Judge Lorna Schofield
Bankruptcy court approved Berlin & Denmar Distributors Inc.'s liquidation plan to sell four units at the Hunts Point Cooperative Market. Successful bidder for three units, Goldstein Development Corp.'s $94,000 deposit exceeded the $50,000 deposit required from a "Qualified Competing Bidder" under the "Bidding Procedures." It was learned Goldstein was not a food distributor—a shareholder requirement—and that its intended sublease of the units was barred. Goldstein sought refund of its deposit. District court affirmed bankruptcy court's order that Goldstein forfeit $50,000. Under the Plan and Bidding Procedures the buyer assumed the risk the sale would not close because the buyer could not become a Hunts Point shareholder. As long as the buyer was a Qualified Competing Bidder and a Purchaser as those terms were defined, then the "Deposit"—defined to limit forfeiture to $50,000—was subject to forfeiture if the buyer could not close. Agreeing that Goldstein was a Qualified Competing Bidder and a Purchaser district court noted the record supported bankruptcy court's finding Goldstein failed to close because it did not conduct appropriate due diligence, nor read the shareholder application provided prior to the auction.
