I agree with your position based on the code, but have no case law to
support it
On Fri, Jan 20, 2012 at 9:40 AM, John D. Faucher
wrote:
> **
>
>
> Hello All -
> Our client owns a stunning house worth between $5 million and $8 million.
> Chapter 11 plan contemplates sale of the house.
> The first trust deed holder has, let's say, $2 million against the house.
> Client has not made a single payment on the first for two years +; total
> arrears are $240,000, monthly payment is $12,000, postpetition arrears are
> $85,000 or so.
> The second trust deed has $800,000 on the house. It hasn't been paid
> either.
> Three more trust deeds are junior to the second, for a total of $1.5
> million.
>
> The second trust deed is moving for relief from stay, on the basis that it
> is not adequately protected. We say no, there is adequate protection: even
> at the lowest valuation of $5 million, the second has an equity cushion of
> almost $2 million, or 40 percent. Judge Bluebond thinks that they are not
> adequately protected, because that cushion is eroding: there are no
> payments made at all.
>
> Rutter says that the equity cushion is all that matters, and that a debtor
> may keep the property in such a situation. But it cites no cases. We've
> seen Mellor, which holds that a 20 percent cushion is adequate protection.
>
> The judge now wants from us a brief providing support for the proposition
> that an equity cushion of 20 percent is sufficient to protect a junior
> lienholder even where the senior lien is not being paid, therefore
> decreasing the value of the junior lienholder's interest in the collateral.
>
> Has anyone else run into this situation, and how did you handle it?
>
> John D. Faucher
> Hurlbett & Faucher, LLP
> 5743 Corsa Ave., Suite 208
> Westlake Village, CA 91362
> (818) 889-8080
> Fax: (805) 367-4154
>
http://www.hurlbettfaucher.com/
>
> 3324 State Street, Suite O
> Santa Barbara, CA 93105
> (805) 963-9111
>
> *This electronic mail message and any attached files are confidential,
> contain information intended for the exclusive use of the individual or
> entity to whom it is addressed, and may be legally privileged. If you are
> not the intended recipient, please immediately reply to John Faucher (at
> 818/889-8080 or
john@hf-bklaw.com) indicating that you received this
> message and then delete the message without delay. Thank you for your
> cooperation.
>
> Disclosure Under U.S. IRS Circular 230: The recipient may not use any tax
> advice contained in this communication, including any attachments, for the
> purpose of avoiding federal tax related penalties or promoting, marketing
> or recommending to another party any particular transaction or matter.
> *
>
>
>
Kirk Brennan, esq.
California Law Office, P.C.
calibankrutpcysite.com
CONFIDENTIALITY NOTICE: This e-mail and any attachments are for the
exclusive and confidential use of the intended recipient. If you are not
the intended recipient, please do not read, distribute or take action in
reliance on this message. If you have received this message in error,
please notify us immediately by return e-mail and promptly delete this
message and its attachments from your computer system. We do not waive
attorney-client or work product privilege by the transmission of this
message.
TAX ADVICE NOTICE: Tax advice, if any, contained in this e-mail does not
constitute a "reliance opinion" as defined in IRS Circular 230 and may not
be used to establish reasonable reliance on the opinion of counsel for the
purpose of avoiding the penalty imposed by Section 6662A of the Internal
Revenue Code. The firm provides reliance opinions only in formal opinion
letters containing the signature of a director.
I agree with your position based on the code, but have no case law to support itOn Fri, Jan 20, 2012 at 9:40 AM, John D. Faucher <
j.d.faucher@sbcglobal.net> wrote:
Hello All - Our client owns a stunning house worth between $5 million and $8 million. Chapter 11 plan contemplates sale of the house.
The first trust deed holder has, let's say, $2 million against the house. Client has not made a single payment on the first for two years +; total arrears are $240,000, monthly payment is $12,000, postpetition arrears are $85,000 or so.
The second trust deed has $800,000 on the house. It hasn't been paid either. Three more trust deeds are junior to the second, for a total of $1.5 million.
The second trust deed is moving for relief from stay, on the basis that it is not adequately protected. We say no, there is adequate protection: even at the lowest valuation of $5 million, the second has an equity cushion of almost $2 million, or 40 percent. Judge Bluebond thinks that they are not adequately protected, because that cushion is eroding: there are no payments made at all.
Rutter says that the equity cushion is all that matters, and that a debtor may keep the property in such a situation. But it cites no cases. We've seen Mellor, which holds that a 20 percent cushion is adequate protection.
The judge now wants from us a brief providing support for the proposition that an equity cushion of 20 percent is sufficient to protect a junior lienholder even where the senior lien is not being paid, therefore decreasing the value of the junior lienholder's interest in the collateral.
Has anyone else run into this situation, and how did you handle it?
The post was migrated from Yahoo.