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implementation of plan;
(6) Court scrutinizing a proposed Chapter 11 plan to determine whether it satisfies the feasibility test should consider the following: (1) the adequacy of the capital structure, (2) the earning power of the business, (3) economic conditions, and (4) the ability of management. In this case, proposed plan of Chapter 11 debtor, a religious corporation that operated a local church, did not satisfy the "feasibility test," given plan's high level of debt service, the extraordinary demands that such debt service would make on congregational giving for 20 years, debtor's lack of working capital reserves, and the lack of evidence that ecclesiastical authority affiliated with debtor, which had guaranteed debtor's construction loan and, under proposed plan, was the giver of a new guaranty, was both credit worthy and willing to supplement debtor's efforts and perform when called upon.;
(7) secured creditor failed to establish absence of a reasonable likelihood of rehabilitation, as required for dismissal of case;
(8) Although omission by Chapter 11 debtor, a religious corporation that operated a local church, of endowment, a creditor that had provided it with restricted-use funds, from Schedule F and from list of 20 largest unsecured creditors constituted cause for dismissal of case, there was cause to appoint an examiner, and so case would not be dismissed. Debtor apparently allowed insurance coverage on three of its properties to lapse, such that an examiner should be appointed to monitor the existence and continuance of insurance coverage, examiner also could assist with clarity and reliability of debtor's accounting practices, and interests of creditors and the estate were better served by not dismissing case.
vii. In re Proctor, 494 B.R. 833 (Bankr. E.D.N.C. 2013)
Issue: In determining whether property is a debtor's "principal residence" under 11 U.S.C. § 1123(b)(5), does the court look to whether the property was the debtor's principal residence at the time of the mortgage transaction or at the time the petition was filed?
Holding: The court held that the mortgage documents that gave rise to the security interest best determine whether property is a debtor's principal residence, not the status of the property on the petition date. The debtor sought to modify a loan secured by his current principal residence, which was originally the debtor's second home. The trustee and a creditor objected to the plan. The court found that it was undisputed that the home was originally a second home. The secured creditor charged a higher interest rate based on that fact and "had no reasonable expectation that its loan . . . could come within the protection of the anti-modification statute."
viii. In re O'neal, 490 B.R. 837 (Bankr. W.D. Ark. 2013)
Issue: Whether a plan that generally failed to specify the name of any creditor or the class to which that creditor was assigned, failed to indicate whether each class was impaired, and failed to provide the treatment for at least one creditor could be confirmed.
©2014 William L. Norton III
