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payment of all the sale proceeds. The Court held that the debtor's may not use "indubitable equivalent" provisions under § 1129(b)(2)(A)(iii) which is effectively a general provision that was being used to override a specific provision under § 1129(b)(2)(A)(ii) that does provide the creditor the right to credit bid at a sale. Accordingly, the lower court's denial of confirmation of the plan was affirmed.
ii. Wells Fargo Bank National Association v. Texas Grand Prairie Hotel Realty, L.L.C. (In re Texas Grand Prairie Hotel Realty, L.L.C.), 710 F.3d 324 (5th Cir. 2013)
Issue: Whether the bankruptcy court clearly erred in approving a 5% cramdown interest rate.
Holding: The Fifth Circuit held that the bankruptcy court did not clearly err in confirming a 5% cramdown rate under the "prime-plus" formula set forth in Till by the United States Supreme Court because the risk adjustment rate fell within the range of adjustments that other courts had assessed in similar circumstances.
iii. In re Castleton Plaza, LP, 707 F.3d 821 (7th Cir. 2013)
Issue: Whether an equity investor can evade the competitive bidding process, required for new equity when objecting creditors are not paid in full, by arranging for the new value to be contributed by, and the new equity to go to, an "insider."
Holding: The Seventh Circuit held that "[c]ompetition is essential whenever a plan of reorganization leaves an objecting creditor unpaid yet distributes an equity interest to an insider," just as it is required under Bank of America National Trust & Savings Association v. 203 North LaSalle Street Partnership, 526 U.S. 434 (1999) for old equity holders to receive new equity for new value. The court equated the debtor's principal's wife, an insider, to the debtor's principal himself because the debtor's principal would benefit in numerous ways from his wife receiving new equity. For example, the debtor's principal would get to keep his job as the CEO of his wife's company, which happened to operate the debtor.
iv. In re River East Plaza, LLC, 664 F.3d 668 (7th Cir. 2012)
Issue: Whether the debtor's plan could be confirmed as a cram-down plan by providing the secured creditor with the "indubitable equivalent" of its claim.
Holding: The court affirmed the holding of the bankruptcy court. The court first addressed the requirements for a cram down plan. The Court noted that "[u]nder (i) [of section 1129(a)(8)(A)], the reorganized debtor keeps the property and may be allowed to stretch out the repayment of the debt beyond the period allowed by the loan agreement, but the lien remains on the property until the debt is repaid. Under (ii), the debtor auctions the property free and clear of the mortgage but
©2014 William L. Norton III
