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Holding: The Bankruptcy Court, Bruce A. Harwood, Chief Judge, held bankruptcy court would employ valuation date close in time to confirmation in order to give junior mortgagee, which bore the risk of having extended credit to debtors, the benefit of any postpetition increase in value of property, which was allegedly due to improvement in real estate market rather than to actions of debtors.
viii. In re Batista-Sanechez, 502 B.R. 227 (Bankr. N.D. Ill 2013)
Issue: Individual Chapter 11 debtor objected to mortgagee's proof of claim as untimely filed.
Holdings: The Bankruptcy Court, Jack B. Schmetterer, J., held that:
(1) regardless of whether mortgagee's delay in filing a proof of claim after claims bar date had expired had any effect on its state law lien rights, it provided valid basis for disallowance of its untimely proof of claim;
(2) Motion to lift automatic stay was not intended as proof of claim, and did not qualify as "informal proof of claim," even though motion was filed by mortgagee prior to expiration of claims bar date.;
(3) disallowance of mortgagee's proof of claim, as untimely filed, did not in any way effect its lien rights; but
(4) lack of timely proof of claim deprived mortgagee of right to vote upon individual Chapter 11 debtor's proposed plan or to participate in plan distribution.
ix. Salyer v. SK Foods, L.P. (In re SK Foods, L.P.), 487 B.R. 257 (E.D. Cal. 2013)
Issue: Was the bankruptcy court correct to use a going-concern value in determining whether a proposed compromise of a super-priority claim should be approved.
Holding: The district court affirmed the bankruptcy court's approval of a settlement between the Chapter 11 trustee and the secured lenders and held that the bankruptcy court correctly used a going-concern valuation in its determination. Certain creditors objected to the settlement arguing that no chance existed for the secured creditors to obtain a super-priority claim. The court found that the valuation of the collateral was critical and that the collateral should be valued "in light of the purpose of the valuation." The objecting creditors argued that a liquidation value should have been used. The court found that the bankruptcy court's determination that the collateral was being sold as a going-concern and not being liquidated was not clearly erroneous. Therefore, the court concluded that a going-concern valuation was proper over a liquidation value.
©2014 William L. Norton III
