In re Malkus, Inc.

Charles Malkus and his wife owned Malkus, Inc. (Malkus), which operated a motel that had been terminated from one franchise agreement and received a low quality rating from its current franchisor; after obtaining a first mortgage from LaSalle and, despite contractual restrictions barring junior financing, a second mortgage from First Community Bank, Malkus defaulted on the LaSalle note, prompting foreclosure, and filed Chapter 11 the same day as the foreclosure's summary judgment hearing. Malkus and LaSalle entered a stipulation agreement with a specific budget, but Malkus repeatedly failed to operate within that budget, missed other financial requirements, and failed to make payments to LaSalle even after the court ordered compliance; creditors objected to Malkus's proposed reorganization plan as not feasible under §1129(a)(11).