Gregory M. Garvin, Acting United States Trustee for Region 18, Appellant,
Cook Investments NW, SPNWY, LLC; Cook Investments NW, Fern, LLC; Cook Investments NW, LLC; Cook Investments NW, Darr, LLC; Cook Investments NW, Arl, LLC, Appellees.
and Submitted December 3, 2018 Seattle, Washington
from the United States District Court for the Western
District of Washington D.C. No. 3:17-cv-05516-BHS Benjamin H.
Settle, District Judge, Presiding
Carson (argued) and Mark B. Stern, Appellate Staff; Annette
L. Hayes, Acting United States Attorney; Joseph H. Hunt,
Assistant Attorney General; Civil Division, United States
Department of Justice, Washington, D.C.; Wendy Cox, Trial
Attorney; P. Matthew Sutko, Associate General Counsel; Ramona
D. Elliott, Deputy Director/General
Counsel; Department of Justice, Executive Office for United
States Trustees, Washington, D.C.; for Appellant.
L. Day (argued) and Aditi Paranjpye, Bush Kornfeld LLP,
Seattle, Washington, for Debtors-Appellees.
Before: Susan P. Graber, M. Margaret McKeown, and Morgan
Christen, Circuit Judges.
panel affirmed the district court's decision affirming
the bankruptcy court's order confirming the second
amended Chapter 11 plan of five real estate holding
the debtors leased property to a company that used the
property to grow marijuana. The United States trustee
objected that the lease violated federal drug law, and so the
plan was unconfirmable under 11 U.S.C. § 1129(a)(3)
because it was proposed by means forbidden by law.
panel held that § 1129(a)(3) directs bankruptcy courts
to police the means of a reorganization plan's proposal,
not its substantive provisions. The panel affirmed
confirmation of the plan because it was not proposed by any
means forbidden by law.
McKEOWN, CIRCUIT JUDGE:
insolvency, five real estate holding companies owned and
managed by Michael Cook (collectively, "Cook" or
the "Cook companies") sought Chapter 11 protection.
Cook's foray into Chapter 11 was by most standards a
resounding success. It culminated with the Second Amended
Joint Debtors' Plan of Reorganization ("Amended
Plan"), which paid all creditors in full and provided
for Cook to continue as a going concern. The Amended Plan was
confirmed by the bankruptcy court.
the United States Trustee ("Trustee") asks that the
Amended Plan go up in smoke, because one of the Cook
companies leases property to N.T. Pawloski, LLC ("Green
Haven"), which uses the property to grow marijuana. The
Trustee complains that, even if Green Haven's business
complies with Washington law, the lease itself violates
federal drug law. The Trustee reasons that this violation
proves the Amended Plan was "proposed . . . ...