A golf course may look like a solid piece of collateral. After all, golfers will pay good money to play and the green fees and driving range fees golfers pay to play the course will generate a revenue stream. This revenue stream can be pledged to a lender and used to support loans to the owner of the course. Lenders love to finance a business that generates a steady revenue stream, making a golf course look like an attractive form of collateral.
Are golf course revenues "rents"?
A golf course may look like a solid piece of collateral. After all, golfers will pay good money to play and the green fees and driving range fees golfers pay to play the course will generate a revenue stream. This revenue stream can be pledged to a lender and used to support loans to the owner of the course. Lenders love to finance a business that generates a steady revenue stream, making a golf course look like an attractive form of collateral.
In re Creekside Senior Apartments, LP, 477 B.R. 40 (6th Cir. B.A.P. 2012) –
In valuing a bank claim secured by a low-income housing project for purposes of a plan of reorganization, should the remaining federal low‑income housing tax credits allocated to the project be taken into consideration? In Creekside the bankruptcy court said yes, and the bankruptcy appellate panel agreed.
A decision issued earlier this year by a Florida bankruptcy court1 provides comfort to those who accept payment from a debtor-in-possession in return for goods or services. The court held that to invoke the jurisdiction of a bankruptcy court in a lawsuit to recover an alleged impermissible post-petition transfer by a debtor, the plaintiff must establish that the debtor's estate was diminished as a result of the transfer to the defendant.
If a loan or extension of credit requires collateral, banks prefer collateral that is readily marketable rather than taking a security interest in a closely-held business. Occasionally, the only collateral that is available or that the borrower can offer is corporate stock that is not traded on a public market, an interest in a limited liability company ("LLC") or a partnership interest. It is common for closely-held business entities to prohibit an assignment of an owner's interest or require as a condition to an assignment the consent of the other owners of the entity.
In its recent decision in Valley Bank and Trust Company v. Spectrum Scan, LLC (In re Tracy Broadcasting Corp.), the U.S. Court of Appeals for the 10th Circuit overturned lower court decisions that were casting serious doubt on a lender’s ability to realize value from its security interest in the proceeds of FCC broadcast licenses. This alert will briefly describe the law governing security interests in FCC broadcast licenses, as well as the issues created by the lower courts – and ultimately resolved by the appeals court - in the Tracy case.
Steven Enright and his wife borrowed money from a bank to buy dairy cows and other improvements for the family dairy farm. The bank loan was secured by assets of the Enrights, and also guaranteed by Steven’s parents, with the parents’ guarantee secured by a mortgage on the dairy farm itself (which was owned by the parents).
In re Heritage Highgate, 679 F.3d 132 (3d Cir. 2012)
CASE SNAPSHOT
In re Creekside Senior Apartments, LP, 2012 Fed App. 0008P (6th Cir. B.A.P. June 29, 2012)
CASE SNAPSHOT
In a case of first impression, the Sixth Circuit BAP held that, for purposes of valuing collateral under section 506(a) of the Bankruptcy Code, the availability of Low-Income Housing Tax Credits must be considered in valuing a creditor’s secured claim.
FACTUAL BACKGROUND