MEMORANDUM AND ORDER
YOUNG, District Judge.
In this consolidated bankruptcy appeal, Singer Furniture Acquisition Corp. ("Singer"), the potential debtor, and SSMC Inc. N.V. ("SSMC") each appeals orders entered by the United States Bankruptcy Court for the Middle District of Florida. Singer takes issue with two orders in particular. First, Singer appeals a July 13, 1995 dismissal order, whereby the Bankruptcy Court held that Singer's Chapter 11 petition was filed in bad faith and must be dismissed. Second, Singer appeals a July 26, 1995 order denying Singer's motion for sanctions against SSMC and its counsel for their allegedly willful violation of the automatic stay provisions of the Bankruptcy Code. See 11 U.S.C. § 362. For its part, SSMC appeals the Bankruptcy Court's March 14, 1996 order denying SSMC's motion, pursuant to Fed.R.Bankr.P. 9011, seeking sanctions against Singer for Singer's bad faith filing.
I. Facts & Procedural History
During the spring of 1995, Singer was a defendant and compulsory counterclaimant in a civil action brought by SSMC entitled SSMC, Inc. N.V. v. Steffen in the United States District Court for the Western District of Virginia (Kiser, C.J.). In that matter, SSMC asserted various causes of action against Singer, Terri Steffen, Singer Furniture Company, and members of Singer Furniture Company's management. SSMC alleged, among other things, that the defendants engaged in a fraudulent scheme to circumvent SSMC's security interest in Singer Furniture Company, the stock of which Singer had pledged to SSMC to secure a $44,600,000 debt owed by Singer to SSMC in exchange for SSMC's sale of Singer Furniture Company to Singer.
During the pendency of the Virginia matter, Singer made three unsuccessful attempts either to stay or to transfer the action from Virginia to Florida. See Notice of Proffer of Exs., Ex. D, Ex. E ¶ j, Ex. F (Bankruptcy Proceedings); Notice of Proffer of Aff. ¶ 13 (Bankruptcy Proceedings). After the parties completed discovery in the Virginia matter, the court heard argument from all parties regarding their respective motions for summary judgment on April 13, 1995. See Notice of Proffer of Aff. ¶ 17 (Bankruptcy Proceedings). Thirteen days before trial was to commence in Virginia, and while the summary judgment motions were sub judice, Singer filed its Chapter 11 petition on May 2, 1995.
On the same day of the pretrial conference in Virginia, SSMC filed a motion seeking the dismissal of Singer's bankruptcy case as having been commenced in bad faith. See Mot. to Dismiss Chapter 11 Pet. (Bankruptcy Proceedings). Although SSMC requested that the motion be expedited, Singer explicitly requested the Bankruptcy Court to refrain from hearing the motion on an emergency basis. The hearing was rescheduled from May 10 to June 28. On June 28, 1995, Chief Bankruptcy Judge Paskay conducted a hearing on the motion to dismiss. Judge Paskay began the hearing by asking counsel for SSMC to articulate facts which justified dismissing the petition. See Tr. of Hr'g of Mot. to Dismiss at 5 (Bankruptcy Proceedings). Counsel for Singer was then afforded an opportunity to dispute the facts as alleged by SSMC. See id. at 12. After hearing from both parties, Judge Paskay concluded that Singer had filed its petition in bad faith. In fact, he called the filing "a classic and gross misuse of Chapter 11" and "one of the wors[t] bad faith cases I've seen. . . . There is no doubt in my mind." Id. at 19, 23. On July 13, 1995, an order (at issue in this appeal) was entered dismissing the case. See Order Dismissing Chapter 11 Case (Bankruptcy Proceedings). At the same hearing, Judge Paskay also entertained Singer's motion for sanctions and for an order declaring the Virginia Order void. After listening to Singer's recitation of the facts which it claimed gave rise to the relief requested, see id. at 26-37, the Bankruptcy Court denied the motions without even the need for argument from SSMC's counsel. He held that even if a legal basis for sanctions existed (which he found was not the case), on the facts articulated by Singer, there simply was no factual basis upon which to award sanctions, see id. at 38. Singer appeals this ruling as well.
After the case was dismissed, on July 21, 1995, Singer filed a motion for reconsideration of the dismissal order and for a stay pending appeal. See Debtor's Mot. for Reh'g, Recons. and Relief from Order Dismissing Chapter 11 Case or Mot. for Stay Pending Appeal (Bankruptcy Proceedings). On August 1, 1995, the Bankruptcy Court denied the motion for reconsideration. See Order on Mot. for Recons., Reh'g and Relief from Order Dismissing Chapter 11 Case or Mot. for Stay Pending Appeal (Bankruptcy Proceedings). On August 4, 1995, Singer filed its Notice of Appeal from the dismissal order. Thereafter, on August 17, 1995, after hearing arguments from both parties, the Bankruptcy Court denied Singer's motion for stay pending appeal. See Order Denying Mot. for Stay Pending Appeal (Bankruptcy Proceedings). In response, Singer filed a motion before this Court for a stay pending appeal, which was subsequently denied on August 31, 1995, when District Judge Nimmons found that Singer was unlikely to succeed on the merits.
On December 5, 1995, SSMC moved for sanctions against Singer, Singer's attorneys, and Paul A. Bilzerian, Singer's sole officer, director, and employee, for Singer's bad faith filing. SSMC relied upon Rule 9011 of the Federal Rules of Bankruptcy Procedure and the inherent power of the court to award sanctions against parties who act in bad faith. Notwithstanding
II. Standards of Review
Upon review of bankruptcy proceedings, the Court will not set aside findings of fact unless such findings are clearly erroneous. See Fed.R.Bankr.P. 8013; In re Downtown Properties, Ltd., 794 F.2d 647, 651 (11th Cir.1986). While conclusions of law are reviewed de novo, In re Owen, 86 B.R. 691, 693 (M.D.Fla.1988) rev'd on other grounds, 500 U.S. 305, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991), discretionary rulings made pursuant to the Bankruptcy Code are reviewable only for abuse of discretion. See In re Albany Partners, Ltd., 749 F.2d 670, 674 (11th Cir.1984).
A. Dismissal Order
Singer alleges several errors relating to the Bankruptcy Court's dismissal of its Chapter 11 petition. Singer claims that: SSMC failed to meet its burden of proof on its motion to dismiss, the Bankruptcy Court should have held an evidentiary hearing, the Bankruptcy Court applied the summary judgment standard and based its legal conclusions on facts it erroneously believed were not disputed, and the Bankruptcy Court relied on several material facts merely alleged by SSMC in finding that Singer's case was filed in bad faith. These claims essentially challenge: (1) the factual basis underlying the Bankruptcy Court's dismissal of Singer's petition and (2) the procedural approach adopted by Chief Judge Paskay in determining whether to dismiss the petition. SSMC responds that overwhelming evidence supports the finding that the petition was filed in bad faith and that the Bankruptcy Court committed no procedural error in dismissing the petition.
Section 1112(b) of the Bankruptcy Code provides that, on request from a party of interest, the court may dismiss a case for cause. See Colonial Daytona Ltd. Partnership v. American Sav. of Fla., 152 B.R. 996, 1000 (M.D.Fla.1993). In determining what constitutes "cause" under the Code, "the court may consider other factors as they arise, and use its equitable powers to reach an appropriate result in individual cases." Albany Partners, 749 F.2d at 674 (quoting H.R.Rep. No. 595, 95th Cong., 1st Sess. 406 , U.S.Code Cong. & Admin.News 1978, pp. 5787, 6362). Of particular importance here, the Eleventh Circuit has determined that the debtor's bad faith in filing its petition for relief constitutes cause for dismissal of the bankruptcy case. See In re Phoenix Piccadilly, Ltd., 849 F.2d 1393, 1394 (11th Cir.1988); Albany Partners, 749 F.2d at 674; In re Double W Enter., Inc., 240 B.R. 450, 453 (Bankr.M.D.Fla. 1999); In re Wells, 227 B.R. 553, 560 (Bankr.M.D.Fla.1998). Here, Judge Paskay ruled that the case had been filed in bad faith and, therefore, that it should be dismissed. See Order Dismissing Chapter 11 Case (Bankruptcy Proceedings). The inquiry on appeal, then, turns on whether the Bankruptcy Court erred in determining that the Chapter 11 petition was filed in bad faith. "[T]he court has judicial discretion to evaluate the totality of the circumstances in each case and determine whether those circumstances indicate a bad faith filing by that debtor. This determination, since it is discretionary, will only be reversed by this Court if it finds the Bankruptcy Court has abused its discretion." Colonial Daytona, 152 B.R. at 1003.
The Eleventh Circuit has explained that in determining whether a bankruptcy case has been filed in bad
(1) the debtor has only one asset to which it does not hold legal title;
(2) the debtor has few unsecured creditors whose claims are small in relation to the claims of the secured creditors;
(3) the debtor has few employees;
(4) the debtor's financial problems involve essentially a dispute between the debtor and the secured creditors which can be resolved in pending proceedings;
(5) the timing of the debtor's filing evidences an intent to delay or frustrate the legitimate efforts of the debtor's secured creditors to enforce their rights;
(6) the lack of a realistic possibility of an effective reorganization; and
(7) whether the debtor is seeking to use the bankruptcy provisions to create and organize a new business, not to reorganize or rehabilitate an existing enterprise, or to preserve going concern values of a viable or existing business. See Phoenix Piccadilly, 849 F.2d at 1394; In re Natural Land Corp., 825 F.2d 296, 298 (11th Cir. 1987); Albany Partners, 749 F.2d at 673-74; see also In re Boughton, 243 B.R. 830, 834 (Bkrtcy.M.D.Fla.2000) (employing the Phoenix Piccadilly factors in multiple asset cases although such factors are no longer applicable in single asset real estate cases). The bankruptcy record is replete with evidence relevant to these factors which would warrant the Bankruptcy Court's finding of bad faith. First, Singer itself concedes that it is a holding company that is not engaged in any business and has no employees. See Br. for Appellant at 23-24; Tr. of Hr'g of Mot. to Dismiss at 12-13 (Bankruptcy Proceedings). Moreover, according to Singer's own documents and schedules, Singer had more than enough assets to pay its only two reported creditors other than SSMC at the time it filed its petition.
As for Singer's second claim of error, this Court finds that the Bankruptcy Court conducted the dismissal hearing in an appropriate manner. The Code requires bankruptcy courts to conduct such "hearing[s] as [are] appropriate in the particular circumstances." 11 U.S.C. § 102(1)(A). Courts throughout the country have held that evidentiary hearings are not required before a bankruptcy court dismisses a Chapter 11 petition due to bad faith. See, e.g., In re Elmwood Dev. Co., 964 F.2d 508, 511-12 (5th Cir.1992); In re Mazzocone, 180 B.R. 782, 785-86 (E.D.Pa. 1995); In re Cockings, 172 B.R. 257, 260-61 (Bkrtcy.E.D.Ark.1994); Colonial Daytona, 152 B.R. at 1002; In re Baker Oil Well Servs., Inc., Nos. 87-41489-76C, 89-4232-S, 1991 WL 49722, at *4 (D.Kan. Mar. 5, 1991). In Colonial Daytona, Bankruptcy Judge Paskay "requested the parties first give the Court all purportedly uncontested facts bearing on the issue of bad faith cause for dismissal, and then proffer evidence only if a material fact was deemed disputed." Colonial Daytona, 152 B.R. at 1002. Although the debtor's counsel asserted that some facts were disputed, after further inquiry, the Bankruptcy Court found that the facts at issue were either immaterial or not truly disputed. See id. In Colonial Daytona, Chief Judge Kovachevich ruled that there was no error in Judge Paskay's approach. See id. The same procedure was followed here and Singer fails to provide a reason not to follow Colonial Daytona. Judge Paskay explained the procedure followed in this case subsequent to the hearing:
Tr. of Hr'g of Debtor's Mot. for Stay Pending Appeal at 24-26 (Bankruptcy Proceedings). The transcript reveals that the Bankruptcy Court provided Singer's counsel an opportunity to proffer evidence regarding bad faith that might dispute the facts as recited by SSMC. See Tr. of Hr'g of Mot. to Dismiss at 12-23 (Bankruptcy Proceedings). Judge Paskay was unconvinced by counsel's entreaties. See id. Under Colonial Daytona, providing an opportunity to proffer evidence in this manner is not inappropriate. The Bankruptcy Court's procedural approach does not constitute error.
B. Violation of the Automatic Stay and Sanctions
Singer also argues that the Bankruptcy Court erred when it denied its motion for a determination that the Virginia Order entered by the United States District Court for the Western District of Virginia (the "District Court") was a violation of the automatic stay. As a supplement to this argument, Singer claims that the Bankruptcy Court erred in ruling that SSMC and its counsel were not subject to sanctions, or in the alternative, contempt, for their willful violation of the automatic stay through the implementation of the Virginia Order. In response, SSMC contends that the Bankruptcy Court's decision finding that there was no violation of the automatic stay was correct and should be affirmed because the Virginia Order did not affect any property of the estate.
Prior to examining the Bankruptcy Court's decision it is important to have an understanding of the complicated series of transactions that led to the Virginia suit and ultimately the bankruptcy filing. Singer and SSMC entered into a share purchase agreement for the sale of stock of Singer Furniture Company ("Singer Delaware") from SSMC to Singer in exchange for a $44,600,000 note, a guaranty by Bilzerian (a principal in Singer) and BPLP-I (a partnership with an ownership interest in Singer), and a pledge of Singer Delaware stock (the "Stock Pledge Agreement"). See SSMC, Inc. N.V. v. Singer Furniture Acquisition Corp., No. 93-0952-R, slip op. at 4 (W.D.Va. May 5, 1995) ("SSMC, slip op.").
Before the $44,600,000 note was due, disputes erupted among the various parties regarding this transaction as well as other transactions in which they had engaged. See SSMC, slip op. at 5. A Refinancing Agreement which altered the payment terms of the original purchase of Singer Delaware was signed. See id. The Refinancing Agreement was never fully consummated and consequently the equitable and legal ownership of Singer Delaware was not altered under the agreement. See id. at 5-6. Negotiations between the parties continued. See id. at 6.
Meanwhile, in the Fall of 1991, Singer caused Singer Delaware to form a subsidiary: Singer Furniture Company of Virginia ("Singer Virginia"). See id. Singer Delaware then merged into Singer Virginia, leaving Singer Virginia as the surviving corporation. See SSMC, slip op. at 6. Subsequently, Singer "surrendered" its 1000 shares of Singer Delaware in exchange for four million shares of the surviving company. See id. at 7. This exchange occurred even though Singer did not have the stock certificate and it was not the record shareholder of Singer Delaware. See id. (indicating that Singer had altered its stock book to make it appear
Singer Virginia then bought back 3,900,000 of the new shares in purported forgiveness of a $25,000,000 debt owed to it by Singer. See id. After the buy-back, Singer was left with 100,000 shares of Singer Virginia. See id. In an alleged effort to recapitalize, Singer Virginia then issued 720,000 shares of stock to Steffen (a member of Singer Delaware's board), 38,032 shares to Ammons (president and CEO of Singer Delaware and now Singer Virginia, and a member of Singer Virginia's board), and 25,644 shares to Matthews (vice-president, secretary, and treasurer of Singer Delaware and a member of Singer Virginia's board). See SSMC, slip op. at 7. As a result of this transaction, Singer's interest in Singer Virginia was reduced to about ten percent. See id. In March 1993, Singer purported to sell its remaining 100,000 shares back to Singer Virginia, completely eliminating Singer's interest in Singer Virginia. See id. at 8.
Based on Singer's actions, SSMC filed suit in Virginia, alleging that it was deprived of its rightful security interest in Singer Delaware by a fraudulent corporate restructuring. There were several other defendants in addition to Singer, namely Singer Virginia individual defendants Steffen, Ammons, and Matthews, and the directors and officers of Singer Virginia.
2. The Virginia Pretrial Conference and Order
Although Singer made several unsuccessful attempts to remove the case to Florida, it remained in Virginia, and, on April 13, 1995, the District Court of the Western District of Virginia heard summary judgment arguments in the case styled SSMC, Inc. N.V. v. Singer Furniture Acquisition Corp. The District Court took the summary judgment motions under advisement and declined to enter an order at oral arguments. Then, on May 2, 1995, two days prior to a scheduled pretrial conference in the Virginia action, Singer filed bankruptcy in Florida. Despite the filing, on May 4, 1995 a pretrial scheduling conference was held for the Virginia action. See Tr. of Pretrial Conference at 1. Singer was not represented at the conference, but the non-debtor defendants' attorneys were all present. See id. At the start of the conference, Judge Kiser asked counsel to address how the bankruptcy petition affected the Virginia trial, scheduled to start in a week. See id. at 1. Counsel for SSMC encouraged the court to proceed without Singer, while counsel for the non-debtor defendants were split — two argued the trial should proceed while one asserted that Singer was a necessary party. See id. at 2-4. The conference transcript indicates that Judge Kiser was cognizant of the bankruptcy filing and what, if any, effect it had on the Virginia proceedings. See id. at 1, 5.
During the course of the conference, Judge Kiser offered a draft memorandum of the summary judgment motions. See Tr. of Pretrial Conference at 10. The opinion concluded that the purported merger between Singer Delaware and Singer Virginia was legally ineffective, essentially reasoning Singer Virginia out of existence. See id. at 10-12.
3. The Automatic Stay
Based on the record before this Court, the finding of the Bankruptcy Court that the Virginia Order did not violate the automatic stay is not clearly erroneous. The automatic stay operates to enjoin a creditor from attempting to possess or exercise control over property of the estate once a petition has been filed. See 11 U.S.C. § 362. Property of the estate has been defined broadly to include "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). If property is not property of the estate, then the automatic stay does not protect it. See In re Burnsed, 224 B.R. 496, 498 (Bankr. M.D.Fla.1998). Thus, the threshold inquiry, determined under federal law, see id. (citation omitted), is whether the Virginia Order in fact asserted control over property of the estate.
It is SSMC's contention that the Bankruptcy Court properly concluded that the Virginia Order did not violate the automatic stay because no property of the estate was affected. SSMC rests this conclusion on the claim that, at the time the petition was filed, Singer did not possess any shares of Singer Virginia, and, pursuant to the Stock Pledge Agreement, it never had any. To counter this, Singer asserts that the Virginia Order both vested and stripped Singer of its ownership of the stock by declaring the merger void and improperly awarding the stock to SSMC. Essentially, Singer asked the Bankruptcy Court to void an order of the District Court for the Western District of Virginia, a federal court.
The Bankruptcy Court's finding is supported by the record. The Virginia Order essentially turned back the clock in determining the transactions between SSMC and Singer. The merger of Singer Delaware and Singer Virginia and all events thereafter were void or voidable. See Tr. of Pretrial Conference at 15. Thus, Singer's purported transfer of the 1000 shares of Singer Delaware stock to Singer Virginia for four million shares of Singer Virginia was erased, as was Singer's surrender of 3,900,000 shares back to Singer Virginia for the "forgiveness" of a $25,000,000 debt. The "recapitalization" that resulted in share purchases by Steffen, Ammons, and Matthews was also declared invalid.
The unwinding of the merger affected only the assets of Steffen, Ammons, Matthews, and Singer Virginia — all non-debtors. By returning the parties to premerger status quo the Virginia Order did not exercise control over property of the estate.
As written, therefore, the Virginia Order did not violate the automatic stay.
While the Virginia Order itself did not violate the stay, the interpretation and implementation of the order by SSMC may have done so. Specifically, it appears that SSMC assumed control of Singer Delaware, essentially divesting Singer of its equitable interest and thus altering their pre-petition status. Singer raised this issue with the Bankruptcy Court when counsel stated:
MS. LoCICERO: Judge, we also believe that the SSMC continues to violate the automatic stay. THE COURT: By doing what? MS. LoCICERO: By continuing to take possession of [Singer Delaware]. THE COURT: Precisely, what are they doing? MS. LoCICERO: Managing it, operating it, as if they were the owners. We again believe that we were the owners, that when the merger was undone an interest of ours — COURT: Who owns [Singer Delaware]? MS. LoCICERO: [Singer Delaware] was a subsidiary of the debtor.
Tr. of Hr'g of Mot. to Dismiss at 36 (Bankruptcy Proceedings). Although the record is far from clear on this issue,
4. Sanctions for Willful Violation of the Automatic Stay
Even if, as Singer contends, there was a willful violation of the automatic stay sanctions are not available under 11 U.S.C. § 362(h). Section 362(h) provides that an "individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." 11 U.S.C. § 362(h). Based on the word "individual," the Bankruptcy Court concluded that the remedy under section 362(h) was not available to corporations. See Tr. of Hr'g of Mot. to Dismiss at 38 (Bankruptcy Proceedings).
A year after the Bankruptcy Court's decision, the Eleventh Circuit held that the term "individual" does not include corporations or other artificial entities. See Jove Eng'g, Inc. v. Internal Revenue Service, 92 F.3d 1539, 1549-53 (11th Cir.1996) (recognizing circuit split and concluding that "individual" refers to natural persons). Specifically, the court ruled that a corporate debtor is not entitled to relief under section 362(h) "because the term `individual' is limited to natural persons and does not include corporations or other artificial entities." Id. at 1552-53. Based on this controlling precedent, the Bankruptcy Court's conclusion that sanctions under section 362(h) are unavailable to corporate debtors is affirmed.
Although Singer suggests that sanctions are appropriate under other provisions of the Bankruptcy Code, specifically section 105 and Rule 9020, nothing in the record suggests that the Bankruptcy Court's refusal to apply sanctions was an abuse of discretion. Sanctions are not mandatory and, given the equities of the case, it was not unreasonable for the Bankruptcy Court Judge to decline to impose them.
C. SSMC's Motion for Sanctions Under Rule 9011
SSMC appeals from that part of the Bankruptcy Court's March 14, 1996 order that denied its motion for sanctions under Federal Rule of Bankruptcy Procedure 9011 against the law firm of Gibbs & Runyan, P.A., Cindy L. LoCicero, Bilzerian, and Singer. See Order Den. in Part and Deferring Ruling in Part on SSMC's Mot. for Sanctions (Bankruptcy Proceedings). The order specified that the motion pursuant to Rule 9011 "is denied for the reasons stated at the hearing." Id. ¶ 1. The transcript of the hearing reveals that Chief Judge Paskay interpreted Rule 9011 to require all three of the following deficiencies: (1) the petition contains untrue factual assertions that could have been obtained after a reasonable inquiry; (2) the petition is not warranted by existing law, and (3) it was imposed for an improper purpose. See Tr. of Hr'g of SSMC's Mot. for Sanctions at 6-13 (Bankruptcy Proceedings). At one point, Judge Paskay expressly refers to the first "requirement," i.e., untrue factual assertions, as "[t]he very early and the initial threshold requirement. . . ." Id. at 7. By referring to untrue factual assertions as a "threshold requirement," the Bankruptcy Court reveals its conceptualization of Rule 9011 as a series of requirements, all of which must be met in order for sanctions to lie. SSMC challenges the Bankruptcy Court's interpretation of Rule 9011 and requests that this Court not only
Even though the question at issue is purely one of law, an abuse of discretion standard is applied in reviewing all aspects of the lower court's determination of a sanctions motion. See Glatter v. Mroz, 65 F.3d 1567, 1571-72 (11th Cir. 1995) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 ; Chambers v. NASCO, Inc., 501 U.S. 32, 55, 111 S.Ct. 2123, 115 L.Ed.2d 27 ). Nonetheless, a court "would necessarily abuse its discretion if it based its ruling on an erroneous view of the law." Souran v. Travelers Ins. Co., 982 F.2d 1497, 1507 n. 10 (11th Cir.1993) (quoting Cooter & Gell, 496 U.S. at 405, 110 S.Ct. 2447 [internal quotation marks omitted]). Consequently, if the Bankruptcy Court erred in its legal interpretation of Rule 9011, then it necessarily abused its discretion.
Respectfully, here the Bankruptcy Court misinterpreted Rule 9011.
By requiring SSMC to show that the petition contained untrue factual assertions as a "threshold requirement," the Bankruptcy Court's interpretation is at odds with the Eleventh Circuit's command in Mroz. Instead, the Bankruptcy Court ought consider not only whether it contained untrue factual assertions or was legally unreasonable, but also whether the petition was filed in bad faith or for an improper purpose. This interpretation makes great sense, for as SSMC points out in its brief, "[a]bsent, a reversal, litigants in this Circuit will be free to file frivolous petitions simply to harass and delay as long as they ensure that the facts stated in their legally frivolous filings are themselves accurate." Br. for Appellant, SSMC Inc. N.V. at 3. In its own way, each of the three prohibited types of conduct wreak havoc on an already overburdened judicial system in addition to wasting the time and energy of the opposing party and its counsel. As a result, each type of conduct should be individually subject to sanctions under Rule 9011. Therefore, this Court holds that the Bankruptcy Court abused its discretion when it applied an erroneous interpretation of Rule 9011, and remands the issue to the Bankruptcy Court with direction to reconsider the motion in light of this decision. This ruling ought not, however, be interpreted as mandating that sanctions be imposed. It simply requires that the analytic approach of the Eleventh Circuit be followed.
In light of the foregoing, the Court AFFIRMS the Bankruptcy Court's determination that Singer's bankruptcy petition was filed in bad faith and, therefore, warranted dismissal. [Case No. 95-1452; Dkt. 5]. The Court also AFFIRMS the Bankruptcy Court's ruling that the Virginia Order did not violate the automatic stay and its denial of sanctions pursuant thereto. [Case No. 95-1452; Dkt. 5]. The Court, however, REVERSES the Bankruptcy Court's determination of sanctions and REMANDS that issue for reconsideration in light of this opinion. [Case No. 96-1021; Dkt. 3].
Id. at 17-18. The leap made by SSMC is not supported by the record before this Court. SSMC assigned Singer voting rights except in instances when the voting violated the Stock Pledge Agreement. There is no indication that a violation of the pledge agreement resulted in an automatic reversion of all voting rights.
Fed.R.Bankr.P. 9011(a) (amended 1997). This version was in effect at all times material to this case (i.e., pre-amendment).