Bankr. E.D.N.C.: In re Redding - Substantial and Unanticipated Change In Circumstances for Modification of Chapter 11

Summary: Ms. Redding’s Chapter 11 plan was confirmed providing that she was to have six months in which to market and sell her principal residence and was required to make adequate protection payments on the mortgage claim of $1,000.00 per month during that time. After failing to do either, Ms. Redding filed a motion to modify, asserting that the a possible increase in the value of the real property, due to potential grants to ameliorate flooding problems. The bankruptcy court found that the standard for modification of a Chapter 11 plan was same the “substantial and unanticipated circumstances” standard in Chapter 13. See Murphy v. O’Donnell (In re Murphy), 474 F.3d 143, 150 (4th Cir. 2007) (discussing analysis developed in In re Arnold, 869 F.2d 240, 243 (4th Cir. 1989)). Under this, the speculative change in circumstances offered by Ms. Redding was not “substantial”. Commentary: Obviously, if the flood grants do cause an substantial increase in the property values before there is a final foreclosure sale, that would then be unanticipated. For a copy of the opinion, please see: Redding - Substantial and Unanticipated Change In Circumstances for Modification of Chapter 11