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Posts Tagged ‘Subchapter V’

Debt of Single Asset Real Estate entity blows Subchapter V Eligibility

A recent bankruptcy court decision has found the debt of an affiliate that is ineligible to file for Subchapter V to be included in the $7.5M threshold for eligibility (and post-CARES Act, a $2.7M threshold).  In this case, the affiliate was a single asset real estate entity.  This decision appears counterintuitive.  Stay tuned for an appeal?  

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Subchapter V allows Cramdown of Collateral Value

In Pearl Resources, another case of first impression under Subchapter V, a Texas court confirmed a cramdown plan with a reduced collateral value.  Parsing a mix of traditional and new chapter 11 provisions, the court permitted a $7.4M replacement lien for the original $35M lien, deeming it sufficient to cover the $1.2M claim, and thus freeing up…

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Subchapter V has become a cost-effective bankruptcy lifeline for a business reboot

A group of mid-western businesses comment on their unique ability to reorganize under Subchapter V of the Bankruptcy Code in accordance with its intended goal to allow small business owners to retain control of a reorganizing company.  Drafters of the new law effected much needed tweaks to the chapter 11 process, an endeavor that has proved to…

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An Individual Chapter 11 Plan must be funded by more than Business Income

In re Patel, a recent CA bankruptcy decision, held that chapter 11’s requirement for individual debtors to pay unsecured creditors  from “disposable income,” encompasses income from all sources.  Note that this would equally apply in Subchapter V.  The Patel Chapter 11 plan listed only motel income which was insufficient to fund a payout to unsecured creditors.  While…

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A defaulted chapter 13 plan can be extended under the CARES Act

Good news!  A New Orleans judge has found the CARES Act to permit a 7 year extension of a chapter 13 plan whose payments were in default prior to enactment of the Act, holding that the currency of payments is irrelevant. In fact, most chapter 13 plans are in a state of default and ultimately…

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