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In In re Bodensiek,[1] a chapter 7 case involving an abandoned Florida homestead, the bankruptcy court addressed the issue of whether a debtor can strip[2] a wholly unsecured claim on account of a second mortgage on abandoned homestead property. The question, as phrased by the court, was whether it had the authority under prevailing law to strip off a wholly unsecured lien, even if the property to which the lien was attached is no longer subject to administration in the case.

There are two types of foreclosure proceedings in the U.S.: judicial and nonjudicial. Both proceedings contain procedures for oversecured creditors to recover attorneys’ fees and costs from the proceeds of the collateral securing the indebtedness. Judicial foreclosure jurisdictions subscribe to the theory that loans secured by real property are liens (i.e., lien theory states), while nonjudicial foreclosure jurisdictions subscribe to the theory that the lender is the title owner of the real property until the borrower repays its obligations (i.e., title theory states).

[1]When we last reported on In re Loop 76,[2] the case was on appeal with the Ninth Circuit Bankruptcy Appellate Panel (BAP). In a lengthy decision that one could argue expanded the bankruptcy court’s ruling on classification, the BAP has since affirmed the bankruptcy court’s decision permitting separate classification of unsecured deficiency claims.[3]

In order to confirm a chapter 11 reorganization plan, a debtor must satisfy all of the provisions of § 1129(a) of the Bankruptcy Code, except for § 1129(a)(8), which requires that each class of creditors either (1) accept the proposed plan or (2) is unimpaired under the proposed plan. When a debtor fails to meet § 1129(a)(8), the debtor can “cram down” a dissenting unimpaired secured creditor pursuant to § 1129(b), but only if the plan is “fair and equitable” with respect to that creditor.

Two recent decisions have provided guidance concerning the scope of a lender’s right to collect “rents” generated by a debtor in possession, and the debtor’s corresponding ability to use those “rents” in furtherance of its restructuring efforts: In re Ocean Place Development LLC[1] and In re Soho 25 Retail LLC.[2] The issue of whether certain post-petition income generated by a debtor constitutes property of the estate under § 541(a) of the Bankruptcy Code was at t

Two sections of the Bankruptcy Code seemingly stand at odds regarding the protections offered to lessees of real property owned by a bankrupt debtor. Section 365(h) strongly protects a lessee’s right to possession of real property in the face of debtor’s rejection of the lease. The legislative history of § 365(h) indicates that Congress had a desire to protect a lessee’s expectations in real estate transactions. However, § 363(f) allows a trustee or debtor in possession (DIP) to sell real property free and clear of “any interest” in such property, including a leasehold interest.

Although a wealth of case law has found pre-petition bans on bankruptcy filings to be unenforceable as a matter of public policy, a recent unpublished decision from the Tenth Circuit Bankruptcy Appellate Panel (BAP) upheld a pre-petition ban included as an amendment to an operating agreement. [1] The debtor, DB Capital Holdings LLC, was organized under Colorado law as a manager-operated, limited liability company. The debtor was created to develop and sell a timeshare project in Aspen known as Dancing Bear Residences.

A potential conflict among circuit courts regarding § 1129(b)(2)(A) of the Bankruptcy Code may soon exist. In a recent decision, Hon. Bruce Black in In re River Road Hotel Partners, LLC[1] denied the debtors’ request to sell real property under a plan using bid procedures that denied the secured creditors the right to credit-bid.

To confirm a chapter 11 plan under the so-called "cramdown option," at least one impaired class of creditors must accept the proposed plan. [1] To accept a plan, more than one half (in number) of the voting claimants in a class, representing at least two-thirds of the total dollar amount of voting claims in such class, must vote to accept. [2] In single-asset real estate cases, [3] the lienholder frequently holds a deficiency cl

When a retail company enters bankruptcy, its most valuable asset routinely includes its interest as a tenant in unexpired commercial-space leases. Subject to certain limitations, the Bankruptcy Code permits the debtor-tenant to continue its operations in the profitable locations and “reject” the unprofitable stores, which are effectively abandoned back to the landlords.