This is the second time this panel has had the opportunity to consider the issues involved in this appeal. Following remand for consideration of the effect of Bankruptcy Code Section 544(a)on the trustee’s motion to sell, the bankruptcy court entered judgment on April 29, 2011, denying the trustee’s request to sell jointly-owned real estate free and clear of the defendant co-owner’s interest pursuant to Bankruptcy Code Sections 363(b) and (h).
The Chapter 7 trustee appealed.
Bankruptcy Code Section 363(b)(1) provides the general authority for the trustee to sell property of the estate. Subsection (h) provides that a trustee can sell both the estate’s interest and the interest of any co-owner in the property only if (1) partition is impracticable; (2) sale of the estate’s undivided interest would realize significantly less than sale of the property free of the interest of the co-owners; (3) the benefit to the estate of a sale of the property free of the interest of the co-owners outweighs the detriment to the co-owners; and (4) the property is not used in the production, transmission, or distribution of electric energy or gas. The parties are in agreement that the only element in dispute is the third element – benefit to the estate versus detriment to the co-owner.
The trustee bears the burden of proving that he has met each of the four elements.
Based on the record before it, the bankruptcy court concluded that the trustee had not met his burden of proving that the benefit to the bankruptcy estate of the sale outweighed the detriment to the non-debtor spouse. The bankruptcy court’s findings of fact regarding the benefit to the estate and detriment to non-debtor spouse are not clearly erroneous. Accordingly, the bankruptcy court did not abuse its discretion in denying the motion to sell.
Affirmed.