Trustee Blog

Motion to Sell under Section 363(b)

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One of the duties of a chapter 7 Trustee is to sell real property that is not exempt.  Below is Chapter 7 Bankruptcy Trustee Charles Daff recent case  which was heard in front of Judge Houle.  This opinion gives a nice summary of the procedure  under Section 363(b).


On September 18, 20xx (“Petition Date”), (“Debtor”) filed her petition for chapter 7 relief. Charles Daff is the duly appointed chapter 7 trustee (“Trustee”).

A primary asset of the Debtor’s estate is a rental property located at Loma Linda, CA 92354 (the “Property”).

The Trustee seeks to sell the Property for the benefit of creditors. In connection with his efforts to sell the Property, the Trustee has located a buyer and filed a Motion to Sell the Property (“Motion”) on August 23, 20xx.

On September 18, 2013, the Debtor filed her Opposition to the Motion (“Opposition”). Pursuant to LBR 9013, opposition to a Motion is to be filed and served 14 days prior to the hearing. The Opposition is 7 days late and is thus, untimely.


I. Sale of Estate Property Pursuant to Section 363(b)

The trustee, after notice and a hearing, may sell property of the estate. 11 U.S.C. § 363(b)(1); see also Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 352 (1985). The sale must be in the best interests of the estate and the price must be fair and reasonable. In re Canyon Partnership, 55 B.R. 520 (Bankr. S.D. Cal. 1985); see also In re Wilde Horse Enterprises, Inc., 136 B.R. 830, 841 (Bankr. C.D. Cal. 1991)(sale must have fair/reasonable price, accurate/reasonable notice to
creditors and sale made in good faith). The trustee must articulate some “business justification” for selling estate property out of the “ordinary course of business” before the court may approve the transaction. In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983); In re Ernst Home Ctr., Inc., 209 B.R. 974, 979 (Bankr. W.D. Wash. 1997). Objections to sale that are based on inadequacy of price are often resolved the court ordering an auction, which may occur in open court. Simantrob v. Claims Prosecutor, LLC (In re Lahijani), 325 B.R. 282, 287 (9th Cir. BAP 2005) citing Fed. R. Bankr. P. 6004(f).1

Here, Trustee has determined that sale of the Property is in the best interests of creditors and the estate for the following reasons:

The sale of the Property is estimated to generate approximately $47,000 in funds for the benefit of the Estate ;

The Trustee believes that the $310,000 sales price is a reasonable price for the Property given current market conditions and taking into consideration the marketing of the Property for the past seven months; and

On August 14, 20xx, the Trustee caused to be served on the current tenants a sixty day notice to terminate tenancy .

Sale Price …
Less Real Estate Commissions … Less Escrow Costs …
Less Lien of Central Mortgage Bank Less Unpaid property taxes … Estimated Proceeds:







Based on the Trustee’s analysis and the consequent benefit to creditors of the estate, the Court finds that the sale is in the best interests of the estate because it will result in substantial dividend to creditors.

Stay tuned to see what happens….


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