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.
In In reAm. Capital Equip., LLC1 the Third Circuit addressed the issue of whether a bankruptcy court has the authority to determine at the disclosure statement stage that a Chapter 11 plan is unconfirmable without holding a confirmation hearing. The court held that when a plan is patently unconfirmable, so that no dispute of material fact remains and defects cannot be cured by creditor voting, a bankruptcy court is authorized to convert the case to Chapter 7 without holding a confirmation hearing. Am.
In re Ramz Real Estate Co., LLC, 510 B.R. 712 (Bankr. S.D.N.Y. 2013) –
An undersecured mortgagee objected to a debtor’s proposed plan of reorganization on several grounds, including that (1) the plan was not approved by a proper impaired class and (2) retention of equity by the debtor’s members violated the absolute priority rule.
In re Stacy’s, Inc., 508 B.R. 370 (Bankr. D. S.C. 2014) –
A debtor sold substantially all of its assets after negotiating with its primary secured creditor for carve-outs from the sale proceeds for administrative priority and general unsecured claims. When the administrative claims turned out to be greater than anticipated, the debtor sought court approval to use additional proceeds to pay income tax and other claims.
A senior mortgagee battled the debtor and a junior mortgagee over its entitlement to post-petition interest: If and when did it become oversecured and thus entitled to interest? Was it entitled to interest at the default rate? Should the interest be compounded?
The United States Court of Appeals for the Third Circuit recently issued an important decision on the valuation of collateral of secured creditors and “lien-stripping” in Chapter 11 cases. In In re Heritage Highgate, Inc.,1 the court held that in a Chapter 11 case, the value of a secured creditor’s collateral under §506(a) of the Bankruptcy Code2 was the fair market value of the property as established by expert testimony and it was permissible to “strip the lien” of the creditor where it was unsupported by collateral value.
In re Mississippi Valley Livestock, Inc., 745 F.3d 299 (7th Cir. 2014) –
A debtor sold cattle for the account of a cattle producer and then remitted the proceeds to the producer. A chapter 7 trustee sought to recover the payments as preferential transfers. The trustee lost in both the bankruptcy and district courts, and then appealed to the 7th Circuit.
Secured transactions typically include two key documents, which are often executed simultaneously: a promissory note memorializing loan and repayment terms executed by the borrower in favor of the lender and a security agreement granting the lender an interest in collateral securing the borrower’s debt owed to the bank. If a borrower ends up filing for bankruptcy, the bank likely will seek to enforce the security agreement against the borrower and recover the collateral. However, as made clear by the U.S.
In re Demers, 511 B.R. 233 (Bankr. D. R.I. 2014) –
A chapter 13 debtor objected to the portion of a mortgagee’s claim consisting of expenses related to foreclosure of its mortgage. She argued that since the mortgagee failed to comply with notice requirements under the mortgage, the foreclosure expenses were not valid.