Bankr. E.D.N.C.: In re Cooper- Adequate Protection Payments Only Required Where Use of Property Causes Depreciation in Interest

Summary:

Throughout extended litigation regarding the validity of a junior mortgage (there are more than 300 docket entries in this Chapter 13 case), a motion to dismiss filed by the trustee remained pending due to the inability to confirm a plan. After more then five years when the court determined both liens were valid in In re Cooper, but demoted lien of First American, the Debtors proposed a plan surrendering the property to the secured creditors, with the collateral to satisfy those claims and the $61,554.84 paid by the debtors to date being held by the trustee.

First American, the holder of the second mortgage, opposed confirmation arguing that the plan was unfair and not proposed in good faith, since it had received no payments. At the same time, First American filed a separate motion seeking adequate protection payments, retroactive to the petition date, pursuant to 11 U.S.C. § 363(e).

Finding that adequate protection payments can be required “to the extent that the …use under this title … results in a decrease in the value of such entity’s interest in such property.” (Emphasis added.) Following BB&T v. Beaman (In re Constr. Supervision Servs. Inc.) , the bankruptcy court, however, held that it was not the “ use of the Property that resulted in the decrease in value of First American’s interest in the Property, but the reversal of lien position.” (Emphasis in the original.)

For a copy of the opinion, please see:

Cooper- Adequate Protection Payments Only Required Where Use of Property Causes Depreciation in Interest

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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