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31% over the past 13 years, case involved fractionalized and interrelated interests in those trust deeds locked in power struggle over how to proceed with property, petition was filed on eve of first lienholders' foreclosure sale, debtor had compelling history of multiple bankruptcy filings with multiple managers' unsuccessful attempts to bring property to profitable use, and debtor had shown reluctance to expend funds to either propose a plan or make adequate protection payments.
iv. In re Yishlam, Inc., 495 B.R. 328 (Bankr. S.D. Tex. 2013)
Issue: Whether debtor was a single asset real estate ("SARE") debtor under Section 101(51B) of the Bankruptcy Code.
Holding: The bankruptcy court held that the movant trying to designate the debtor as a SARE debtor failed to carry its burden proof. The debtor owned two apartment/condominium properties. The court found the facts supporting the movant and the debtor to be nearly equal. Facts supporting the movant included: "(a) all of the units are pledged as collateral for [the movant]'s loan; (b) [the debtor] has a single bank account for all of its operations; (c) [the debtor] has one contract to provide internet, garbage pickup, and electricity to all units; and (d) [the debtor] has one real estate management contract for all of the units." Facts supporting the debtor's argument that it was not a SARE debtor included: 1) the properties were non- contiguous; 2) the properties were bought and converted to condominiums at different times; 3) the properties were marketed differently; and 4) the properties were operated differently. "Because the factors [we]re largely in equilibrium," the court held the movant failed to prove the debtor was a SARE debtor.
v. In re 4848, LLC, 490 B.R. 343 (Bankr. E.D. Wis. 2013)
Issue: Whether a single asset real estate (SARE) debtor's prepetition waiver of protections of the automatic stay provided "cause" for stay relief.
Holding: The court held that a waiver of stay protections can be a consideration in determining cause for stay relief. Prior to bankruptcy, the debtor waived automatic stay protection in any future bankruptcy as part of a forbearance agreement with a secured lender. The lender argued that public policy promotes the enforcement of such waivers to promote compromise and workouts between debtors and creditors. The debtor argued that public policy disfavors such waivers because stay protection so important to a successful reorganization, particularly in a SARE case. The court found the policies balanced but relied on case law in finding that a waiver can be a consideration in determining cause for stay relief.
©2014 William L. Norton III
