Central District Consumer Bankruptcy Attorney's Association

That's always been my understanding, but this would also apply to any
real estate, not just a principal residence, would it not?
Also, assuming you do the 506(a) valuation and treat the unsecured
portion as such, can the lien be avoided simply by putting a provision
in the plan, or would it require a separate motion/adversary? [I
realize the lien avoidance would not work in a cramdown situation
because of 1129(b)(2)(A).]
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Law Office of Mark J. Markus
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On 1/2/2010 12:59 PM, ray@averlaw.com wrote:
>
>
> Music to my ears, Peter!
>
> Sent from my Verizon Wireless BlackBerry
>
> ------------------------------------------------------------------------
> *Date: *Sat, 2 Jan 2010 12:40:58 -0800 (PST)
> *To: *
> *Subject: *[cdcbaa] Reflections on Chapter 11 residential lien
> stripping & the 1111(b) election
>
> While in an LA court recently, I heard a bankruptcy judge opine that
> residential junior loan lien stripping is not possible in Chapter 11
> due to the 1111(b) election.
> Today, I was reviewing my client's options which include a Chapter
> 11 wherein it would be beneficial to strip the entirely
> under/unsecured second loan and needed to review 1111(b).
> I believe the statue is very clear that the 1111(b)(1)(A) election
> [allowing the junior secured lender to opt for retaining the lien and
> accepting payments over time equal to the allowed claim, but with
> present value of merely it's ineterest in the collateral, despite the
> 506(a) determination] is NOT available where the underlying ineterest
> is of inconsequential value. 1111(b)(1)(B)(i).
> In other words, when the FMV of debtor's residence is equal to or less
> than the balance of the first secured note, the Chapter 11 debtor can
> use 506(a) to render the junior note(s) unsecured and the junior note
> holder(s) do NOT have a right to elect to be treated as secured under
> 1111(b).
> Happy New Year!
> Peter M. Lively, J.D./M.B.A.
> Law Offices of Peter M. Lively
> Personal Financial Law Center I
> 11965 Venice Blvd, Suite 301
> Los Angeles, CA 90066-3977
> 310-899-0630
> 800-307-DEBT (3328)
> Fax: 310-899-0632
> A-Bankruptcy-Attorney.com
>
> Personal Financial Law Center II
> 1706 Newport Boulevard, Suite B
> Costa Mesa, California 92627-3073
> Telephone: 949-650-DEBT(3328)
>
>
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