RTJJ is the largest owner of low-income housing in Gastonia. Following first the closure of area textile mills and then the housing crash, RTJJ became unable to pay its debts and faced foreclosure by Community One, its largest secured creditor. Despite proposing a Chapter 11 plan that would have paid creditors substantially more than a Chapter 7 liquidation, Community One objected to the plan and pressed for the sale of the assets. (The Bankruptcy Court found that Community One, itself in dire financial straits and under the supervision of the OCC, was under regulatory pressures to quickly obtain cash rather than greater returns over a longer period.)
The first objection raised by Community One was that the allowance of two tardy votes of unsecured creditors was improper.… Read More
The Debtors guaranteed a $765,440.00 bridge loan with an adjustable interest rate, with range between 14% and 28%, and a 12 month term, with an option to extend the note for an additional 12 months. The Debtors filed Chapter 11 and proposed a 30-year amortization rate at 5% interest, to which the lender objected both as to the interest rate and the new term.
At hearing, an expert in commercial real estate testified that there was no effective market for this loan, so the bankruptcy court turned to the formula approach outlined in Till v. SCS Credit Corporation, 541 U.S.… Read More
Tagged with: Interest Rate
The Debtor granted Royal Bank America (“RBA”) a first Deed of Trust against a 36-unit condominium complex, in the amount of $17,000,000 and also a “Put Agreement”, which obliged the guarantors of the Deed of Trust, to obtain permanent financing for 10 of the units. At the same time, the Edwards Family Partnership, L.P. (“EFP”) was granted a junior Deed of Trust for $3,000,000.
The RBA loan originally matured on July 1, 2009, but the Debtor exercised its right to extend the loan to January 1, 2010. In December 2009, RBA declared the loan in default for failure to comply with the Put Agreement.… Read More
Following a determination of the appropriate interest rate to pay on a secured claim, the creditor filed a Motion for Reconsideration under Rule 59(e). The reconsideration of an order, the moving party must show:
- An intervening change in controlling law;
- New evidence not available at trial; or
- A clear error of law or prevent manifest injustice.
In essence finding that the secured creditor was merely seeking to relitigate the issue, the Court denied the Motion for Reconsideration, finding (again) that its previous ruling was supported by competent evidence, was not manifestly unjust, and the Debtor had made a prima facie showing that its reorganization was feasible.… Read More