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One of the benefits of purchasing a debtor’s assets through the bankruptcy process is the opportunity to obtain an order from a bankruptcy court approving the sale free and clear of other parties’ interests in the purchased property, pursuant to § 363(f) of the Bankruptcy Code.

In a recent opinion delivered by Judge Huennekens in the case of In re Alpha Natural Resources Inc., et al.,[1] the bankruptcy court permitted the debtor, Alpha Wyoming Land Co., to reject a settlement agreement that required the payment of a royalty, the amount of which was based on a percentage of the coal mined and subsequently sold by the debtor from various areas in the state of Wyoming.

Considering that bankruptcy cases typically involve divvying up a less-than-whole pie, it should not come as a surprise when a court disfavors debtors trying to have their cake and eat it, too.

Lenders frequently require that the insiders of single-asset real estate borrowers[1] personally guarantee their companies’ debt to the lender. If the borrower defaults on its obligations and files for bankruptcy, the automatic stay prohibits the lender from pursuing or continuing any collection efforts against the borrower in bankruptcy. However, the automatic stay does not prohibit the lender from exercising remedies against the insider with respect to the insider’s guaranty liability.

There is a split among bankruptcy courts as to whether a debtor may modify his or her state law right of redemption through a chapter 13 plan after his or her real property is sold at a tax sale.[1] Section 1322 of the Bankruptcy Code permits a debtor to modify the rights of secured claims through a plan under certain enumerated circumstances.[2] The threshold question, however, is whether or not a debtor’s right of redemption can be characterized as a “claim” subject to § 1322.

Counsel for commercial landlords should be aware of the Seventh Circuit’s recent opinion in Great Lakes Quick Lube LP v. T.D. Investments I LLP (In re Great Lakes Quick Lube LP).[1] The Seventh Circuit held that a pre-bankruptcy termination of a lease was a “transfer” to the landlord for purposes of the preferential and fraudulent transfer provisions of the Bankruptcy Code, 11 U.S.C. §§ 547 and 548.

The § 363 game may be changing again, at least with respect to the treatment of express easements in real property. A bankruptcy court in the Eastern District of New York called an audible earlier this year in In re Metroplex on the Atlantic LLC,[1] allowing a chapter 11 debtor to compel an objecting easement-holder to accept a monetary payout on account of his interest in real property being sold free and clear of liens under a liquidating chapter 11 plan.