GVS Texas objects to U.S. trustee’s motion to appoint Chapter 11 trustee

By Sarah Lizee

Olympia, Wash., Nov. 3 – GVS Texas Holdings I, LLC objected to Region 6 U.S. trustee William T. Neary’s motion to appoint a Chapter 11 trustee to the case or convert the case to Chapter 7, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

“The U.S. trustee simply has not met its high burden to produce clear and convincing evidence to support the extraordinary relief it seeks,” the company said in its objection.

As previously reported, Neary said appointment of a Chapter 11 trustee is necessary because the debtors can’t serve as fiduciaries, as reflected by the incomplete financial reporting, as well as the attendant litigation and “lack of confidence” that resulted.

Great Value Storage LLC, a non-debtor operating affiliate that maintains, manages and operates the debtors’ self-storage and parking facilities, was placed into receivership by a Texas state court on Sept. 8. On Oct. 6, a Texas court of appeals signed an order temporarily staying the receivership order.

The property manager is indirectly owned and controlled by Natin Paul, who also directly or indirectly owns the debtors as the principal shareholder of the debtors’ corporate parent GVS Portfolio I C, LLC, a debtor in the Chapter 11 cases.

“Paul’s attention, at a minimum, is distracted from acting as a fiduciary, while dealing with a myriad of additional lawsuits, including the 25 bankruptcy cases filed in the Western District of Texas,” the U.S. trustee said.

GVS said that the U.S. trustee “cannot point to a conflict” now that Natin Paul has been removed as a director for the debtors, and Robert Algergotti has taken over.

The company said it is also clear that the debtors intend to remove Great Value Storage, LLC as the property management.

“In any event, there could be no greater alignment of interests between Mr. Paul and the creditors – as the creditors must be repaid before equity receives a dollar in this case,” the company said.

GVS Texas is an indirect subsidiary of GVS Portfolio I B, LLC, which does business as Great Value Storage, an Austin, Tex.-based storage chain. GVS Texas Holdings I filed bankruptcy on June 17 under Chapter 11 case number 21-31121.

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