AKRON, Ohio — Kelly Gearhart bankruptcy trustee Harold Corzin has filed a motion for the court to enforce an automatic stay after San Luis Obispo County Tax Collector Frank Freitas published a public notice of intent to sell tax-defaulted properties, some of which are involved in the bankruptcy proceeding.
“To the extent that you are proposing to sell parcels titled in the name of Kelly V. Gearhart and not yet abandoned by the bankruptcy trustee, this conduct is in violation of the automatic stay of the bankruptcy court,” said Kenneth L. Gibson, attorney for the trustee, in a letter to the tax collector’s office dated June 11.
In addition to properties proposed for sale in Gearhart’s name, several properties listed as owned by Atascadero All Night RV Park, LLC, Atascadero Homeowners, LLC, and Vista Del Hombre, LLC, are also subject to the bankruptcy court’s stay, according to the letter.
In a filing with the court, Corzin said that the proceedings regarding the parcels in question are in the advanced stages of litigation, and that a tentative settlement is in place subject to final documentation and final approval by individual defendants.
Corzin said in the filing that the trustee will administer and sell the properties for the benefit of creditors and lienholders, of which the county tax collector is one, and that the sale of the properties would provide that the liens be paid in full.
But allowing the properties to be sold solely to pay the liens would leave the other creditors in the cold, according to the court filing, because the taxing authorities would sell the properties at auction for any amount in excess of the tax liens.
“If this sale were to proceed, San Luis Obispo County would be in no better position than if the tax sale were stayed, as the trustee intends to pay its lien in full from the proceeds of the liquidation of these parcels,” Corzin said in the filing. “In any event, San Luis Obispo County will retain its tax lien, which it can always enforce if the trustee were not to prevail in this action.”
Corzin also filed a motion to shorten the notice period on the prior motion to seven days to allow Freitas enough time to respond. The motion was granted.
There are some parcels in the Gearhart bankruptcy that the trustee has abandoned, meaning the tax collector can sell them with no encumbrance from the court. Gibson enclosed a list with the June 11 letter to Freitas. The letter also states that Freitas can request abandonment of any parcels not expressly in litigation.
“When the trustee sells the parcels pursuant to an order of the bankruptcy court, I anticipate that you will receive the proceeds of your tax claims upon the closing of any sales, subject to final approval by the bankruptcy court,” Gibson said in the letter.
The letter and filing came after Freitas’ public notice showed that Gearhart and his subsidiary corporations, among hundreds of names that went delinquent on their taxes in 2007, are five years delinquent on more than $500,000 in property taxes.
The law states that the county tax collector can sell properties once taxes reach five years of default.
In the notice, published June 6, a total of 24 properties listed as owned by Gearhart, by Gearhart and wife Tamara, or by one of his subsidiaries add up to $537,986.90 owed, including fees and penalties.
Among these, there are 11 properties in North Ferrocarril Road, totaling $206,934.13, and another four properties in Atascadero totaling an additional $170,926.69.
There are another nine properties in the Shandon/Carrizo area in the eastern part of the county. The amount owed on those properties totals $160,126.08.
According to the notice, once subject to the power to sell on July 1 at 12:01 a.m., the tax collector can sell the property at public auction or otherwise convey it to new ownership.
For the complete article see the 06-27-2012 issue.
Click here to purchase an electronic version of the 06-27-2012 paper.
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