It should be common knowledge that a secured creditor, having received proper notice in a Chapter 11 bankruptcy case, faces the risk that its lien will be extinguished if it fails to object to a reorganization plan that does not specifically preserve the lien. Apparently, however, not all secured lenders realize this risk, and some fall prey to a trap for the unwary in §1141(c) of the Bankruptcy Code by failing to protect their liens and place their collateral at risk.
USA, Insolvency & Restructuring, Litigation, Hunton Andrews Kurth LLP, Bankruptcy, Debtor, Secured creditor, United States bankruptcy court, Fifth Circuit, Seventh Circuit