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I need to talk to a Chapter 11 person if anyone is willing to give me
Let me know if I can call you today.
I have a chapter 11 in Idaho where the corporate debtor is the personal
guarantor on the equipment loan. The principal is the primary obligor.
There were payments made by the debor to the lender in the one year prior
to filing the BK, which benefited the insider of the debtor who actually
owes the money.
The loan is about $60K. the equipment is worth only about $7K but is
necessary to the debtor.
Lender is only a general unsecured creditor in the case. Lender is teeing
up a MFR to be filed next week. Debtor wants to make adequate protection
payments and keep the equipment.
The loan is in default about $20K. The preference payments were about $20K.
Is there anything unethical about using the preference issue as leverage to
negotiate with the creditor to come to an agreement where the Debtor
purchases the equipment from the principal and pays it via the plan for an
agreed reduced amount, or is the DIP obligated to try to recover that
preference payment? It seems to me if we can get this creditor to
voluntarily reduce its claim by using the preference leverage then it will
even out and no other creditors would be harmed.
The principal has no assets and is willing to file a personal BK as well,
so this creditor is better off making some kind of deal in the chapter 11.
Is there anyone willing to hash this out with me on the phone?
Second question, different claim in the case: is an undersecured creditor
entitled to apply the adequate protection payments to *interest* on the
secured portion of the claim? In other words, is the creditor entitled to
postpetition interest while it is being paid adequate protection? I
understand in the plan we will give them interest on their claim, but this
has to do strictly with the application of the adequate protection
payments. I told the creditor we want the AP payments applied to principal
only and on the secured portion of the claim only. They disagree. I have
read *In re Weinstein,* 227 B.R. 284 (9th Cir BAP 1998) (thanks Giovanni
Orantes for that) but it doesn't exactly address that issue. It addresses
whether the AP payments are to be applied to the secured portion of the
claim only (they are), and not to the unsecured portion (and the case also
deals with collateral that is not depreciating, whereas in my case it is).
Holly Roark
Certified Bankruptcy Specialist*
*and Sports Lawyer*
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
*Central District of California & District of Idaho* - Consumer Bankruptcy
Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
Let me know if I can call you today.I have a chapter 11 in Idaho where the corporate debtor is the personal guarantor on the equipment loan. The principal is the primary obligor. There were payments made by the debor to the lender in the one year prior to filing the BK, which benefited the insider of the debtor who actually owes the money.The loan is about $60K. the equipment is worth only about $7K but is necessary to the debtor. the case. Lender is teeing up a MFR to be filed next week. Debtor wants to make adequate protection payments and keep the equipment.The loan is in default about $20K. The preference payments were about $20K.Is there anything unethical about using the preference issue as leverage to negotiate with the creditor to come to an agreement where the Debtor purchases the equipment from the principal and pays it via the plan for an agreed reduced amount, or is the DIP obligated to try to recover that preference payment? It seems to me if we can get this creditor to voluntarily reduce its claim by using the preference leverage then it will even out and no other creditors would be harmed.The principal has no assets and is willing to file a personal BK as well, so this creditor is better off making some kind of deal in the chapter 11.Is there anyone willing to hash this out with me on the phone?Second question, different claim in the case: is an undersecured creditor entitled to apply the adequate protection payments to interest on the secured portion of the claim? In other words, is the creditor entitled to postpetition interest while it is being paid adequate protection? I understand in the plan we will give them interest on their claim, but this has to do strictly with the application of the adequate protection payments. I told the creditor we want the AP payments applied to principal only and on the secured portion of the claim only. They disagree. I have read In re Weinstein,227 B.R. 284 (9th Cir BAP 1998)(thanks Giovanni Orantes for that) but it doesn't exactly address that issue. It addresses whether the AP payments are to be applied to the secured portion of the claim only (they are), and not to the unsecured portion (and the case also deals with collateral that is not depreciating, whereas in my case it is).
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