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Reflections on Chapter 11 residential lien stripping & th=
If it makes any difference, I concur. That has been the law for many years.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
L
Sent: Saturday, January 02, 2010 12:41 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Reflections on Chapter 11 residential lien stripping & the
1111(b) election
While in an LA court recently, I heard a bankruptcy judge opine that
residential junior loan lien stripping is not possible in Chapter 11 due to
the 1111(b) election.
Today, I was reviewing my client's options which include a Chapter 11
wherein it would be beneficial to strip the entirely under/unsecured second
loan and needed to review 1111(b).
I believe the statue is very clear that the 1111(b)(1)(A) election [allowing
the junior secured lender to opt for retaining the lien and accepting
payments over time equal to the allowed claim, but with present value of
merely it's ineterest in the collateral, despite the 506(a) determination]
is NOT available where the underlying ineterest is of inconsequential value.
1111(b)(1)(B)(i).
In other words, when the FMV of debtor's residence is equal to or less than
the balance of the first secured note, the Chapter 11 debtor can use 506(a)
to render the junior note(s) unsecured and the junior note holder(s) do NOT
have a right to elect to be treated as secured under 1111(b).
Happy New Year!
Peter M. Lively, J.D./M.B.A.
Law Offices of Peter M. Lively
Personal Financial Law Center I
11965 Venice Blvd, Suite 301
Los Angeles, CA 90066-3977
310-899-0630
800-307-DEBT (3328)
Fax: 310-899-0632
A-Bankruptcy-Attorney.com
Personal Financial Law Center II
1706 Newport Boulevard, Suite B
Costa Mesa, California 92627-3073
Telephone: 949-650-DEBT(3328)
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If it makes any difference,
I concur. That has been the law for many years.
David A.
Tilem
Certified Bankruptcy
Specialist*
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