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Holdings: The Bankruptcy Court, Michael G. Williamson, J., held that:
(1) proposed plan, under which debtor would make all of its plan payments, including payments to secured lender based on 25-year amortization schedule, out of income generated from shopping center, with a five-year balloon payment that debtor was to make by refinancing property, satisfied "feasibility" concerns;
(2) plan was proposed in "good faith";
(3) In absence of efficient market to provide exit financing to borrowers such as Chapter 11 debtor, which operated small shopping center that lacked anchor tenant, bankruptcy court would employ the Till formula approach to calculate appropriate cramdown rate of interest for debtor to pay to lender whose claim was to paid according to 25-year amortization schedule with five-year balloon payment. Rate of 5%, consisting of prime rate of 3.25% plus risk adjustment of 1.75%, was appropriate cramdown rate of interest; and
(4) Among factors which bankruptcy courts consider in deciding whether to approve proposed bar order in Chapter 11 plan to prevent creditor from pursuing non-debtor third party for its liability on debtor's debt, courts consider the following: (1) whether debtor and third party share identity of interest; (2) whether non-debtor has contributed substantial assets to debtor's reorganization; (3) whether bar order is essential to debtor's reorganization; (4) whether impacted class, or classes, overwhelmingly voted to accept plan; (5) whether plan provides mechanism to pay for all, or substantially all, of the class or classes affected by bar order; and (6) whether plan provides an opportunity for those claimants who choose not to settle to recover in full. In this case, court approved, in exercise of its power to issue "necessary or appropriate" orders, provision in debtor's proposed Chapter 11 plan that purported to bar debtor's major secured lender from pursuing debtor's principals on their guarantees of debtor's debt to lender while debtor was current in its 100%-payment plan, where there was identity of interest between debtor and its principals, where principals, by depleting their personal assets, had substantially contributed to debtor and would be contributing their time and effort going forward, and where entry of bar order was essential to debtor's reorganization, as allowing principals to reorder their personal finances without need of bankruptcy filing in manner that would facilitate debtor's obtaining the exit financing necessary to make final balloon payment to lender at conclusion of plan's term.
viii. In re Alfaro, 501 B.R. 292 (Bankr. E.D. Pa. 2013)
Issue: Secured creditor and United States Trustee objected to confirmation of individual's Chapter 11 plan, which proposed to bifurcate secured creditor's claim into a secured and an unsecured component.
Holdings: The Bankruptcy Court, Stephen Raslavich, J., held that: (1) given its objection to plan confirmation, secured creditor's failure to vote on the proposed plan could not be construed as acceptance of the plan;
(2) Chapter 11 plan's proposed treatment of dissenting secured creditor's secured claim was neither fair nor equitable, as required for cram down. Plan proposed that secured creditor would
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