1125(b)(3) Question [2 Attachments]
Posted: Sun Oct 27, 2013 12:14 am
I can't directly answer your questions since I am, in general,
inexperienced.
Remember it's 1123(b)(5) and not 1125.
I do not like the two cases you attached. There are not many good cases on
this topic but the following two are worth reading.
In re Abdelgadir, 455 BR 896 - Bankr. Appellate Panel, 9th Circuit 2011
In re Benafel, 461 BR 581 - Bankr. Appellate Panel, 9th Circuit 2011
I know one follows the other.. I believe these are loaded cases but if you
just analyze whether the parties' intent matters at the time they entered
into a contract, it cannot matter because the character of the property is
determined as of the petition date. If intent mattered then character would
not be determined as of petition date, character would be determined as of
transaction date.
So petition date it is. The next question is what do you look for on the
petition date?
If the debtor(s) do not live on the premises, it's not their principal
residence, I'd say analysis done.
If the debtor(s) do live there then you look at the promissory note and
deed of trust as the sole indicator of whether this is a loan secured
SOLELY by the primary residence.
This is a pure technical analysis for me. I would even argue that those
fancy notes that are secured by the debtor's residence and the community
pool (as an example) break the technical requirement. I would say an
assignment of rents definitely breaks the "only" by residence clause.
There are also tricks at your disposal. One in this case is once you file
for bk, you immediately push for authorization to use cash collateral. If
it's opposed or they want protections etc, then you got them. They are
admitting that their note is also secured by the rent which is definitely a
distinct thing from the home itself.
This is just my opinion and you should do your own research. Other circuits
look at it in a different way and it could change at any time. That's what
makes bk practice so fun. There is so much room to do good lawyering!!
Sincerely,
Michael Avanesian
On Fri, Oct 25, 2013 at 5:27 PM, wrote:
> **
>
> [Attachment(s) from
> cliff@bordeauxlaw.com included below]
>
> I am about to file my first Chapter 11 case next week. I am hoping to
> modify a mortgage secured by a 3 unit building, which happens to be the
> debtor's principal residence. These are legitimate rental units and the
> Deed of Trust contains a multi-unit rider granting a security interest in
> the rental units and an assignment of rents clause. So based on the
> attached Harriman case (which says you should look at the parties'
> intentions at the time of the loan) and Ramirez case (which used the same
> reasoning in the Chapter 13 context), I think I can do this. But I've
> never done it before, so I am wondering:
>
> 1. Is this something that is commonly done in Chapter 11 cases where the
> debtor resides in a multi-unit building?
> 2. If this is uncommon, any thoughts/opinions on whether this is likely
> to work?
>
> The case is not filed yet, but will be in the LA division.
>
>
>
I can't directly answer your questions since I am, in general, inexperienced.Remember it's 1123(b)(5) and not 1125.I do not like the two cases you attached. There are not many good cases on this topic but the following two are worth reading.
The post was migrated from Yahoo.