房地产行业高速发展10余年，在“房住不炒”的宏观背景以及2020年8月“三道红线”政策后，因房地产行业的发展模式及市场发展规律、政策执行力度、国家宏观调控等多方面的原因，房地产市场从2021年9月开始经历行业“缩表”的阵痛，不少大型房地产企业先后出现债务风险，面临诸多的困难处境，继而影响资金方、施工方、材料设备供应方及购房业主等多方主体。房地产市场影响国民经济及民生多个方面，在行业困境下，政府亦在监管、维稳、施救等多方面遇到难题。表面上看，各方主体皆可按政策与法律处理，但实操中，商业诉求与法律的平衡，经济效果与社会效果、法律效果的协调，社会资源的调度与节约，仍需探索最佳路径。

单纯的法律手段难以解决问题的情形下，笔者认为：房地产困境的解决，最终需要落实到具体的房地产项目庭外重组与盘活。开展全行业性的政策拯救或对大型地产公司进行全面的庭外重组盘活，需假以时日并多方共同努力。因此，结合近一年多的地产项目重组盘活经验，笔者希望从政府管理、商业诉求、法律实践等方面，为各方在房地产项目困境中破局提供些建议，达到解决具体房地产项目的实际问题，使项目价值最大化，最大程度实现各方利益诉求，从一定程度上缓解目前房地产困境。

本文仅就困境项目的成因、市场常见盘活方案等问题，从法律角度予以整理，请勿以此作为法律意见在实践中套用。

Every now and then we get an example of how a process should work.

That’s exactly what we have, regarding confirmation of a contested Subchapter V plan, in the case of In re Lapeer Aviation, Inc., Case No. 21-31500 in the Eastern Michigan Bankruptcy Court.

In an opinion issued October 12, 2022, (Doc. 264), the Lapeer Court declares that, (i) most of the plan confirmation standards are satisfied, but (ii) the plan is deficient under two confirmation standards and, therefore, cannot be confirmed.

During a November 9, 2022, hearing on summary judgment motions in the Hertz bankruptcy, Delaware Bankruptcy Judge Mary F. Walrath issues the following oral ruling:

The case is Wells v. McCallister, Case No. 21-1448 in the United States Supreme Court.

The question presented is:

• whether a debtor’s homestead exemption, existing on the date of bankruptcy filing, can vanish if the debtor sells the homestead during the bankruptcy and does not promptly reinvest the proceeds in another homestead.

The Petition for writ of certiorari explains:

For some reason, there is a fascination out there (not sure where, exactly) with having every assignment for benefit of creditors (“ABC”) supervised by a court from the get-go. 

This fascination suggests that every ABC effort requires court action and judicial approvals, from the beginning and throughout the assignment, to assure that everything about the ABC and its administration is on the up-and-up.

Startling and Puzzling

This fascination is both startling and puzzling.  Here are some reasons why.

In its Siegel v. Fitzgerald opinion, the U.S. Supreme Court declares that disparate quarterly fee amounts between U.S. Trustee and Bankruptcy Administrator districts are unconstitutional, under the uniformity requirement of the U.S. Constitution’s bankruptcy clause.

The most recent fallout from that opinion is the following docket entry by the U.S. Supreme Court in a different case with the same issues:

Illinois follows the common law of assignments for benefit of creditors (“ABC”): a non-judicial, trust-like process for liquidating a failed business.

That ABC process can work, hand-in-hand, with the Bankruptcy Code. The case of In re Computer World Solutions, Inc., Case No. 07-21123, Northern Illinois Bankruptcy Court, shows us how.

FACTS

Debtor is an importer and distributor of computer monitors, televisions and other electronic products, owing $20 million to Bank, which holds a first-lien on virtually all of Debtor’s assets.

Many years ago, back when mediation is a rarity in bankruptcy disputes, I asked an old-timer this question:

Why is the bankruptcy system a lagging adopter of mediation?”

A Surprising Answer

The old-timer gave this surprising answer:

“At the time of the Bankruptcy Code’s enactment, the bankruptcy judge was viewed as a mediator in the judge’s own court.”

The old-timer added this.  When the Bankruptcy Code was enacted:

You’ve gotta admire the Debtor in In re Deirdre Ventura.

Debtor has been fighting to save a Bed and Breakfast business through bankruptcy: beginning in 2018 with a regular Chapter 11, and then struggling to get into Subchapter V.

Debtor’s is a you-can’t-make-this-stuff-up story of persistence through adversity.

Debtor has survived, for example, an inexplicably-bad appellate opinion refusing to allow Debtor’s Subchapter V election. The appellate opinion declares:

Assignment for benefit of creditors (“ABC”) has existed for centuries under the common law of England and the United States. And the ABC process has worked well under that common law!

ABC Function

ABC has been an effective tool in the toolbox of debtor and creditor remedies for resolving financial stress. Specifically, ABC allows a failing business to shut down with efficiently and credibility: