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v. In re Colony Beach and Tennis Club, Inc., 508 B.R. 468 (Bankr. M.D. Fla. 2014)
Issue: Whether debtor's proposed Chapter 11 plan could be crammed down as providing indubitable equivalence of secured claim
Holding: (1) Proposed Chapter 11 plan that would have required an objecting undersecured lender to transfer collateral securing its claim free and clear of liens in exchange for receiving either payment in unspecified amount in one year's time or the right to have its collateral transferred back to it, did not provide creditor with "indubitable equivalent "of its claim, and could not be "crammed down" on "indubitable equivalence" theory. Secured creditor did not have any equity cushion or right to interim payments to protect creditor as real estate taxes continued to accrue on collateral. Furthermore if plan is to be "crammed down" over creditor's objection, then it must satisfy the more specific requirement of "cramdown" provision dealing with plans that provide for such sales free and clear, and must allow creditor the right to credit bid.
vi. In re NNN Parkway 400 26 LLC, 505 B.R. 277 (Bankr. C.D. Cal. 2014).
Issue: Chapter 11 debtors' major undersecured creditor objected to confirmation of their proposed reorganization plan.
Holding: (1) Chapter 11 debtors failed to satisfy burden of showing that "new value" that their existing equity holders proposed to contribute had been sufficiently market-tested, as required for court to confirm over objection of unsecured creditor a plan that allowed equity holders to retain their interests while making less than a 100% distribution on general unsecured claims. The plan was based on debtors' desultory efforts to investigate financing available in market place and on testimony of alleged expert who had no prior or existing experience in "market testing" of reorganization plans and had never testified before concerning plan confirmation. (2) Chapter 11 debtors, as parties seeking to cram down plan over objection of creditor whose $6 million deficiency claim would have dominated general unsecured class, failed to satisfy burden of showing that they had reasonable business justification for placing creditor's deficiency claim in separate class from their other $43,307 in general unsecured debt. The classification was based solely on fact that there was third-party guarantee for debtors' debt to creditor holding this deficiency claim. Debtors presented little, if any, evidence as to third party's financial condition or as to strength of its guarantee,
vii. In re J.C. Householder Land Trust # 1, 501 B. R. 441 ( Bankr. M.D. Fla. 2013)
Issue: Secured lender objected to confirmation of debtor's proposed Chapter 11 plan, based principally on its alleged lack of feasibility and on inadequacy of proposed "cramdown" rate of interest.
©2014 William L. Norton III
