United States Bankruptcy Appellate Panel of the Eighth Circuit
Submitted: May 19, 2016
from United States Bankruptcy Court for the Northern District
of Iowa - Sioux City
KRESSEL, SCHERMER, and NAIL, Bankruptcy Judges.
Partners Sioux City, LLC appeals the July 8, 2015 order of
the bankruptcy court dismissing its chapter 11 bankruptcy
case. We reverse and remand.
Partners Sioux City, LLC ("Civic Partners") owns
commercial real estate, known as the Promenade, in the
Historic Fourth Street Redevelopment District of Sioux City,
Iowa ("City"). Northwest Bank ("Bank")
holds a mortgage against the Promenade and an assignment of
rents to secure a promissory note executed by Civic Partners.
City also holds a mortgage against the Promenade to secure a
promissory note executed by Civic Partners. Main Street
Theatres, Inc. ("Main Street") leases and occupies
the majority of the space in the Promenade.
after entering into the lease with Civic Partners in 2004,
Main Street fell behind on its lease payments. This in turn
caused Civic Partners to fall behind on its loan payments to
Bank and to City. In 2009, Civic Partners, Main Street, Bank,
and City mediated their various disputes. The mediation
sessions led to a tentative resolution of the parties'
disputes, which was memorialized in a settlement agreement.
The settlement agreement was subject to ratification by the
settlement agreement, Bank agreed to restructure Civic
Partners' loan, City agreed to reduce the Promenade's
tax assessment value, and City further agreed to address
certain construction defects in public works adjacent to the
Promenade. In return, Civic Partners agreed to enter into an
amended lease with Main Street that would lower Main
Street's annual rent and forgive the back rent owed by
November 2009, Civic Partners and Main Street entered into
the amended lease contemplated by the settlement agreement.
Civic Partners' obligations under the amended lease were
conditioned on Civic Partners' formalizing the agreements
with Bank and City described in the settlement agreement on
or before January 15, 2010. In the event Civic Partners was
unable to do so, the amended lease gave Civic Partners the
right to declare the amended lease null and void on or before
January 31, 2010.
same month, Civic Partners was able to formalize the
agreement with Bank. Bank's obligations under the
parties' restructure agreement were conditioned on,
inter alia, Civic Partners' formalizing the
agreement with City and entering into the amended lease with
Main Street described in the settlement agreement on or
before December 31, 2009. In the event Civic Partners was
unable to do so, the restructure agreement provided the loan
modification would be void and without effect.
Partners was not able to formalize the agreement with City:
In December 2009, the city council declined to ratify the
settlement agreement. Civic Partners and Main Street
nevertheless agreed to several extensions of the January 31,
2010 deadline for Civic Partners to declare the amended lease
null and void. The last such extension pushed the deadline to
March 31, 2011.
meantime, in December 2010, Bank commenced a state court
lawsuit against Civic Partners. In January 2011, City
March 30, 2011, Civic Partners notified Main Street it was
terminating the amended lease. Fifteen days later, Civic
Partners filed a petition for relief under chapter 11 of the
2012, on Civic Partners' motion to determine whether the
original lease or the amended lease controlled, the
bankruptcy court concluded the amended lease was still in
effect and controlled Civic Partners' relationship with
Main Street. The bankruptcy court held Iowa rescission law
prevented Civic Partners from terminating the amended lease
without returning a $200, 000.00 "restructuring
payment" it had received from Main Street.
Alternatively, the bankruptcy court held Civic Partners could
not terminate the amended lease without Bank's consent.
January 2013, on Civic Partners' motion to reconsider its
earlier ruling, the bankruptcy court again held the amended
lease was still in effect and controlled Civic Partners'
relationship with Main Street. Civic Partners appealed both
orders. Because the bankruptcy court's orders were
interlocutory, we dismissed the appeal in early February
meantime, in September 2012-after the bankruptcy court first
held the amended lease was still in effect, but before it
reiterated its holding-Civic Partners filed a "Second
Amended and Substituted Plan of Reorganization (Dated
September 26, 2012)." While Civic Partners continued to argue
the amended lease had been terminated, the plan was
predicated on the amended lease, in compliance with the
bankruptcy court's earlier rulings. In early October
2013, the bankruptcy court denied confirmation of the plan,
in large part because the bankruptcy court determined it was
days later, Bank filed a motion to dismiss Civic
Partners' bankruptcy case. The matter was held in
abeyance while Civic Partners again appealed several of the
bankruptcy court's orders, including its orders regarding
the amended lease and its order denying confirmation of Civic
Partners' plan. Because the bankruptcy court's orders
were interlocutory, we dismissed the appeals in late October
2013. On Civic Partners' further appeal, the Eighth
Circuit Court of Appeals did likewise in March 2015.
the Eighth Circuit Court of Appeals denied Civic
Partners' motion for rehearing and for rehearing en
banc in April 2015, the bankruptcy court held a
continued hearing on Bank's motion to dismiss. The
bankruptcy court took the matter under advisement and on July
8, 2015, entered ...