A federal judge has rejected a bid by the U.S. Department of Justice’s bankruptcy watchdog to upend a Washington state landlord’s debt-repayment plan because one of his tenants grew marijuana, WSJ Pro Bankruptcy reported. The decision, issued on Monday, is among a relatively small number of rulings that has grappled with the conflict of administering corporate bankruptcies within a state that has legalized the cultivation and sale of recreational marijuana. The landlord, Michael Cook, placed a group of property management companies he owns into chapter 11 in November 2016 in order to halt Columbia State Bank from appointing a receiver over the companies. The bank had loaned one of the companies $8.5 million in 2006 and in July 2016 said the business was in default of a forbearance agreement. The companies were placed in chapter 11 a few months later following unsuccessful negotiations with the bank, court papers say.
