Written by: Paula K. Jacobi
Barnes & Thornburg LLP; Chicago
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. This ruling is contrary to the position taken by the Third and Fifth Circuits in In re Philadelphia Newspapers LLC [2] and In the Matter of The Pacific Lumber Co., [3] respectively, in which the courts held that under § 1129(b)(2)(A)(iii), secured creditors’ collateral could be sold under reorganization plans without affording the secured creditors the right to credit-bid their debt for their collateral. Judge Black’s decision is on direct appeal to the Seventh Circuit.
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Schian Walker, P.L.C.; Phoenix
Trent S. Trueblood
Schian Walker, P.L.C.; Phoenix
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 claim larger than one third of the total dollar amount owed to unsecured creditors, [4] giving it an effective veto unless the lienholder's deficiency claim is classified separately from the claims of other unsecured creditors.
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ABI is pleased to announce that it will be co-sponsoring the 35th Annual Judge Alexander L. Paskay Seminar on Bankruptcy Law and Practice with Stetson University College of Law on March 10-12, 2011, at the Tampa Marriott Waterside in Tampa, Fla. This year's event will focus on "Real Estate in Crisis," and will have sessions covering a variety of topics including executory contracts and leases, DIP financing, fraudulent transfer actions and flawed affidavits. With these sessions and more, plus a judges panel, an optional Yankees vs. Braves baseball outing and up to 15.25/18 hours of CLE/CPE credits, this is not an event to miss!
Click here to register.
You can also opt to attend the one-day Nuts & Bolts Stand-alone program for CLE/CPE credit. Click here to register.
In December 2010, at the 22nd Annual Winter Leadership Conference, the Real Estate Committee made a presentation titled "Tranche Warfare." The panel gave an overview of commercial mortgage-backed securities, discussed mezzanine loans, "Bankruptcy Remote" entries and multiple debt tranches. The panel included Michael J. Canning of Arnold & Porter LLP in New York; Joseph P. Forte of Alston & Bird LLP in New York and Hon. Arthur J. Gonzalez of the U.S. Bankruptcy Court (S.D.N.Y.) in New York.
Tranche Warfare
There were three other sessions of interest to the committee. One session was titled "Where the Rubber Meets the Road: Proofs of Claim, Claims Objections and Amendments to Rules 3001, 3002." The panel was moderated by Lawrence R. Ahern, III of Burr & Forman LLP in Nashville, Tenn; Patti H. Bass of Bass & Associates, PC in Tucson, Ariz.; Hon. C. Ray Mullins of the U.S. Bankruptcy Court (N.D. Ga.) in Atlanta; and John Rao of the National Consumer Law Center in Boston. This panel focused on claims in recent caselaw, as well as real estate and environmental claims issues in recent caselaw.
Where the Rubber Meets the Road: Proofs of Claim, Claims Objections and Amendments to Rules 3001, 3002
Another session of interest to the committee was titled "Commercial Real Estate: The Next Tsunami Approaches." The panel discussed General Motors and other related cases, the economic outlook, national CRE trends and lease mitigation. The panel was moderated by Matthew Bordwin of KPMG Corporate Finance LLC in Melville, N.Y. It also included William N. Lobel of The Lobel Firm, LLP in Newport Beach, Calif.; Perry M. Manadarino of PricewaterhouseCoopers LLP in New York; Cynthia Nelson of FTI Consulting, Inc. in Los Angeles and Dennis Yeskey of AlixPartners LLP in New York.
Commercial Real Estate: The Next Tsunami Approaches
A final session on interest to the committee was titled "Resolved: A Mortgage Servicer Lacks Standing as a Real Party in Interest." The panel discussed a variety of related cases in a pro/con format. The panel was moderated by James T. Markus of Markus Williams Young & Zimmerman in Denver. Karen L. Kellett of The Kellett Law Firm in Dallas led the Pro argument, and Rudy J. Cerone of McGlinchy Stafford, PLLC in New Orleans led the Con argument.
Resolved: A Mortgage Servicer Lacks Standing as a Real Party in Interest
At ABI's Detroit Consumer Bankruptcy Conference in November 2010, there were two sessions of interest to the committee. One session titled "Debtor Remedies for Creditor Wrongs: RESPA/FDCPA/TILA." The panel discussed Truth in Lending, the right to rescission, recent statutory changes and offered a variety of example documents. The panel was moderated by John P. Kapitan of Trott & Trott, PC in Farmington Hills, Mich. The panel also included Kurt A. O'Keefe of Law Offices of Kurt A. O'Keefe in Grosse Pointe, Mich. and Jesse R. Sweeney of Sweeney Law Offices, PLLC in Southfield, Mich.
Debtor Remedies for Creditor Wrongs: RESPA/FDCPA/TILA
Also of interested to the committee is the session titled "Mortgage Loan Modifications: Proving It's a Win-Win." The panel discussed the Making Home Affordable Program, modification waterfalls, the Second Lien Modification Program and provided supporting documents and charts. The session was moderated by David Wm. Ruskin, who is a Chapter 13 Trustee in Southfield, Mich. The panel also included Brian J. Small of Thav, Gross, Steinway & Bennett, PC in Bingham Farms, Mich.
Mortgage Loan Modifications: Proving It's a Win-Win
ABI is pleased to announce the launch of the newly updated and enhanced ABI Journal Online. ABI Journal Online provides immediate access to the current issue of the ABI Journal as well as issues dating back to the year 2000. ABI members are able to search ABI Journal Online by year and issue, keyword, author and column. In addition, members can submit articles for publication. Use your ABIWorld login and password to access the site.
Click here to view the new site.
