In a short opinion for what it considered an “easy case,” the Supreme Court decided 8-01 in RadLAX Gateway Hotel, LLC v. Amalgamated Bank2 on May 29, 2012 that if a plan of reorganization proposes a sale of property, secured lenders with liens on that property must be allowed to credit bid, i.e., “pay” using the amount of their allowed secured claim. This is a definite victory for secured lenders who, generally, will now not have to advance additional capital in order to protect their collateral.
In Part 1 of this commercial landlord's guide (published in the March 20 - April 2 issue of the CREJ), I addressed some of the issues faced by a landlord when a commercial tenant files bankruptcy.
In a recent Fifth Circuit decision, Western Real Estate Equities, LLC v. Village at Camp Bowie I, L.P., No. 12-10271 (5th Cir. 2013), the court held that the acceptance vote from a minimally and “artificially impaired” class of claims meets the 11 U.S.C. § 1129(a)(10) requirement for the confirmation of a non-consensual “cramdown” chapter 11 plan.
As you know, the last two years have seen a somewhat improved, but by no means robust, business climate. At the same time, structural shifts in the law firm business model have been both highly publicized and memorably demonstrated.
Many Colorado landlords have confronted the issues that arise when a commercial tenant files, or threatens to file, a bankruptcy case.
Chapter 11 of the U.S. Bankruptcy Code provides debtors with a number of tools to restructure comprehensively their debts and other liabilities as well as immediate protection from secured and unsecured creditors.
In a pro-debtor opinion released on February 26, 2013, the Fifth Circuit Court of Appeals held that a debtor may “artificial impair” claims in a class to obtain an impaired and accepting class of claims as required by section 1129(a)(10) of the Bankruptcy Code. Western Real Estate Equities, L.L.C. v. Village at Camp Bowie I, L.P. (In re Village at Camp Bowie I, L.P.), No. 12-10271, 2013 WL 690497 (5th Cir. Feb. 26, 2013).
Statutory Background to the Artificial Impairment Issue
Public policy in New York prompted the establishment of, and recent increase to the Homestead Exemption (the “Exemption”), codified in the CPLR at §5206. The Exemption, a statutorily created right, affords property owners (and their surviving heirs) certain protections from a creditor’s right to levy against a judgment debtor’s real property for the purpose of satisfying a personal money judgment. The rationale behind the need for the Exemption is to ensure that a property owner is not left wholly insolvent once his primary residence is taken from him.
Custom and practice in Illinois with respect to mortgages has been to incorporate the note or other debt instrument by reference, rather than to disclose all of the financial terms of a loan transaction in the mortgage.
The Sixth Circuit Court of Appeals recently affirmed the decisions of the courts below and held in an unpublished opinion that a secured lender’s credit bid at a Michigan foreclosure sale extinguished all of the Chapter 13 debtor’s indebtedness to the lender, thereby precluding the lender from executing on a prepetition foreclosure judgment obtained against the debtor in Wisconsin. State Bank of Florence v. Miller (In re Miller), 2013 WL 425342 (6th Cir. Feb. 5, 2013).