Central District Consumer Bankruptcy Attorney's Association

Perhaps your motion's caption referencedvaluation pursuant to 506 [determination of secured status of claim - which is moot following proper 1111(b) election] versus valuation pursuant to 1129(a)(7)(B)?
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On Wednesday, October 16, 2013 12:18 AM, Alik Segal wrote:
Listmates,
This is a question for 1111(b) experts.
I have had two judges in the central district of California (Ahart and Neiter) who denied as moot a motion to value collateral after the secured creditor made an 1111(b) election. Now one of these secured creditor in one of those cases insisting that the treatment must give it not only at least the face value of contractual secured claim (the entire contractual claim without interest during the term of years), but also at least the value of the collateral at a reasonable rate of interest (fair market value with interest over the term of years).
But I have no order setting value because the court denied the motion as moot. In that particular case, there was a second lien that we needed to strip, so the court ruled on the motion but explicitly made the ruling inapplicable to the first lien (the one that made the 1111(b) election).
Here's an example that illustrates the situation:
Current contractual balance (allowed claim): $1,000,000
FMV (allowed secured claim): $700,000
Assume General Unsecured Class gets nothing
Treatment:
Principal: $700,000
Term: 40 y
At Rate: 2%: Payment: $2,120, Lifetime payout: $1,017,494
Assume fair market rate is 5%
At Rate: 5%: Payment $3,375, Lifetime payout: $1,620,181
Lifetime payout at 2% rate is $1,017,494 > Current contractual balance $1,000,000
Rate 2% < Fair Market Rate
1. Could someone explain to me why the court ruled that the motion to value is moot after the 1111(b) election?
2. Is there any authority that says the 1111(b) creditor is not entitled to have the net present value of the payments that is at least equal to the fair market value of the collateral?
Gratefully,.
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District

The post was migrated from Yahoo.

Listmates,
This is a question for 1111(b) experts.
I have had two judges in the central district of California (Ahart and
Neiter) who denied as moot a motion to value collateral after the secured
creditor made an 1111(b) election. Now one of these secured creditor in
one of those cases insisting that the treatment must give it not only at
least the face value of contractual secured claim (the entire contractual
claim without interest during the term of years), but also at least the
value of the collateral at a reasonable rate of interest (fair market value
with interest over the term of years).
But I have no order setting value because the court denied the motion as
moot. In that particular case, there was a second lien that we needed to
strip, so the court ruled on the motion but explicitly made the ruling
inapplicable to the first lien (the one that made the 1111(b) election).
Here's an example that illustrates the situation:
Current contractual balance (allowed claim): $1,000,000
FMV (allowed secured claim): $700,000
Assume General Unsecured Class gets nothing
Treatment:
Principal: $700,000
Term: 40 y
At Rate: 2%: Payment: $2,120, Lifetime payout: $1,017,494
Assume fair market rate is 5%
At Rate: 5%: Payment $3,375, Lifetime payout: $1,620,181
Lifetime payout at 2% rate is $1,017,494 > Current contractual balance
$1,000,000
Rate 2% < Fair Market Rate
1. Could someone explain to me why the court ruled that the motion to value
is moot after the 1111(b) election?
2. Is there any authority that says the 1111(b) creditor is not entitled to
have the net present value of the payments that is at least equal to the
fair market value of the collateral?
Gratefully,.
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Listmates,This is a question for 1111(b) experts.I have had two judges in the central district of California (Ahart and Neiter) who denied as moot a motion to value collateral after the secured creditor made an 1111(b) election. Now one of these secured creditor in one of those cases insisting that the treatment must give it not only at least the face value of contractual secured claim (the entire contractual claim without interest during the term of years), but also at least the value of the collateral at a reasonable rate of interest (fair market value with interest over the term of years).
But I have no order setting value because the court denied the motion as moot. In that particular case, there was a second lien that we needed to strip, so the court ruled on the motion but explicitly made the ruling inapplicable to the first lien (the one that made the 1111(b) election).
Here's an example that illustrates the situation: Current contractual balance (allowed claim): $1,000,000FMV (allowed secured claim): $700,000Assume General Unsecured Class gets nothing
Treatment:Principal: $700,000Term: 40 yAt Rate: 2%: Payment: $2,120, Lifetime payout: $1,017,494Assume fair market rate is 5%At Rate: 5%: Payment $3,375, Lifetime payout: $1,620,181
Lifetime payout at 2% rate is $1,017,494 > Current contractual balance $1,000,000Rate 2% < Fair Market
The post was migrated from Yahoo.