2006-01-09 Proof of Service Documents
Henson&Efron
220 South Sixth Street, Suite 1800
Minneapolis, Minnesota 55402-4503
Telephone (612) 339-2500
Facsimile (612) 339-6364
www.hensonefron.com
firm@hensonefron.com
PROFESSIONAL ASSOCIATION
Direct Dial (612) 252-2874
jnesset@hensonefron.com
January 9, 2006
TO PARTIES IDENTIFIED ON
THE PROOF OF SERVICE
RE: BKY 06-42532
Edina Development Corporation
To whom it may concern:
Enclosed and served upon you via facsimile and U.S. Mail, please find the following documents:
(1) Notice of Hearing and Motion for Order Approving Sale of Property of the Estate;
. (2) Memorandum of Law;
(3) Order Approving Sale of Property of the Estate; and
(4) Proof of Service.
Sincerely,
HENSON & EFRON, P.A.
~r-
JDNlbja 299938.DOC
Enclosures
cc: Client
,
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MINNESOTA
Inre:
BKY 06-42532
Edina Development Corporation,
Chapter 11 Case
Debtor.
NOTICE OF HEARING AND MOTION FOR
ORDER APPROVING SALE OF PROPERTY OF THE ESTATE
1. Edina Development Corporation ("Debtor"), through its undersigned counsel,
makes this application for their relief requested below and gives notice herewith.
2. The Court will hold a hearing on this motion at 1:30 p.m. on January 29,2007, in
Courtroom 7 West in the United States Courthouse, 300 South Fourth Street, Minneapolis,
Minnesota.
3. Any response to this motion must be mailed and delivered not later than January
24, 2007, which is three days before the time set for hearing or filed and served by mail not later
than January 18, 2007, which is seven days before the hearing date. UNLESS A RESPONSE
OPPOSING THE MOTION IS FILED, THE COURT MAY GRANT THE MOTION
WITHOUT A HEARING.
4. This Court has jurisdiction over this motion pursuant to 28 U.S.C. SS 157 and
1334, Rule 5005 of the Federal Rules of Bankruptcy Procedure ("Bankruptcy Rules"), and Local
Rule 1070-1 and 1073-1. This is a core proceeding. The petition commencing this Chapter 11
case was filed on November 1, 2006. The case is now pending in this Court.
5. This motion arises under 11 U.S.C. S363 and Fed. R. Barne P. 6004. This motion
is filed under Bankruptcy Rule 9014 and Local Rules 9013-1 through 9013-3. The Debtor seeks
298537.DOC
relief in the form of an order authorizing it to convey certain real property according to the terms
of that certain December 19, 2006 Agreement Between Edina Development Corporation and
Rock Solid Acquisition, Inc. ("Purchaser") (the "Agreement"). A copy of the Agreement is
attached hereto as Exhibit A.
Material Terms of Agreement
6. The Agreement provides for the sale of three tracts of real property (collectively
referred to as the "Properties") legally described as follows:
Lots 1-23, Block 1, Stonecreek Estates, Benton County, MN
Lot 1, Block 2, Stonecreek Estates, Benton County, MN
Outlot A, Stonecreek Estates, Benton County, MN
(the "Stonecreek Estates Property")
The part of the NW1I4 ofNW1I4 of Section 25, Township 37, Range 29, described as
follows: Beginning at the Northwest corner of said NW1/4 ofNW1I4; thence East along
the North line of said NW1I4 ofNW1I4 a distance of 690.06 feet; thence South a distance
of 1,026.05 feet; thence West a distance of 690.0 feet to the West line of said NW1I4 of
NW1I4; thence North along the West line of said NW1I4 ofNW1I4 a distance of
1,024.74 feet to the point of beginning and there terminating.
EXCEPTING THEREFROM That part of the following tract lying within the above
described tract and described as follows: Beginning at a point on the West line of said
- Section 25, said point being South 02029'30" West, a distance of 1,024.74 feet from the
Northwest corner of said Section 25; thence North 90000'00 East, a distance of 690.00
feet; thence South 02~9'30" West, a distance of 1,157.53 feet; thence North 90000'00"
East a distance of 100.09 feet; thence North 02029'30" East, a distance of 1,197.57 feet;
thence North 90000'00" West, a distance of790.09 feet to the West line of said Wll2 of
NW1I4; thence South 02029'30" West, a distance of 40.04 feet to the point of beginning,
Benton County, Minnesota.
AND
Part of the W1I2 ofNW1/4 of Section 25, Township 37, Range 29 LYING Easterly of the
following described line: Beginning at a point on the north line of said Wll2 ofNW1I4
690.06 feet East of the Northwest corner of said W1I2 ofNW1I4; thence South 2,183.68
feet; thence West to the Easterly right of way line of 9th Street; thence South along said
East right of way of 9th Street to the South line of said Wll2 ofNWI/4 and said line
there terminating.
298537.DOC 2
EXCEPTING THEREFROM the South 225 feet of the East 237.2 feet of that part of said
W1I2 of NW1I4 lying North of the Northerly right of way line of Minnesota Trunk
Highway No. 23.
ALSO EXCEPTING THEREFROM That part of the following tract lying within the
above described tract and described as follows: Beginning at a point on the West line of
said Section 25, said point being South 02029'30" West, a distance of 1,024.74 feet from
~he Northwest corner of Section 25; thence North 90000'00" East, a distance of 690.00
feet; thence South 02029'30" West, a distance of 1,157.53 feet; thence North 90000'00"
East a distance of 100.09 feet; thence North 02029'30" East, a distance of 1,197.57 feet;
thence North 90000'00" West, a distance of790.09 feet to the West line of said W1I2 of
NW1I4; thence South 02029'30" West, a distance of 40.04 feet to the point of beginning,
Benton County, Minnesota.
(the "Englenook Property")
The Southeast Quarter (SE )4) of Section Thirty-Six (36), Township Thirty-Seven (37)
North, Range Twenty-Nine (29) West, Fourth Principal Meridian, EXCEPTING
THEREFROM, the North 480.0 feet of the South 1,638.0 feet of the East 800.0 feet
thereof, Benton County, Minnesota.
(the "Harper Property").
7. The Agreement includes the following material terms:
a. The Purchaser will take title to the Properties in consideration of its assumption of
all debt secured by liens on the Properties; and
b. The Purchaser will indemnify, defend, and hold harmless the estate from any and
all claims that may be asserted by parties claiming any interest in any part of the
Properties, including, but not limited to, deficiency claims related to claims secured by
liens on the Properties.
Liens and Interests in Property
8. In addition to liens for real estate taxes, the Stonecreek Estates Property is subject
to the following liens and encumbrances:
a. A judgment in the amount of $240,268.75 in favor of Duane and Susette Strand
(Docketed in Benton County on June 27,2006);
b. A mechanic's lien in the amount of$210,533.39 SJ Louis Construction (Recorded
with the Benton County Recorder on March 8, 2005 as Doc. No. 323947);
298537.DOC
3
c. A judgment in the amount of $259,328.96 in favor of Meritt 1. Hage (Docketed in
Benton County on August 25, 2006); and
d. A mortgage in favor of Lakeland Construction Finance, LLC (Recorded with the
Benton County Recorder on June 5, 2003 as Doc. No. 300536), which encumber both the
Stonecreek Estates Property and the Harper Property, and is security for a promissory
note in the original amount of $1 ,845,000, with a current balance of $2,177,601.34.
9. In addition to liens for real estate taxes, the Englenook Property is subject to the
following liens and encumbrances:
a. A judgment in the amount of $240,268.75 in favor of Duane and Susette Strand
(Docketed in Benton County on June 27, 2006);
b. A judgment in the amount of$259,328.96 in favor of Meritt J. Hage (Docketed in
Benton County on August 25, 2006); and
c. A mortgage in favor of Lakeland Construction Finance, LLC (Recorded with the
Benton County Recorder on November 20,2002 as Doc. No. 292045), securing a
promissory note in the original amount of $500,000, with a current balance of
approximately $640,000.
10. In addition to liens for real estate taxes, the Harper Property is subject to the
following liens and encumbrances:
a. A judgment in the amount of $240,268.75 in favor of Duane and Susette Strand
(Docketed in Benton County on June 27,2006);
b. A judgment in the amount of$259,328.96 iufavor of Meritt J. Hage (Docketed in
Benton County on August 25, 2006); and
c. A mortgage in favor of Lakeland Construction Finance, LLC (Recorded with the
Benton County Recorder on June 5, 2003 as Doc. No. 300536), which encumber. both the
Stonecreek Estates Property and the Harper Property, and is security for a promissory
note in the original amount of$1,845,000, with a current balance of $2,177,601.34.
11. The aggregate of claims secured by the Harper Property and is $2,677,198.71; all
of these claims are also secured by the Stonecreek Estates Property.
298537.DOC
4
12. The aggregate of claims secured by the Stonecreek Estates Property IS
$2,887,732.10.
13. The aggregate of claims secured by the Englenook Property is $1,139,597.71.
Business Reasons for Sale
14. The Debtor negotiated directly with the Purchaser regarding the terms of the sale.
15. The Debtor estimates the current market value for the Properties as follows:
Current Market Value
$836,000
$900,000
$631,000
$2,367,000
16. The Debtor's estimated values are based on the highest bids that were received at
an auction of the Harper and Stonecreek Estates Properties in May 2005. During the auction, the
highest bid related to the Harper Property was $5,500 per acre, and the highest bid related to the
Stonecreek Estates Property was $22,000 per lot. The estimated values above are the result of
I
multiplying the amount of the best offers by the 152 acres making up the Harper Property and
the 23 lots making up the Stonecreek Estates Property, respectively. With respect to the
Stonecreek Estates Property, the estimated value was increased by $125,000 by reason of that
property's inclusion of Outlot A, which was not otherwise accounted for in the estimate.
17. The estimated value of the Englenook Property is based on the fact that it is
adjacent to the Harper Property, consists of a comparable amount of developable land, and has
slight market advantages based on proximity to schools.
298537.DOC
5
18. The Debtor has determined that, given the present housing market, the interests of
the estate would be best served by reducing its inventory of undeveloped land so that it might
betterfocus on its more substantial projects.
19. The Debtor has concluded that the assumption of debt as provided for in the
Agreement is the highest and best value that the Debtor could reasonably expect to realize upon
the sale of the Properties. This conclusion is based on the Debtor's recent efforts to market the
Properties, including the May 2006 auction, as well as ordinary course of business inquiries from
prospective purchasers. Despite regular efforts to market the Properties, the Debtor has not
received any offers that would indicate that the estimated values set forth above are inaccurate.
20. The Debtor and the Purchaser negotiated the terms of the Agreement at arms'
length, and the Debtor believes that such terms are fair and reasonable, and that the Purchaser. is
acting in good faith for purposes of Section 363 of the Bankruptcy Code.
21. The Debtor believes that the sale of the Properties is in the best interests of the
estate.
Disclosure of Parties in Interest and Related Agreements
22. The Purchaser is a Minnesota corporation, all of the shares of which are owned by
Duane H. Strand and David A. Rothfork.
23. Rick Lewandowski, the Debtor's president, and Mr. Strand and Mr. Rothfork
were at one time the three shareholders of Stonecreek Golf Course, Inc.; since Mr. Rothfork's
shareholder interest terminated in August 2006, Mr. Lewandowski and Mr. Strand have been the
only shareholders.
298537.DOC
6
298537.DOC
7
Home Builders, Inc., an entity wholly-owned by Mr. Lewandowski. The estimated amount of
the claims of MM Home Builders, Inc. against Stonecreek Golf Course, Inc. is approximately
$6,000. As part of the general release by and between the individuals, Mr. Strand executed a
satisfaction and release of his judgment. One result of this satisfaction and release is that the
Debtor is relieved of $240,268.75 in liability that constituted an encumbrance on a substantial
amount of the Debtor's property.
(b) Mr. Lewandowski released all claims against Mr. Rothfork, and Mr.
Rothfork released all claims against Mr. Lewandowski. In addition, under the agreement
between Mr. Lewandowski and Mr. Rothfork, Mr. Rothfork agreed to pay to Mr. Lewandowski
the sum of $360,000.
28. In total, Mr. Lewandowski will receive $500,000 in cash payments under the
agreements with Mr. Strand and Mr. Rothfork and a release of liability under the Strand
Judgment; and will release all claims related to the over $700,00 in outstanding loans to
Stonecreek Golf Course, Inc., all claims related to the $50,000, plus interest, in outstanding loans
to Mr. Rothfork, and will convey all of his shares in Stonecreek Golf Course, Inc., which shares
have an estimated value of approximately $578,351.
29. The side agreement between the individuals named above does was incidental to
the Agreement, and had no effect on the Debtor's business judgment regarding the transaction.
30. To the extent that Mr. Lewandowski would have a claim for indemnification
against the Debtor by reason of his personal satisfaction of a claim on which the Debtor was
liable, he has agreed to waive such claim. Therefore, the individuals' side agreement has
298537.DOC
8
resulted in a significant benefit for the estate in that a claim against the Debtor has been satisfied
at no cost.
Notice of Witness
31. Pursuant to Local Rule 9013-2, Debtor gives notice thatit may, if necessary, call
Richard Lewandowski. The business address of the prospective witness is 700 Bunker Lake
Blvd., Anoka, MN 55303.
WHEREFORE, Debtor moves the court for an order: (1) approving the sale of the
Properties pursuant to the proposed terms described herein; and (2) granting such other relief as
the Court deems just and equitable
HENSON & EFRON, P.A.
Dated: January 9, 2007
By: lei Joel D. Nesset
Mary 1. Cox (#176552)
Joel D. Nesset (#030475X)
220 South Sixth Street, Suite 1800
Minneapolis, MN 55402 .
Telephone: 612-339-2500
Attorneys for Debtor
298537.DOC
9
VERIFICATION
I, Rick Lewandowski, the president of the Debtor herein, hereby certify under penalty of perjury,
that the statements contained in the foregoing Motion for Order Approving Sale of Property of
the Estate are true and correct to the best of my knowledge, information and belief.
Dated:
/lVL L {
RJk Lewandowski
298537.DOC
_-.....~.--:--~--_.__..--...._.. ..-.-...
12/20/2005 14:53
7534277136
BERGLUND BAUMGARTI'IER
PAGE 05
. .~.
DECEMBER 19. 2006 AGREEMENT B~EN EDINA. DEVELOPMENT...
OORPORATION ANO ROCK SOLtD ACQUISITION. INC.
THIS AGREEMENT is made this 19th day of December, 2006, by and
between Edina Development Corporation (hereinafter "Transferor") and Rock
Solid Acquisition, Inc. (hereinafter "Transferee") jointly known as the Parties.
WHEREAS, Transferor owns the following parcels of land located in
Benton County, Minnesota (the "Property"):.
A. Stonecreek Estates, legally described as follows:
Lots 1-23, Block 1, Stonecreek Estates, Benton County, MN
Lot 1, Block 2, Stonecreek Estates, Benton County, MN
Outlot A, Stonecreek Estates, Benton County, MN
B. Englenook Property, legally described as follows:
~
.0
.0
l!
Il
The part of the NWl/4 of NWl/4 of Section 25, Township
37, Range 29, described as follows: Beginning at the
Northwest comer of said NW1j4 ofNW1j4; thence East
along the North line of said NW 1/4 of NW 1/ 4a distance of
690.06 feet; thence South a distance of 1,026.05 feet; thence
West a distance of 690.0 feet to the West line of said NWlj4
of NW 1 j 4; thence North along the West line of said NW 1/4
ofNW1/4 a distance of 1,024.74 feet to the point of
beginning and there terminating.
EXCEPTING THEREFROM That part of the following tract
lying within the above described tract and described as
follows: Beginning at a point on the West line of said Section
25, said point being South 02029'30" West, a distance of
1,024.74 feet from the Northwest corner of said Section 25;
thence North
90000'00 East, a distance of 690.00 feet; therice South
02029'30" West, a distance of 1,157.53 feet; thence North
90000'00" East a distance of 100.09 feet; thence North
02029'30" East, a distance of 1,197.57 feet; thence North
90000100" West, a distance of 790.09 feet to the West line of
said Wlj2 ofNWlj4; thence South 02029'30" West, a
distance of 40.04 feet to the point of beginning.
Benton County. Minnesota.
EXHIBIT
12/20/2006 14:53 7634277136
.HH.___.-".-....
BERGLUND BAUMGARTNER
PAGE 05
~ ;.
AND
Part of theWl /2 of NW 1/4 of Section 25, Township 37,
Range 29 LYING Easterly of the following described line:
Beginning at a point on the north line of said W 1/2 of
NW1/4 690.06 feet East of the Northwest comer of said
Wl/2 of NWl/4; thence South 2,183.68 feet; thence West to
the Easterly right of way line of 9th Street; thence South
along said East right of way of 9th Street to the South line of
said WI /2 of NWl /4 and said line there terminating.
EXCEPTING THEREFROM the South 225 feet of the East
237.2 feet of that part of said Wl/2 of NW1/4 lying North of
the Northerly right of way line of Minnesota Trunk Highway
No. 23.
ALSO EXCEPTING THEREFROM That part of the following
tract lying within the above described tract and described as
follows: Beginning at a point on the West line of said Section
25, said point being South 02029'3011 West, a distance of
1,024.74 feet from the Northwest comer of Section 25; .
thence North 90000'00" East, a distance of 690.00 feet;
thence South 02029'30" West, a distance of 1,157.53 feet;
thence North 90000'00" East a distance of 100.09 feet;
thence North 02Q29'30" East, a distance of 1,197.57 feet;
thence North 90000'00" West, a distance of 790.09 feet to
the West line of said Wl/2 of NWl/4; thence South
02029'30" West, a distance of 40.04 feet to the point of
beginning.
Benton County, Minnesota.
C. Harper Property, legally described as follows:
The Southeast Quarter (SE %) of Section Thirty-Six (36),
Township Thirty-Seven (37) North, Range Twenty-Nine (29)
We~t, Fourth Principal Meri.dian, eJCcepting therefrom the
North 480.0 feet of the South 1,638.0 feet of the East 800.0
feet thereof, Benton County, MN. .
WHEREAS, outstanding debts against the above-referenced Property total
more than the current market value of the Property; and
WHERBAS,Edina is currently involved in a bankruptcy proceeding
entitled, In Re Edina Development Corporation. Court File No. 06-42532.
2
12/20/2005 14: 53____7.534277136
BERGLUND BAUMGARTNER
PAGE 137
WHEREAS, Transferee wishes to obtain title to the Property and agrees to
assume all debt, liens and taxes that encumber the Property; and
WBBREAS, Transferee shall indemnify and hold Transferor and Richard
Lewandowski (President of Edina Development Corporation), personally,
harmless from the obligations that encumber the Property.
HOW TBBRBI'ORB, the parties agree as follows:
1. Transferor shall cause to be transferred to Transferee by Quit Claim
Deed, title to all the Property listed above located in Benton Countyj Minnesota.
2.. As total consideration for the above referenced transfers, Transferee
acknowledges it takes the Property subject to all encumbrances against the
Property with the express agreement that the obligation to S. J. LOuis
Construction, hic., pursuant to their Mechanic's Lien f1led. as Document No.
323947, and refiled as Document No. 324082, is limited to $104,000.00.
3. Transferee takes title subject to any and all Restrictions and
Covenants for Site Specific Wetland Replacement for the property.
4. Transferee further acknowledges an additional layer of asphalt is
required under the Developer's Agreement with the City of Foley for Stonecreek
Estates and agrees to provide the layer of asphalt in accordance with the
Developer's Agreement.
5. Transferee will cause to be satisfied any and all mortgages and notes
with Lake1and Construction Finance, LLC, or any other entity involving the
Property and cause. to be removed any and all personal guarantees given by
Richard Lewandowski for the Property.
3
.
12/20/2006 14:53 7534277136
BERGLUND BAUMGARTNER
PAGE 08
6. Transferee agrees to indemnify and hold Transferor and Richard
Lewandowski, personally, harmless fer any and all claims resulting from the
encumbrances against the Property.
7. The Parties specifically acknowledge and agree that the transfer of
the Property contemplated in this Agreement is subject to the approval of the
Bankruptcy Court In Re Edina Development Corporatio~ Court File No. 06-
42532, which approval is expected to be no later than January 12, 2007.
8. A closing on the Property contemplated by this Agreement (the
"'Closing") shall occur (the "Closing Date") within seven (7) days following the
approval of ,the Bankruptcy Court, at a location in Minnesota mutually agreed
upon by the Parties hereto.
9. On December, 19, 2006 Transferor shall execute three Quit Claim
. Deeds in favor of Transferee transferring the title to . the Property, which deeds
shall be held in trust with Berglund & Berglund, Ltd., until the terms and
conditions of this Agreement are agreed to and accepted by the Bankruptcy
. Court.
10. The paragraph headings or captions appearing in this' Agreement
are for convenience only, are not a part of this Agreement, and are not to be
considered in interpreting this Agreement. This written Agreement constitutes
the complete agreement between the parties and supersedes any prior oral or
written agreements between the parties regarding the property. There are no
verbal agreements that change this Agreement, and no waiver of any of its
terms will be effective unless in writing executed by the Parties. This
Agreement binds and benefits the parties and their heirs, successors and
4
12120/2005 14: 53 _ 7534277136
BERGLUND BAUMGARTNER
PAGE 09
12/20/2005 15:25
7534277136
BERGLUND BAUMGARTNER
PAGE 09
Agreement supersedes and replaces any prior agreements, whether oral or
written. . Any amendments or modifications of this Agreement must be in writing
and executed by all parties to be effective. The Parties represent and warrant
that there are no covenants, promises, undertakings or understandings between
the Parties outside of this Agreement except as specifically set forth herein.
17. The terms of this Agreement are contractual, not mere recitals, and
are enforceable as such.
18. The Parties agree that this Agreement is the product of negotiation
between parties represented by legal cou~sel and that. the presumption of
interpreting ambiguities against the drafter of this Agreement does not apply.
This Agreement shall not be construed more strictly against one party than
against any other party by virtue of the fact' that the Agreement may have been
drafted or prepared by counsel for one of the Parties, it being recognized that aU
Parties to this Agreement have contributed substantially and materially to. the
negotiations and preparation of this Agreement.
19. Each person who executes this Agreement hereby represents and
warrants that he/she has the authority to do so, and both individually and on
behalf of the party for whom executed agrees to indemnify and hold harmless the
other.
20. This Agreement may be executed in counterparts and by facsimile, each of
which shall be deemed an original. This Agreement shall be binding upon the
Parties hereto, their respective heirs, successors and assigns.
The Parties have executed this Agreement as of the date first written above.
6
'.
12/20/2006 14:53
7534277136
BERGLUND BAUMGARTNER
PAGE 10
TRANSFEROR:
EDINA DEVELOPMENT CORPORATION
I#: L'
By. Ricl-d Wvandowsld
I~
Its:
Date: I !- -1i'--C16
TRANSFEREE:
ROCK SOLID ACQUISITION, INC.
(1.~M_~=O-~
By: Duane H. Strand
Its: \.1 e .
Date: 1. 'l. - , c;. ~ (!) (p
::B~A01df~
~. ~
Date: lz-l q~
CONSBNT
Lakeland Construction Finance, LLC hereby agrees and consents to the terms
and conditions of this Agreement as stated above.
LAKELAND CONSTRUCTION FINANCE, LLC
By:
Its:
Date:
7
<
12/20/2005 14:53 7534277135
12/18/2e~~ 16:47 7634277135
BERGLUND BAUMGARTNER
BeRrauJND BAlJMGiMTNe:R
PAGE 11
PAGE et3
TRANSFEROR
EDINA DEVELOPMENT CORPORA'TlON
- """'fl
.By~ Ricb.atd Lewandov.rDld
Its:
D.ti!!:
TRANSnREE:
ROCK saUD ACQUlSmott. ~C.
By: Duane H. Stn\.ad
Its:
D4to~ ' .
By: DRd A Rothforlc-
lta:.,.--
-
Date:.....
- COI'~
Litb1and ConetroetioD FinenOCl. LtC h.emby aarc=ea and COUiCD~ ,to, the terms
and condition.. of thb ~t as stated. above.
~:;;;~:Oj~/'lW.
By. --- 'f ~
Its: kkr(.t Of<rIl.L'~ o<r'~tr Date: t 2~lq~O"
7
..
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MINNESOTA
In re:
BKY 06-42532
Edina Development Corporation,
Chapter 11 Case
Debtor.
MEMORANDUM OF LAW
Edina Development Corporation (the "Debtor") submits this Memorandum in support of
its Motion for Order Approving Sale of Property of the Estate ("Motion").
I. STATEMENT OF FACTS
The Debtor relies on the facts as set forth in the verified Motion and incorporates same
herein by this reference.
II. STATEMENT OF LAW AND ARGUMENT
Section 363(b)(1) of the Bankruptcy Code provides that the debtor-in-possession, "after
notice and a hearing, may use, sell, or lease, other than in the ordinary course of business,
property of the estate."
Section 363 motions should typically be granted as long as the debtor articulates a valid
and reasonable business judgment supporting the proposed tr~saction. Once the Debtor
articulates a valid business justification for a proposed sale of assets of the estate, the business
judgment rule presumes that in making the business decision, the debtor acted on an informed
basis, in good faith, and in the honest belief that the action was in the best interests ofthe
company. In re SNA Nut Company, 186 B.R. 98 (Bankr. N.D. III 1995).
298537.DOC
The business judgment test is the "favored test in most jurisdictions" and has been
approved by bankruptcy courts in the Eighth Circuit. In re Audra-John Corp., 140 B.R. 752
(Bankr. D.Minn. 1992); In re Huff, 81 B.R. 531 (Bankr. D. Minn. 1988). In re Briggs Transp.
Co., 39 B.R. 343 (Bankr. D. Minn. 1984). When applying the business judgment rule, the courts
show great deference to the debtor's decision. In re Logical Software, 66 B.R. 683 (Bankr. D.
Mass. 1986). (A debtor's business decision "should be approved by the court unless it is shown
to be 'so manifestly unreasonable that it could not be based upon sound business judgment, but
only on bad faith, or whim or caprice.'" Logical Software, 66 B.R. 683, at 686.). The Debtor has
set forth sound reasons in support of its decision to enter into the Agreement, and has satisfied its
burden under Section 363.
The proposed sale will not adversely affect any creditor claiming a security interest in the
Properties, as the Purchaser is taking title subject to all liens and encumbrances. Although the
sale in itself will not relieve the Debtor of the underlying debt, the Purchaser has assumed those
liabilities, and the Debtor has a right of indemnification in the event that it is compelled to make
any payment to those secured creditors. Since the Debtor has determined that reorganization
would be best facilitated by foregoing efforts to develop the Properties, and since, in the current
market, the Properties have no equity in their present state of development, the sale will result in
a net benefit to the estate.
298537.DOC
2
III. CONCLUSION
For the foregoing reasons, the Debtor requests that the Court: (1) approve the terms ofthe
proposed sale of the property specified in the Motion; and (2) grant such further relief as the
Court deems just and equitable.
HENSON & EFRON, P.A.
Dated: January 9, 2007
By: lei Joel D. Nesset
Mary L. Cox (#176552)
Joel D. Nesset (#030475X)
220 South Sixth Street, Suite 1800
Minneapolis, MN 55402
Telephone: 612-339-2500
Attorneys for Debtor
298537.DOC
3
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MINNESOTA
Inre:
BKY 06-42532
Edina Development Corporation,
Chapter 11 Case
Debtor.
ORDER APPROVING SALE OF PROPERTY OF THE ESTATE
This matter came before the Court on a Motion for Order Approving Sale of Property of
the Estate ("Motion") filed by the Debtor. Appearances, if any, were noted on the record. Based
upon the Motion and the file, record and proceedings in this case, the Court makes the following
FINDINGS OF FACT:
1. The purchaser named in the Motion, Rock Solid Acquisition, Inc. ("Purchaser"),
is a good faith purchaser entitled to the protections of Section 363(m) ofthe Bankruptcy Code;
2. In accordance with the provisions of Section 363, the property specified in the
Motion may be sold by the Debtor;
3. The terms of the proposed sale are fair and reasonable under the circumstances,
and the Debtor took reasonable steps to secure the most favorable terms for the estate;
4. Notice of the Motion was served in accordance with all applicable rules, including
Fed.R.Bankr.P. 2002, 4001, 6004, and 9014, and Local Rules 2002-1, 2002-4, 6004-1, and 9013-
1, and notice to parties in interest was timely, adequate, and sufficient for purposes of Sections
102(1), 105(a), and 363; and
5. A reasonable opportunity. to be heard has been afforded to all parties in interest,
including all parties who may claim a lien on or security interest in any of the assets to be sold.
298537.DOC
BASED ON THE FOREGOING FINDINGS, IT IS ORDERED:
1. The Debtor is authorized to perfolTIl according to the terms of the terms of that
certain December 19, 2006 Agreement Between Edina Development Corporation and Rock Solid
Acquisition, Inc. (the "Agreement"), a copy of which was attached to the Motion, and to
otherwise take any and all actions that may be reasonably necessary in order to effect the
transactions contemplated in the Agreement.
2. On terms consistent with the Agreement and this Order, the Debtor is authorized
to convey the real property legally described as follows:
Lots 1-23, Block 1, Stonecreek Estates, Benton County, MN
Lot 1, Block 2, Stonecreek Estates, Benton County, MN
Outlot A, Stonecreek Estates, Benton County, MN
(the "S tonecreek Estates Property")
The part of the NW1/4 ofNW1I4 of Section 25, Township 37, Range 29, described as
follows: Beginning at the Northwest corner of said NW1I4 ofNW1/4; thence East along
the North line of said NW1/4 ofNWl/4 a distance of690.06 feet; thence South a distance
of 1,026.05 feet; thence West a distance of690.0 feet to the West line of said NWl/4 of
NW1/4; thence North along the West line of said NW1I4 ofNWl/4 a distance of
1,024.74 feet to the point of beginning and there terminating.
EXCEPTING THEREFROM That part of the following tract lying within the above
described tract and described as follows: Beginning at a point on the West line of said
Section 25, said point being South 02029'30" West, a distance of 1,024.74 feet from the
Northwest corner of said Section 25; thence North 90000'00 East, a distance of 690.00
feet; thence South 02~9'30" West, a distance of 1,157.53 feet; thence North 90000'00"
East a distance of 100.09 feet; thence North 02029'30" East, a distance of 1,197.57 feet;
thence North 90000'00" West, a distance of790.09 feet to the West line of said Wll2 of
NW1I4; thence South 02029'30" West, a distance of 40.04 feet to the point of beginning,
Benton County, Minnesota.
AND
Part of the Wll2 ofNW1I4 of Section 25, Township 37, Range 29 LYING Easterly of the
following described line: Beginning at a point on the north line of said Wl/2 ofNW1/4
690.06 feet East of the Northwest corner of said W1/2 ofNWl/4; thence South 2,183.68
feet; thence West to the Easterly right of way line of 9th Street; thence South along said
298537.DOC 2
East right of way of 9th Street to the South line of said W1I2 ofNW1I4 and said line
there terminating.
EXCEPTING THEREFROM the South 225 feet of the East 237.2 feet of that part of said
W1I2 of NW1I4 lying North of the Northerly right of way line of Minnesota Trunk
Highway No. 23.
ALSO EXCEPTING THEREFROM That part of the following tract lying within the
above described tract and described as follows: Beginning at a point on the West line of
said Section 25, said point being South 02029'30" West, a distance of 1,024.74 feet from
the Northwest comer of Section 25; thence North 90000'00" East, a distance of 690.00
feet; thence South 02029'30" West, a distance of 1,157.53 feet; thence North 90000'00"
East a distance of 100.09 feet; thence North 02029'30" East, a distance of 1,197.57 feet;
thence North 90000'00" West, a distance of790.09 feet to the West line of said Wl/2 of
NWl/4; thence South 02029'30" West, a distance of 40.04 feet to the point of beginning,
Benton County, Minnesota.
(the "Englenook Property")
The Southeast Quarter (SE )4) of Section Thirty-Six (36), Township Thirty-Seven (37)
North, Range Twenty-Nine (29) West, Fourth Principal Meridian, EXCEPTING
THEREFROM, the North 480.0 feet of the South 1,638.0 feet of the East 800.0 feet
thereof, Benton County, Minnesota.
(the "Harper Property").
3. The Purchaser will take title to the Properties subject to all existing liens,
interests, and encumbrances.
4. The consideration provided by the Purchaser pursuant to the Agreement will be
deemed to constitute reasonably equivalent value and fair consideration for the purpose of any
applicable state or federal statute, regulation, or other rule of law.
5. Notwithstanding Fed. R. Bankr. P. 6004(g), this Order will take effect
immediately upon entry and will not be automatically stayed.
BY THE COURT:
Dated:
Gregory F. Kishel
ChiefU. S. Bankruptcy Judge
298537.DOC
3
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MINNESOTA
Inre:
BKY 06-42532
Edina Development Corporation,
Chapter 11 Case
Debtor.
PROOF OF SERVICE
The undersigned states that she is an employee of Henson & Efron, P .A., and in
the course of said employment, on the date indicated below, she served, either
contemporaneously with the preparation of this proof of service or prior to its
preparation, the following:
(1) Notice of Hearing and Motion for Order Approving Sale of Property of the Estate;
(2) Memorandum of Law;
(3) Order Approving Sale of Property of the Estate
on the entities named below and/or on the attached service list, by facsimile
and/or U.S. Mail, unless otherwise noted; and that she certifies the foregoing
under penalty of perjury.
*Parties listed on the attached list*
Dated: January 9, 2006
leI Bette Anderson
299971.DOC
LAKELAND CONSTRUCTION FINANCE
LEC
LCF DEVELOPMENT LLC
C/O HELLMUTH & 'JOHNSON PLLC
10400 VIKING DR STE 500
EDEN PRAIRIE, MN 55344
ANDERSON ENGINEERING OF MN,LLC
13605 1ST AVE. N.
SUITE 100
PLYMOUTH, MN 55441
BAKKE NORMAN, SC
2919 SCHNEIDER AVENUE
P.O. BOX 280
MENOMONIE, WI 54751
BERGLUND AND BAUMGARTNER, LTD
2140 FOURTH AVE. N.
ANOKA, MN 55303
CENTER POINT ENERGY
PO BOX 1144
MINNEAPOLIS, MN 55440
CITY OF PINE ISLAND
PO BOX 1000
PINE ISLAND, MN 55963
CONTRACTORS CAPITAL
17316 KENYON AVE. W.
LAKEVILLE, MN 55044
DOMAIN NAME REGISTRY
2316 DELAWARE AVE. #226
BUFFALO, NY 14216
DUNLAP & SEEGER, P A
PO BOX 549
ROCHESTER, MN 55903
ELAN LEASING SERVICES
TWO APPLETREE SQ.
SUITE 325
MINNEAPOLIS, MN 55425
US FEDERAL CREDIT UNION
C/O DAVID C. ANASTASI
ANASTASI & ASSOCIATES, PA
14985 60TH STREET NORTH
STILLWATER, MN 55082
WATER'S EDGE DEVELOPMENT, LLC
C/O MANSFIELD, T ANICK & COHEN, PA
220 SOUtH SIXTH STREET
1700 U.S. BANK PLAZA SOUTH
MINNEAPOLIS, MN 55402
ANOKA COUNTY
2100 3RD AVE
ANOKA, MN 55303
BP PIPELINES
980 BERWOOD AVE.
ST. PAUL, MN 55126
BENTON COUNTY
531 DEWEY ST.
FOLEY, MN 56329
BENTON COUNTY
531 DEWEY STREET
PO BOX 129
FOLEY, MN 56329-0129
COYOTE MOON
480 55TH AVE SE
ST CLOUD MN
CEDAR CORPORATION
604 WILSON AVE.
MENOMONlE, WI 54751
CENTRAL MN BUILDERS ASSOC.
1124 W. ST. GERMAIN ST.
ST. CLOUD, MN 56301
CITY OF ALBERTVILLE
5964 MAIN AVE.
ALBERTVILLE, MN 55301
CITY OF ST. CLOUD
400 SOUTH 2ND ST.
ST. CLOUD, MN 56301
CONTINENTAL GREAT SIGN
1300 OLD HIGHWAY 8
NEW BRIGHTON, MN 55112
COYOTE MOON
480 55TH AVE. SE
ST. CLOUD, MN 56304
DEAN'S OUTDOOR SERVICES
500 N. MAIN
PINE ISLAND, MN 55963
DOUCETTESLANDSCAPING
AND CONTRACTING
16401 RAMSEY LANE
LITTLE FALLS, MN 56345
DUANE STRAND
12655 85TH ST.
FOLEY, MN 56329
DUNN COUNTY
800 WILSON AVE
MENOMONIE, WI 54751
EG RUD & SONS, INC.
9180 LEXINGTON AVE. NE
CIRCLE PINES, MN 55014
ELEMENTS, INC.
10044 FLANDERS COURT NE
SUITE 100
BLAINE, MN 55449
EROSION WORKS, INC.
18140 ZANE ST.
ELK RIVER; MN 55330.
FINANCE & COMMERCE
730 2ND AVE. S.
MINNEAPOLIS, MN 55402
FREDRIKSON & BYRON
200 SOUTH 6TH ST.
#4000
MINNEAPOLIS, MN 55402
GMAC
PO BOX 130424
ROSEVILLE MN 55113
GOODHUE COUNTY
509 W. 5TH STREET
RED WING, MN 55066
HENRY CONSTRUCTION
6633 115THAVE. NE
FOLEY, MN 56329
HUBER COURT REPORTING
204 WILSON AVE. NE
ST. CLOUD, MN 56304
INDEPENDENT TESTING TECH
PO BOX 325
WAITE PARK, MN 56387
JAKE LEWANDOWSKI
5540 HIGHLAND TRAIL
BIG LAKE, MN 55309
KERMIT GILYARD
18605 325TH AVE
PRINCETON, MN 55371
KJOLHAUG ENVIRONMENTAL SVCS
26105 WILD ROSE LANE
SHOREVIEW, MN 55331
KRAUSE MASONRY
705 4TH STREET
ZUMBROTA, MN 55992
KUECHLE UNDERGROUND
20 MAIN ST. N.
PO BOX 509
KIMBALL, MN 55353
LAKELAND CONSTRUCTION
SANDSTONE RIDGE 3RD ADDITION
EAGAN, MN 55121
LANEE LEWANDOWSKI
2670 40TH STREET
BUFFALO, MN 55313
LEONARD O'BRIEN SPENCER, ET AL
100 S. 5TH ST., SUITE 2500
MINNEAPOLIS, MN 55402
LISTINGCORP.COM
305 W. BROADWAY AVE.
SUITE 118
NY, NY 10013
LOWERTOWN ADVERTISING
287 E. 6TH ST.
ST. PAUL, MN 55101
LOWERTOWN ADVERTISING
509 SIBLEY ST.
SUITE 650
ST. PAUL, MN 55101
LURIE BESIKOF LAPIDUS & CO.
2501 WAYZATABLVD.
MINNEAPOLIS, MN 55405
M&I MARSHALL & ILSLEY
C/O MATTHEW R BURTON
100 S 5TH ST STE 2500
MINNEAPOLIS MN 55402
GMAC
5700 CROOKS ROAD
TROY, MI 48098
HANJO F ARMS-CFD
1758 190TH STREET
CENTURIA, WI 54824
IKON FINANCIAL SERVICES
PO BOX 6338
MACON, GA 31208
JOHN OLIVER AND ASSOC.
580 DODGE AVE.
ELK RIVER, MN 55330
KRAUSE MASONRY
30 JEFFERSON DR.
ZUMBROT A, MN 55992
LAKELAND CONSTRUCTION
860 BLUE GENTIAN RD., SUITE 135
EAGAN, MN 55121
LARKIN HOFFMAN DALY & LINDGREN
1500 WELLS FARGO PLAZA
7900 XERXES AVE. S.
MINNEAPOLIS, MN 55431-1194
LOT SURVEYS CO. INC.
7601 73RD AVE. N.
MINNEAPOLIS, MN 55428
LUANN R. JONES, INC.
3416 LONGFELLOW AVE. S.
MINNEAPOLIS, MN 55407
MBE INC.
PO BOX 1056
530 RIVER ST. S. .
DELANO, MN 55328
MM HOME BUILDERS
700 BUNKER LAKE BLVD.
ANOKA, MN 55303
MAIN MOTORS
435 W. MAIN ST.
ANOKA, MN 116.23
MANSFIELD T ANICK & COHEN
1700 US BANK PLAZA
220 S. 6TH STREET
MINNEAPOLIS, MN 55402
MARX TREE TRIMMING SVC
100 FRONTAGE RD E
PINE ISLAND, MN 55963
MCCOMBS FRANK ROOS ASSOC.
14800 28TH AVE N.
PLYMOUTH, MN 55447
MEL & DIANE MAVES
E6004 51 OTH AVE.
MENOMON1E, W154751
MERIT RAGE
110 REGAN LANE #350
OSSEO, MN 55369
MICHAEL MCCARTHY
7100RIVERVIEW TERRACE NE
FRIDLEY, MN 55432
MICHAEL AND LAURIE HASSLER
13006 NEW RAVEN ROAD NW
PINE ISLAND, MN 55963
MIDWEST LANDSCAPES
15050 93RD AVE. N.
MAPLE GROVE, MN 55369
MIDWEST LANDSCAPES
6221 OAKWOOD AVE. NE
OTSEGO, MN 55330
NEW HOME SALES COACH
8420 153RD PLACE
SA V AGE, MN 55378
NEW LOOK CONTRACTING
19696 COUNTY RD. 72
ELK RIVER, MN 55330
OLMSTED COUNTY
1514TH STREET SE
ROCHESTER, MN 55904
PR ADV ANT AGE
1034 33RD ST. S.
ST. CLOUD, MN 56301
PETERSON FRAM & BERGMAN
50 E. FIFTH ST.
SUITE 300
ST. PAUL, MN 55101
PINNACLE ENGINEERING
11541 95TH AVE. N.
OSEGO, MN 55369
PLOWE ENGINEERING
9180 LEXINGTON AVE NE
CIRCLE PINES, MN 55014
POPP.COM
PO BOX 27110
GOLDEN VALLEY, MN 55427
PRO COURIER
8375 SUNSET RD. NE
MINNEAPOLIS, MN 55432
PROPERTY SOURCE
PO BOX 431
BRAINERD, MN 56401-0431
REGAL FILM AND VIDEO
400 E. ST. GERMAIN STREET
SUITE 250
ST. CLOUD, MN 56304
RILEY BROTHERS CO.
46369 208TH STREET
MORRIS, MN 56267
RINKE-NOONAN
1015 W. ST. GERMAIN ST, #300
PO BOX 1497
ST. CLOUD, MN 56302
RIVERVIEW COMMUNITY BANK
9040 QUADA Y AVE. NE
OTSEGO, MN 55330
ROCHESTER SERVICE CO.
2150 SCHUSTER LANE NW
ROCHESTER, MN 55901
RUHLAND COMMERCIAL CONSULTANTS
14 N. 7TH AVE.
ST. CLOUD, MN 56303
RYAN AND GRINDE, LTD.
WAYNE MEHRKENS
JAMES P. RYAN, JR.
407 14TH ST. NW
ROCHESTER, MN 55903
S&C BANK
100 MILL STREET
BALSAM LAKE, WI 54810
SJ LOUIS CONSTRUCTION
3032 COUNTY RD 138
WAITE PARK, MN 56387 .
SAM MONTEGOMERY
4295 SHOREWOOD TRAIL
MEDINA, MN 55340
SHERBURNE COUNTY
13880 HIGHWAY 10
ELK RIVER, MN 55330
WILKERSON & HEGNA
7300 METRO BLVD.
EDINA, MN 55439
WAITT FAMILY FOUNDATION
HELLMUTH & JOHNSON
10400 VIKING DRIVE, #500
EDEN PRAIRIE, MN 55344
US FEDERAL CREDIT UNION
C/O ANASTASI & ASSOCIATES
14985 60TH STN
STILL WATER MN 55082
WASTE MANAGEMENT
PO BOX 609
WINSTEAD, MN 55395
BRUTLAG, HARTMANN & OKONESKI
RYAN J. TRUCKE
1100 US BANK PLAZA
200 SOUTH SIXTH STREET
MINNEAPOLIS, MN 55402
XCEL ENERGY
800 INTERCHANGE W
435 FORD ROAD
MINNEAPOLIS, MN 55426
WHKS & CO.
2905 SOUTH BROADWAY
ROCHESTER, MN 55904-5515
AQUILA
2665 145TH STREET W.
PO BOX 455
ROSEMOUNT, MN 55068
SCHUMACHER EXCAVATING, INC.
155770440 ST.
ZUMBROTA, MN 55992
ST. CLOUD AREA
CHAMBER OF COMMERCE
PO BOX 487
ST. CLOUD, MN 56302
WILKERSON & HEGNA
7300 METRO BLVD.
SUITE 300
EDINA, MN 55439
US FEDERAL
1400 RIVERWOOD DR.
BURNSVILLE, MN 55337
US TRUSTEE
1015 US COURTHOUSE
300 S 4TH ST
MINNEAPOLIS, MN 55415
STOCK BUILDING SUPPLY
915 YANKEE DOODLE RD.
EAGAN, MN 55121
BRUTLAG, HARTMANN & OKONESKI, PA
RYAN J. TRUCKE
1100 U.S. BANK PLAZA
200 SOUTH SIXTH STREET
MINNEAPOLIS, MN 55402
C/O MATTHEW BURTON M&I MARSHALL
& ILSLEY BANK
LEONARD, O'BRIEN, SPENCER, GALE & S
100 SOUTH FIFTH STREET
SUITE 2500
MINNEAPOLIS, MN 55402
WHKS & CO.
C/OWENDLAND UTZ STAHL & MINTZ
21 1ST STREET SW
ROCHESTER, MN 55902
SWENSON, LERVICK, SYVERSON,
ANDERSON, TROSVIG, JACOBSON, PA
GARY 1. SYVERSON
ATTORNEYS FOR RBP HOUSING, LLC
710 BROADWAY, PO BOX 787
ALEXANDRIA, MN 56308
SHAMROCK ENTERPRISES
6415 BANDEL RD. NW
ROCHESTER, MN 55901
ST. CLOUD TIMES
3000 7TH STREET NORTH
ST. CLOUD, MN 56303
STS CONSULTANTS, INC.
10900 73RD AVE N, SUITE 150
MAPLE GROVE, MN 55369
US FEDERAL CREDIT UNION
1400 RIVERWOOD DR.
BURNSVILLE, MN 55337
ST. CLOUD SPRINKLER CO., INe.
1727 75TH AVE. S.
ST. CLOUD, MN 56304
WRIGHT COUNTY
10 2ND STREET NW
ROOM 240
BUFFALO, MN 55313
WRIGHT COUNTY
10 2ND STREET NW
ROOM 240
BUFFALO, MN 55313
SONIC FINANCIAL
ALLIANCE BANK
120 TOWN SQ. 444 CEDAR ST.
ST. PAUL, MN 55110
T&J CONCRETE AND MASONRY
17720 HIGHWAY 65 NE
HAM LAKE, MN 55304
RYAN HATTON
1015 WEST ST. GERMAIN ST., SUITE 300
P.O. BOX 1497
ST. CLOUD, MN 56302
U.S. FEDERAL CREDIT UNION
WENDLAND, UTZ, STAHL & MINTZ, LTD.
JEFFERY A. MINTZ
Tin SEEDING
1202 6TH AVE SE ST.
STEPHEN, MN 56375
DAVID ROTHFORK
10846 HIGHWAY 23 NE
FOLEY, MN 56329
U.S. FEDERAL CREDIT UNION
WENDLAND, UTZ, STAHL &
MINTZ, LTD.
21 FIRST STREET SW, # 300
ROCHESTER, MN 55041
RYAN HATTON
1015 WEST ST. GERMAIN ST.
SUITE 300
P.O. BOX 1497
ST. CLOUD, MN 56302
KERMIT GlL Y ARD
18605 325TH AVE
PRINCETON, MN 55371