Pitcairn Properties said it will appeal Sontchi's ruling.
Bankruptcy lawyers who are not involved in the Pitcairn case said it was very unusual to see a bankruptcy petition dismissed so quickly.
If that happens, it usually means "a debtor is trying to take advantage of the system by filing for a reason that is not reorganization," said Michael Cordone, a partner at Stradley Ronon Stevens & Young L.L.P. in Philadelphia.
The bankruptcy filing by Pitcairn Properties, which manages $800 million in commercial real estate, came as the privately held company was fighting a takeover attempt by an investment group that bought $50 million of preferred stock in Pitcairn six years ago.
The group, led by deal-maker Eric L. Blum, demanded partial repayment as allowed under its investment contract. When the payment was not received in June, Blum said he would exercise his contractual right to take control of Pitcairn's board.
Pitcairn Properties responded in July by suing to block Blum in Delaware Chancery Court. That case continues.
Daniel P. O'Brien, a lawyer for the preferred-stock group, said in an e-mail Monday that his clients were "pleased with the bankruptcy court's ruling dismissing the case filed by the current board of directors as not filed in good faith."
O'Brien, of Klehr, Harrison, Harvey, Branzburg L.L.P. in Philadelphia, did not respond to requests for further comment Tuesday.
Pitcairn Properties released a statement expressing a different view of the dismissal. "The judge found that Chapter 11 was not a proper vehicle for the restructuring of the terms" under which Pitcairn Properties would redeem the $50 million in preferred stock.
However, "the judge found that the directors who voted to commence the reorganization took their responsibilities seriously and were men of integrity," Pitcairn said.
Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.
