  ISSUE
 8        Whether the bankruptcy court abused its discretion in
 9   dismissing Prometheus’s chapter 11 bankruptcy petition.
10                            STANDARD OF REVIEW
11        “We review de novo whether the cause for dismissal of a
12   Chapter 11 case under 11 U.S.C. § 1112(b) is within the
13   contemplation of that section of the Code.       We review for abuse
14   of discretion the bankruptcy court’s decision to dismiss a case
15   as a ‘bad faith’ filing.”   Marsch v. Marsch (In re Marsch),
16   36 F.3d 825, 828 (9th Cir. 1994) (citing Stolrow v. Stolrow’s,
17   Inc. (In re Stolrow’s, Inc.), 84 B.R. 167, 170 (9th Cir. BAP
18   1988)).
19        The Panel must apply a two-part test to determine whether
20   the bankruptcy court abused its discretion.       United States v.
21   Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).
22   First, we consider de novo whether the bankruptcy court applied
23   the correct legal standard.   Id.       Then, we review the bankruptcy
24   court’s factual findings for clear error.       Id. at 1262 & n.20;
25   see Eisen v. Curry (In re Eisen), 14 F.3d 469, 470 (9th Cir.
26   1994) (the bankruptcy court’s finding of “bad faith” is reviewed
27   for clear error).   A bankruptcy court abuses its discretion if it
28   applied the wrong legal standard or its findings were illogical,

                                         7
 1   implausible, or without support in the record.    See
 2   TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th
 3   Cir. 2011).
 4                               DISCUSSION
 5   A.   The bankruptcy court may dismiss a chapter 11 case for bad
          faith under § 1112(b).
 6
 7        Section 1112(b)(1) provides that “the court shall convert a
 8   case under this chapter to a case under chapter 7 or dismiss a
 9   case under this chapter, whichever is in the best interests of
10   creditors and the estate, for cause . . . .”   § 1112(b)(1).
11   Although the statute does not define “for cause,” it identifies a
12   nonexclusive list of factors that may constitute “cause.”   See
13   § 1112(b)(4).   “The bankruptcy court has broad discretion in
14   determining what constitutes ‘cause’ under section 1112(b).”
15   Sullivan v. Harnisch (In re Sullivan), 522 B.R. 604, 614 (9th
16   Cir. BAP 2014) (citing Chu v. Syntron Bioresearch, Inc.
17   (In re Chu), 253 B.R. 92, 95 (S.D. Cal. 2000)).
18        “Although section 1112(b) does not explicitly require that
19   cases be filed in ‘good faith,’ courts have overwhelmingly held
20   that a lack of good faith in filing a Chapter 11 petition
21   establishes cause for dismissal.”    In re Marsch, 36 F.3d at 828
22   (citations omitted).
23        In its oral ruling, the bankruptcy court did not explicitly
24   state that “bad faith” was the basis of the dismissal.    However,
25   in the OSC which precipitated the hearing, the court said that it
26   would consider whether the “bankruptcy case should be dismissed
27   as a bad faith filing . . . .”   Further, the court commented at
28   the hearing that “this whole thing just looks so fraudulent to

                                      8
 1   me.”    We conclude that bad faith was the “cause” that the court
 2   thought justified dismissal under § 1112(b).
 3          “The existence of good faith depends on an amalgam of
 4   factors and not upon a specific fact.”    Id. (quoting Idaho Dep’t
 5   of Lands v. Arnold (In re Arnold), 806 F.2d 937, 939 (9th Cir.
 6   1986)).    “The test is whether a debtor is attempting to
 7   unreasonably deter and harass creditors or attempting to effect a
 8   speedy, efficient reorganization on a feasible basis.”      Id.
 9   (citing In re Arnold, 806 F.2d at 939); see In re Mense, 509 B.R.
10   269, 276 (Bankr. C.D. Cal. 2014) (requiring good faith “deter[s]
11   filings that seek to achieve objectives outside the legitimate
12   scope of the bankruptcy laws”).    “The bankruptcy court should
13   examine the debtor’s financial status, motives, and the local
14   economic environment . . . .    Good faith is lacking only when the
15   debtor’s actions are a clear abuse of the bankruptcy process.”
16   In re Chameleon Sys., Inc., 306 B.R. 666, 670 (Bankr. N.D. Cal.
17   2004) (quoting In re Arnold, 806 F.2d at 939).
18          The court may consider a number of factors when determining
19   bad faith: (1) whether the debtor misrepresented facts in his
20   petition or plan, unfairly manipulated the Bankruptcy Code, or
21   otherwise filed his petition or plan in an inequitable manner;
22   (2) the debtor’s history of filings and dismissals; (3) whether
23   the debtor only intended to defeat state court litigation; and
24   (4) the presence of egregious behavior.    See Drummond v. Welsh
25   (In re Welsh), 711 F.3d 1120, 1129 n.45 (9th Cir. 2013) (citing
26   Leavitt v. Soto (In re Leavitt), 171 F.3d 1219, 1224 (9th Cir.
27
28

                                       9
 1   1999)).4   “The bankruptcy court is not required to find that each
 2   factor is satisfied or even to weigh each factor equally.”    Khan
 3   v. Curry (In re Khan), 523 B.R. 175, 185 (9th Cir. BAP 2014)
 4   (citing Meyer v. Lepe (In re Lepe), 470 B.R. 851, 863 (9th Cir.
 5   BAP 2012)).   Rather, “[t]he . . . factors are simply tools that
 6   the bankruptcy court employs in considering the totality of the
 7   circumstances.”   Id.; see In re Mitchell, 357 B.R. at 154 (“no
 8   single criterion should be considered dispositive, but rather the
 9   entirety of the situation must be evaluated”).
10        Moreover, if the court finds cause for dismissal or
11   conversion, it must “(1) decide whether dismissal, conversion, or
12   the appointment of a trustee or examiner is in the best interests
13   of creditors and the estate; and (2) identify whether there are
14   unusual circumstances that establish that dismissal or conversion
15   is not in the best interests of creditors and the estate.”
16   In re Sullivan, 522 B.R. at 612 (citing § 1112(b)(1), (b)(2)).
17   B.   The bankruptcy court abused its discretion by failing to
          articulate a finding of bad faith or any other reason for
18        dismissal that is supported by the record.
19        The bankruptcy court dismissed Prometheus’s chapter 11
20   petition at the hearing on its OSC.   Prometheus argues that the
21   court’s reasons stated at the hearing are not supported by the
22   evidence in the record.   We agree.
23        “Whether the good faith requirement has been satisfied is a
24
          4
            Both Welsh and Leavitt concerned chapter 13 cases.
25   However, the totality-of-the-circumstances test is applicable to
26   both chapter 13 and chapter 11 cases alike. See In re Mitchell,
     357 B.R. 142, 154 (Bankr. C.D. Cal. 2006) (noting that “[c]ourts
27   applying the Chapter 11 and Chapter 13 bad faith tests generally
     consider a variety of non-exclusive factors” and listing five
28   factors similar to those considered in Welsh and Leavitt).

                                     10
 1   ‘fact intensive inquiry’ that involves examining ‘the totality of
 2   facts and circumstances’ and determining whether the petition is
 3   consistent with the purposes of the Bankruptcy Act or is
 4   ‘patently abusive.’”   1500 Mineral Spring Assocs., LP v.
 5   Gencarelli, 353 B.R. 771, 781 (D.R.I. 2006) (quoting NMSBPCSLDHB,
 6   L.P. v. Integrated Telecom Express, Inc. (In re Integrated
 7   Telecom Express, Inc.), 384 F.3d 108, 118 (3d Cir. 2004)).    “The
 8   question of good faith is factual and will often require the
 9   introduction of evidence.”   In re Stolrow’s, Inc., 84 B.R. at 170
10   (citing In re Universal Clearing House Co., 60 B.R. 985, 994 (D.
11 Utah 1986)).   A bankruptcy court’s findings of fact “must be
12   sufficient to enable a reviewing court to determine the factual
13   basis for the court’s ruling.”   Veal v. Am. Home Mortg.
14   Servicing, Inc. (In re Veal), 450 B.R. 897, 919 (9th Cir. BAP
15   2011) (citing Vance v. Am. Haw. Cruises, Inc., 789 F.2d 790, 792
16   (9th Cir. 1986)).
17        The bankruptcy court’s OSC raised six issues, the last of
18   which was whether the case should be “dismissed as a bad faith
19   filing.”   At the hearing, the court barely mentioned the first
20   five issues5 and instead focused solely on the question whether
21   the case was a bad faith improper filing.   The court mentioned
22   only two circumstances as a basis for a bad faith determination.
23        First, the court stated that a “strip mall tax preparer
24   person” was purportedly running the debtor, but was really just a
25   “front” for “somebody in the background” who was “a fugitive at
26
27
          5
            The court confirmed that the debtor is a Delaware
28   corporation, presumably in connection with the venue issue.

                                      11
 1   this point in time . . . .”    The court said that “I know who [the
 2   fugitive] is” but did not identify the person.
 3        Second, the court observed that Prometheus had filed the
 4   bankruptcy case in order to buy time to continue litigating a
 5   case that it had already lost twice in the courts of two nations.
 6        We recognize that, “[e]ven when a bankruptcy court does not
 7   make formal findings, . . . the BAP may conduct appellate review
 8   ‘if a complete understanding of the issues may be obtained from
 9   the record as a whole or if there can be no genuine dispute about
10   omitted findings.’”    In re Veal, 450 B.R. at 919-20 (quoting
11   Gardenhire v. Internal Revenue Serv. (In re Gardenhire), 220 B.R.
12   376, 380 (9th Cir. BAP 1998), rev’d on other grounds, 209 F.3d
13   1145 (9th Cir. 2000)).    “After such a review, however, when the
14   record does not contain a clear basis for the court’s ruling, we
15   must vacate the court’s order and remand for further
16   proceedings.”   Id. at 920 (citing Alpha Distr. Co. of Cal., Inc.
17   v. Jack Daniel Distillery, 454 F.2d 442, 452-53 (9th Cir. 1972);
18   Canadian Comm’l Bank v. Hotel Hollywood (In re Hotel Hollywood),
19   95 B.R. 130, 132-34 (9th Cir. BAP 1988)).
20        We have carefully scrutinized the excerpts of record
21   provided by Prometheus.    We have also exercised our discretion to
22   review the entire docket in the bankruptcy court.    See Woods &
23   Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2
24   (9th Cir. BAP 2008).    We are unable to find any evidentiary
25   support for the bankruptcy court’s statements about the person
26   who was actually controlling the debtor and that the real control
27   person was a fugitive.
28        We note that the court conducted several status conferences.

                                      12
 1   It is possible that the bankruptcy court relied on information
 2   revealed in those conferences (although Prometheus’s counsel
 3   represented at oral argument that the bankruptcy court’s concerns
 4   regarding the two grounds for dismissal were never discussed at
 5   the status conferences).   But the bankruptcy court did not say
 6   that it was doing that, and we have no minutes, transcript, or
 7   other record of what transpired during those conferences.    We
 8   cannot speculate that evidence not in the trial or appellate
 9   record might support the court’s ruling.
10        We also think that the record does not support the court’s
11   finding that the debtor was merely attempting to buy time in
12   which to continue meritless litigation.    The bankruptcy court
13   correctly found that the debtor was defeated in U.S. and French
14   courts.   It is also correct that abuse of the automatic stay or
15   use of other litigation tactics unrelated to reorganization can
16   constitute bad faith warranting dismissal.    If “a debtor seeks to
17   use a chapter 11 filing to ‘unreasonably deter and harass
18   creditors,’ such a filing lacks good faith.”    In re Sullivan,
19 522 B.R. at 615 (quoting In re Marsch, 36 F.3d at 828).
20   Furthermore, the Ninth Circuit has stated that courts may dismiss
21   “cases filed for a variety of tactical reasons unrelated to
22   reorganization.”   In re Marsch, 36 F.3d at 828.
23        “Cause” for dismissal may exist if the debtor seeks an
24   automatic stay to defeat state court litigation.    Cf. id. (“One
25   limitation some courts have implied under section 1112(b)
26   involves Chapter 11 cases filed to stay a state court judgment
27   against the debtor pending appeal.   In those cases, courts have
28   expressed concern that the petition is merely a ‘litigating

                                     13
 1   tactic’ designed to ‘act as a substitute for a supersedeas bond’
 2   required under state law to stay the judgment.” (citation
 3   omitted)); In re Mitchell, 357 B.R. at 154 (courts should
 4   consider “whether the debtor intended to invoke the automatic
 5   stay for improper purposes, such as for the sole objective of
 6   defeating state court litigation” (citation omitted)).
 7        But the bankruptcy court did not indicate that it considered
 8   the unusual circumstances of this case.
 9        In the first place, the debtor offered evidence that it was
10   entitled under French law to de novo review of the French trial
11   court’s judgment.   Therefore, Prometheus’s initial defeat in
12   France is less significant than it appears.
13        Further, Prometheus provided unrebutted evidence that, in
14   order to prosecute the appeal and obtain de novo review of the
15   French trial court’s judgment, it had to either pay the judgment
16   in full (which it could not afford to do) or demonstrate that it
17   could not pay the judgment by filing a bankruptcy case.    In other
18   words, Prometheus was not invoking the automatic stay “for the
19   sole objective of defeating [non-bankruptcy] litigation,”
20   In re Mitchell, 357 B.R. at 154 (emphases added), or to stall the
21   legitimate collection activities of creditors.   Rather,
22   Prometheus filed a bankruptcy petition because, if it did not do
23   so, it would have irrevocably lost a potentially valuable asset –
24   the claims against GEM – to the detriment of all creditors (other
25   than GEM).   In light of this unrefuted evidence, the bankruptcy
26   court committed clear error when it found that Prometheus filed
27   the bankruptcy petition as a delaying tactic.
28        Finally, we note that the court’s oral ruling does not

                                     14
 1   indicate that the court engaged in the broad examination of the
 2   circumstances that the good faith standard requires.   See
 3   In re Welsh, 711 F.3d at 1129 n.45.   We do not mean to suggest
 4   that the good faith inquiry is a “check the boxes” exercise.    We
 5   do think, however, that the bankruptcy court abused its
 6   discretion when it dismissed a bankruptcy case based on only two
 7   findings, particularly where the evidence in the record does not
 8   support either finding.
 9                              CONCLUSION
10        For the reasons set forth above, we VACATE the bankruptcy
11   court’s order dismissing Prometheus’s bankruptcy petition and
12   REMAND to the bankruptcy court to (1) consider whether the
13   evidence supports a finding of bad faith or other “cause,”
14   (2) consider whether conversion, dismissal, or the appointment of
15   a trustee is in the best interests of creditors and the estate,
16   and (3) make appropriate findings of fact.
17
18
19
20
21
22
23
24
25
26
27
28

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