The Lighthouse Group of Connecticut LLC, a "debtor in bad faith" according to New London attorney Michael Sheehan, has no right to file a bankruptcy petition on behalf of the Lighthouse Inn, according to a filing in U.S. Bankruptcy Court.Sheehan, representing the historic New London inn's first mortgage holder, Business Loan Center LLC, said in a filing last month that Lighthouse Group of Connecticut is not entitled to file an involuntary Chapter 11 bankruptcy petition. The group is not listed as a legal entity in Connecticut, he said, and a change of the group's name from the Lighthouse Trust was not properly executed.

Sheehan, representing the historic New London inn's first mortgage holder, Business Loan Center LLC, said in a filing last month that Lighthouse Group of Connecticut is not entitled to file an involuntary Chapter 11 bankruptcy petition. The group is not listed as a legal entity in Connecticut, he said, and a change of the group's name from the Lighthouse Trust was not properly executed.What's more, the bankruptcy petition was filed by Christopher Plummer, a principal in The Lighthouse Group, rather than by a licensed attorney, as required by law, Sheehan argued. He also said bankruptcy code requires that a property with so many claims against it have at least three petitioners to force it into Chapter 11, rather than the sole petitioner in this case.

What's more, the bankruptcy petition was filed by Christopher Plummer, a principal in The Lighthouse Group, rather than by a licensed attorney, as required by law, Sheehan argued. He also said bankruptcy code requires that a property with so many claims against it have at least three petitioners to force it into Chapter 11, rather than the sole petitioner in this case."A petition for Chapter 11 bankruptcy may be deemed frivolous if it is clear on the filing date there was no reasonable likelihood that the debtor intended to reorganize and no reasonable probability that it would eventually emerge from bankruptcy proceedings," Sheehan said. "This involuntary filing meets all of the requirements ... of a bad faith filing."

"A petition for Chapter 11 bankruptcy may be deemed frivolous if it is clear on the filing date there was no reasonable likelihood that the debtor intended to reorganize and no reasonable probability that it would eventually emerge from bankruptcy proceedings," Sheehan said. "This involuntary filing meets all of the requirements ... of a bad faith filing."The petition, he noted, was not filed until one day before the inn and its contents had been scheduled for sale at an auction in September.

The petition, he noted, was not filed until one day before the inn and its contents had been scheduled for sale at an auction in September.What's more, according to Sheehan's brief, the value of Lighthouse Inn has declined from $2.9 million to $1 million in the year it has been closed. That's about half the amount Sheehan's client, known as BLC, is owed as the first mortgage holder.

What's more, according to Sheehan's brief, the value of Lighthouse Inn has declined from $2.9 million to $1 million in the year it has been closed. That's about half the amount Sheehan's client, known as BLC, is owed as the first mortgage holder."Clearly, the intent of this last minute filing was to frustrate BLC's efforts to exercise its rights and foreclose its mortgage," Sheehan said in the filing.

"Clearly, the intent of this last minute filing was to frustrate BLC's efforts to exercise its rights and foreclose its mortgage," Sheehan said in the filing.Sheehan pointed out that the Lighthouse Inn property is closed and has been placed in receivership. McGrath Hotels LLC, who owned the property until losing it in a foreclosure, has no employees, no cash flow and can't meet current expenses, including the payment of property and real estate taxes, he added.

Sheehan pointed out that the Lighthouse Inn property is closed and has been placed in receivership. McGrath Hotels LLC, who owned the property until losing it in a foreclosure, has no employees, no cash flow and can't meet current expenses, including the payment of property and real estate taxes, he added."A debtor is in bad faith," Sheehan said, quoting U.S. bankruptcy code, "when it is clear that from the date of the filing, the debtor has no reasonable probability of emerging from the bankruptcy proceedings and no realistic chance of reorganizing."

"A debtor is in bad faith," Sheehan said, quoting U.S. bankruptcy code, "when it is clear that from the date of the filing, the debtor has no reasonable probability of emerging from the bankruptcy proceedings and no realistic chance of reorganizing."Sheehan has asked that the Chapter 11 petition be dismissed and converted into a Chapter 7 bankruptcy, which would call for the immediate liquidation of Lighthouse Inn assets.

Sheehan has asked that the Chapter 11 petition be dismissed and converted into a Chapter 7 bankruptcy, which would call for the immediate liquidation of Lighthouse Inn assets.The next hearing in the case being heard by Chief Judge Albert S. Dabrowski will be at 10 a.m. Nov. 12 in Room 715B at U.S. Bankruptcy Court in Hartford.

The next hearing in the case being heard by Chief Judge Albert S. Dabrowski will be at 10 a.m. Nov. 12 in Room 715B at U.S. Bankruptcy Court in Hartford.In a related matter, Lighthouse Inn principal Plummer agreed in an out-of-court settlement to pay out more than $25,000 in back wages to 25 former employees, Department of Labor spokesman Nancy Steffens said Friday. The payments ranged from $100 to $4,300, she said.

In a related matter, Lighthouse Inn principal Plummer agreed in an out-of-court settlement to pay out more than $25,000 in back wages to 25 former employees, Department of Labor spokesman Nancy Steffens said Friday. The payments ranged from $100 to $4,300, she said.Employees had complained about not being paid by Plummer and Marilyn Clark, another Lighthouse Inn principal. The charges against Clark had previously been dropped, and Plummer's counts were also dismissed as part of the settlement, which included a requirement that Plummer give an unspecified extra charitable contribution, Steffens said.

Employees had complained about not being paid by Plummer and Marilyn Clark, another Lighthouse Inn principal. The charges against Clark had previously been dropped, and Plummer's counts were also dismissed as part of the settlement, which included a requirement that Plummer give an unspecified extra charitable contribution, Steffens said.Checks were sent to the former employees after the agreement was reached with Plummer, the State's Attorney's Office and the Department of Labor, she added.

Checks were sent to the former employees after the agreement was reached with Plummer, the State's Attorney's Office and the Department of Labor, she added.l.howard@theday.com

l.howard@theday.com