Does the 506(b) cramdown (stripdown) resurrect previously discharged note?
Posted: Fri May 10, 2013 1:36 pm
The effect of the 1111(b) election is to require payment of discharged debt. The election does not make the debt not discharged. A little esoteric I say - sorry bout that.
>
> "In ch 11 the 1111(b) election would require full pay in ch 18 but not
> because the debt has been resurrected, because that's what 1111says."
>
> Are you saying that there is no resurrection of the old debt but that it's
> tantamount to resurrection, then I agree. But if you are saying there is no
> in personam liability due to the filing of the 11, can you explain a bit
> more? Here is my rationale.
>
> Assuming there is no election made under 1111(b)(1)(A)(i) what does this
> code section do?
>
> "(b)(1)(A) A claim secured by a lien on property of the estate shall be
> allowed or disallowed under section
> 502of this title the
> same
> *as if the holder of such claim had recourse against the debtor* on account
> of such claim, whether or not such holder has such recourse,"
>
> I underlined the part where I believe the debt is "resurrected".
>
> My rationale is that assuming when filing Chapter 11, there was no
> recourse, i.e. no personal claim (for whatever reason, we can assume
> Chapter 7 eliminated recourse). This section appears, to me, to "resurrect"
> the recourse to the extent of the unsecured amount.
>
> Now, if they make the election, I agree, the resurrection is nullified.
>
>
> Sincerely,
> Michael Avanesian
> Attorney and Counselor at Law
> 818-817-1725
>
>
> On Fri, May 10, 2013 at 8:09 AM, jonhayes6666 wrote:
>
> > **
> >
> >
> > A discharged debt is not "resurrected" in a subsequent chapter anything
> > w/o a reaffirmation. And certainly not by 1111. That is why Home State Bank
> > went all the way to the supremes. Section 102 will help you. Claim against
> > debtor includes claim against prop ie a lien. Good luck. I still don't know
> > the answer to what happens to the unsecured portion in ch 20. In ch 11 the
> > 1111(b) election would require full pay in ch 18 but not because the debt
> > has been resurrected, because that's what 1111says.
> >
> > --- In cdcbaa@yahoogroups.com, Michael Avanesian wrote:
> > >
> > > I am trying to keep my list post count down but since this was directed
> > to
> > > me I'll reply.
> > >
> > > Yes, 1111(b) creates the in personam and I also agree that there is no
> > > similar provision in a 13. So this is one of those situations where a 13
> > > might be more powerful than an 11 because you don't have to pay the
> > > deficiency at all AND you don't have to worry about unbifurcation (I like
> > > to make up words) under 1111(b).
> > >
> > > As far as interpretation, Chapter 13 just does not have anything akin to
> > > 1111 so there is no ambiguity that Congress intended for individuals in
> > 13s
> > > not to be burdened with recourse while they did intend for those who file
> > > for 11 to be burdened by such recourse. Just like Chapter 13 discharges
> > > more stuff than a 7 or 11.
> > >
> > > Sincerely,
> > > Michael Avanesian
> > > On Thu, May 9, 2013 at 10:05 AM, PHiLiP E. KOeBeL, Esq.
> > > wrote:
> >
> > >
> > > >
> > > > MIchael -
> > > >
> > > > the resurrection of in personam obligation in a "Chapter 18" is due to
> > > > 1111(b) right? and we figured out that there appears to be no
> > comparable
> > > > statute under Chapter 13 right? just Home State Bank.
> > > >
> > > > it feels to me like i was reading a case recently that somehow applied
> > C11
> > > > statutes to help interpret C13 was silent on similar topics, but this
> > is
> > > > not the general rule for interpreting the Code. silence is silence
> > > > generally.
> > > >
> > > > oh yes, here it is from a recent USSC case:
> > > >
> > > > Hamilton v Lanning 130 S Ct 2464 (2010) on best efforts:
> > > >
> > > > Petitioner argues that only the mechanical approach is consistent with
> >
> > > > 1129(a)(15)(B), which refers to "projected disposable income of the
> > debtor
> > > > (as defined in section 1325(b)(2))." This cross-reference, petitioner
> > > > argues, shows that Congress intended for the term "projected disposable
> > > > income" to incorporate, presumably in all contexts, the defined term
> > > > "disposable income." It is evident that 1129(a)(15)(B) refers to the
> > > > defined term "disposable income," see 1325(b)(2), but that fact
> > offers no
> > > > insight into the meaning of the word "projected" in 1129(a)(15)(B)
> > and
> > > > 1325(b)(1)(B). We fail to see how that word acquires a specialized
> > meaning
> > > > as a result of this cross-reference particularly where both > > > > 1129(a)(15)(B) and 1325(b)(1)(B) refer to projected disposable income
> > "to
> > > > be received" during the relevant period. See *supra,*at 11.
> >
> > > >
> > > > On Thu, May 9, 2013 at 9:08 AM, Michael Avanesian > > > michael@> wrote:
> > > >
> > > >> **
> >
> > > >>
> > > >>
> > > >> Alik,
> > > >>
> > > >> Did you ever get an answer to this question? If not, yes, in a Chapter
> > > >> 11, the in personam claim is "resurrected" in the fact pattern that
> > you
> > > >> mentioned.
> > > >>
> > > >> Sincerely,
> > > >> Michael Avanesian
> > > >> On Thu, May 2, 2013 at 1:47 PM, Alik Segal wrote:
> > > >>
> > > >>> **
> >
> > > >>>
> > > >>>
> > > >>> Listmates,
> > > >>>
> > > >>> Here's a puzzle. Or at least a puzzle to me.
> > > >>>
> > > >>> Debtor owns an income property. First mortgage exceeds FMV. The
> > > >>> property is upside down. Debtor filed c7 and received discharge. The
> > note
> > > >>> was discharged. The deed of trust remains valid and could permit the
> > > >>> creditor to foreclose.
> > > >>>
> > > >>>
> > > >>>
> > > >>> Next Debtor filed chapter 11. Debtor files a motion to value which
> > > >>> establishes the extent of the allowed secured claim. The allowed
> > secured
> > > >>> claims is smaller than the original contractual mortgage obligation.
> > > >>>
> > > >>>
> > > >>>
> > > >>> What happens to the unsecured portion of the bifurcated claim? Was it
> > > >>> discharged in the previous c7 case? Is it resurrected through the
> > plan?
> > > >>> Does the 506(b) cramdown (stripdown) resurrect previously discharged
> > note?
> > > >>>
> > > >>> --
> > > >>> Alik Segal
> > > >>> Alik.Segal@
> > > >>> 310-362-6157
> > > >>> California Central District
> > > >>>
> > > >>>
> > > >>
> > > >>
> > > >
> > > >
> > >
> >
> >
> >
>
The post was migrated from Yahoo.