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For the purposes of automatic stay analysis, recognized the district court, not every proceeding in a given case is necessarily lumped together. In this particular case, however, the district court concluded that the debtor's claim for declaratory judgment exposed the estate to liability. Accordingly, the court sustained the defendant's and third-party defendants' joint motion to stay the debtor's claims.
* Qmect, Inc. v. Burlingame Cap. Ptrs. II, L.P. (In re Qmect, Inc.), 373 B.R. 682
(N.D. Cal. Aug. 2007) (Alsup, J.) Post-petition lenders could not foreclose on replacement liens without first demonstrating diminution in value. Pre-petition lenders who also advanced funds post-petition sought to foreclose upon collateral and all proceeds acquired by the debtor after the commencement of the case. The bankruptcy court, after requiring the lenders to demonstrate the diminution in value of the collateral, granted the lenders' relief. The debtor appealed, asserting that its post-petition assets were not proceeds subject to foreclosure. The district court affirmed, however, because the debtors failed to establish from where, if not pre-petition collateral, the post-petition assets were derived. The lenders cross-appealed, arguing that the bankruptcy court should not have required them to demonstrate the loss in value of the collateral as a pre-condition for relief. The bankruptcy court's cash collateral order, according to the lenders, had granted them replacement liens and could be foreclosed upon without further action. The district court dismissed this argument, however, because the nature of the lenders' replacement liens were to provide adequate protection. Before a lender may receive adequate protection funds, said the court, the lenders must demonstrate the devaluation of its collateral.
* In re Bryan Road, LLC, 382 B.R. 844 (Bankr. S.D. Fla. Feb. 2008) (Olson, J.) The debtor's pre-petition automatic stay waiver was enforceable. To stall an imminent foreclosure of the debtor's real estate, the debtor executed a forbearance agreement with the bank. In exchange for rescheduling the foreclosure for two more later, the debtor consented to a waiver of the automatic stay as to the bank if the debtor ever filed bankruptcy. The debtor failed to obtain refinancing before the expiration of its forbearance period, leaving bankruptcy as its final option. When the debtor filed its chapter 11 petition, the bank of course moved for relief from stay, arguing that the debtor had already consented to the bank's relief. In response, the debtor challenged the bank's lien and argued that the forbearance agreement was unenforceable.
3
The court concluded that the bank's lien was valid, and so looked to the Desai factors
3 Under Florida law, a creditor may not take an interest in condominiumized real estate without prior consent of all unit owners. The debtor argued that the bank's mortgage was invalid because the debtor had filed a Declaration of Condominium in the public records before the bank recorded its mortgage (which contained only the legal description of the real estate as a whole). The court found this argument to be red herring because, as a practical matter, the debtor owned all units on which the bank asserted its lien.
