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Reflections on Chapter 11 residential lien stripping & the 1111(b) election
I file Motions to Value regularly in my individual residential Chapter 11 cases, wherein a determination is made of the value of the property and that the junior liens are wholly undersecured for all purposes in the Chapter 11.
Lou Esbin
>
> I represented a creditor in a chapter 11 a long time ago. He was second on a property but the vast majority of the debt was unsecured. I made an 1111(b) election but Judge Thompson ruled that the election was invalid because the secured portion of the debt was inconsequential. I just did a search of Randall Newsome Research Binder - 347 pages - and the term "1111(b)" isn't in there.
>
> --- In cdcbaa@yahoogroups.com, "David A. Tilem" wrote:
> >
> > 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.
> > Business bankruptcy specialist cert. by Amer. Bd. of Certification
> >
> >
> > -----Original Message-----
Of P
> > 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)
> >
> >
> > THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO
> > WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED,
> > CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER
> > OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT
> > RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE
> > HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS
> > COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS
> > COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY
> > TELEPHONE. THANK YOU.
> >
>
The post was migrated from Yahoo.
I represented a creditor in a chapter 11 a long time ago. He was second on a property but the vast majority of the debt was unsecured. I made an 1111(b) election but Judge Thompson ruled that the election was invalid because the secured portion of the debt was inconsequential. I just did a search of Randall Newsome Research Binder - 347 pages - and the term "1111(b)" isn't in there.
>
> 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.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
> -----Original Message-----
P
> 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)
>
>
> THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO
> WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED,
> CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER
> OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT
> RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE
> HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS
> COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS
> COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY
> TELEPHONE. THANK YOU.
>
The post was migrated from Yahoo.
Btw, once judge Carrol made this Statement, I started putting into my retainers that in super 13 type ch 11 if debtor is assigned to Judge Carrol, might not be feasible to confirm plan short of an appeal.
Sent from my iPhone
On Jan 2, 2010, at 12:40 PM, P L wrote:
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)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
Btw, once judge Carrol made this Statement, I started putting into my retainers that in super 13 type ch 11 if debtor is assigned to Judge Carrol, might not be feasible to confirm plan short of an appeal.Sent from my iPhoneOn Jan 2, 2010, at 12:40 PM, P L <petermlively2000@yahoo.com> wrote:
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 I11965 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 II1706 Newport Boulevard, Suite BCosta Mesa, California 92627-3073Telephone: 949-650-DEBT(3328)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
The post was migrated from Yahoo.
Peter:
1111b. Says notwithstanding 506a. I have a case like this in front of the judge with the antilien-stripping view. Am going to try anyway by using two steps, adversary to value lien and have it declared void (506d), then try to confirm plan saying lien is void therefore, 506a is no longer applicable. Essentially this is an argument 506a only applies to 1111b if the lien is partially secured, not if lien is Void.
Cannot find a case that says this. If anyone has seen one let the group know.
Dennis
Sent from my iPhone
On Jan 2, 2010, at 12:40 PM, P L wrote:
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)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
Peter:1111b. Says notwithstanding 506a. I have a case like this in front of the judge with the antilien-stripping view. Am going to try anyway by using two steps, adversary to value lien and have it declared void (506d), then try to confirm plan saying lien is void therefore, 506a is no longer applicable. Essentially this is an argument 506a only applies to 1111b if the lien is partially secured, not if lien is Void.Cannot find a case that says this. If anyone has seen one let the group know.DennisSent from my iPhoneOn Jan 2, 2010, at 12:40 PM, P L <petermlively2000@yahoo.com> wrote:
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 I11965 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 II1706 Newport Boulevard, Suite BCosta Mesa, California 92627-3073Telephone: 949-650-DEBT(3328)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
The post was migrated from Yahoo.
While in an LA court recently,I hearda bankruptcy judge opine that residential junior loan lien stripping is not possible in Chapter 11 due to the 1111(b) election.
Today, I was reviewingmy client's options which include a Chapter 11wherein it would be beneficial to strip theentirely under/unsecured second loan and needed to review 1111(b).
I believe the statue isveryclear that the 1111(b)(1)(A) election [allowing the juniorsecured lender to opt for retaining the lien and accepting payments over time equal to the allowed claim, butwith present value of merelyit's ineterest in the collateral, despite the 506(a) determination] isNOT available where theunderlying ineterest is ofinconsequential value. 1111(b)(1)(B)(i).
In other words, whentheFMV of debtor's residenceisequal to or less than the balance of the first secured note, the Chapter 11 debtor can use506(a) torender thejunior note(s)unsecured and the junior note holder(s) do NOT havea right to elect to be treated as secured under 1111(b).
Happy New Year!
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)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
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 I11965 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 II1706 Newport Boulevard, Suite BCosta Mesa, California 92627-3073Telephone: 949-650-DEBT(3328)
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY TELEPHONE. THANK YOU.
The post was migrated from Yahoo.