BY LINDA BENTLEY | FEBRUARY 23, 2011
Fressadi dubbed a ‘serial pro se litigator’
Based upon debtor’s acknowledged financial condition, no plan of reorganization would have any realistic chance of being confirmed
PHOENIX – On Feb. 10, M&I Marshall & Ilsley Bank filed a motion for stay relief and adequate protection from the Chapter 11 bankruptcy filed by Arek Fressadi.
In its Memorandum of Points and Authorities, M&I refers to Fressadi as a “serial pro se litigator,” listing five separate actions filed by Fressadi involving his School House Road property, for which M&I was granted its motion for summary judgment on Jan. 7, 2011 as to his financial liability in the principal amount of $226,650 and its right to a judgment of judicial foreclosure.
When M&I filed the judicial foreclosure complaint against Fressadi in April 2010, Fressadi responded by filing an eight-count counterclaim against M&I alleging fraud and other “unrelated theories” against the bank.
Ten days after M&I was granted summary judgment, Fressadi filed for bankruptcy protection in what M&I stated was an effort to prevent Maricopa County Superior Court from entering its final order allowing M&I to judicially foreclose on the School House Road property and preventing other parties from obtaining judgments against Fressadi in other related actions.
M&I stated, “Debtor is a serial pro se litigator that has attempted to avoid and delay payment of his legal obligations while attempting to realize financial gains by seeking to extract nuisance value settlements through the filing of numerous lawsuits.”
According to M&I, Fressadi has managed to collect rents on the School House Road property for over a year while avoiding payment to M&I and avoiding foreclosure of the property by filing for bankruptcy.
M&I claims Fressadi has not made a single payment to M&I on his note since Jan. 1, 2010 but has collected and kept rental income from the property, while M&I has incurred and continues to incur attorneys’ fees, interest and late fees, all of which are recoverable under the terms of the note.
Because Fressadi filed for protection under Chapter 11, he must prove a “reasonable possibility” of plan confirmation, showing he is proceeding to propose a plan of reorganization, the proposed or contemplated plan has a realistic chance of being confirmed, and the proposed or contemplated plan is not patently unconfirmable.
However, M&I notes, “In this case, there is no reasonable possibility of plan confirmation as the debtor has not established he is able to generate the funds necessary to pay the indebtedness owed to M&I pursuant to the accelerated note.”
Because the School House Road property is not necessary for an effective reorganization, M&I argues the automatic stay should be lifted.
Further, M&I states Fressadi’s inability to fund any reorganization plan is further evidenced by the schedules he filed, which list monthly income of $3,416 and expenses of $2,809, leaving net monthly income of $607, with $75 cash on hand.
In contrast, schedules show Fressadi’s liabilities exceed $1.2 million.
M&I stated, “Based upon debtor’s acknowledged financial condition, there is no contemplated plan of reorganization that would have any realistic chance of being confirmed.”
In conclusion, M&I requested the court enter its order terminating all stays and injunctions, lifting the automatic stay, to allow M&I to exercise its rights preserve and protect its collateral interests and allow foreclosure and liquidation of the School House Road property and mitigate the losses incurred by M&I.
On Feb. 19, Fressadi’s Attorney Jay K. Powell filed a brief objection to M&I’s motion for relief from the automatic stay, stating, “Debtor believes that creditor’s concerns, listed in its Motion for Relief, will be remedied in debtor’s Chapter 11 plan.”
