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Claims and
Interests:
The filing of proofs
of claims or interests, and the allowance of secured claims are
accorded special treatment in a Chapter 11 case.
Proofs of claims or interests: In a Chapter 11 case, the court fixes
(and sends notice of) a bar date, which operates as a deadline for
proofs of claims or interests. However, a claim or interest that is
listed in the schedules filed by the debtor is deemed filed (for the
scheduled amount), unless it is scheduled as disputed, contingent,
or un-liquidated. Therefore, in a Chapter 11 case, the holder of a
correctly scheduled, undisputed, non-contingent, liquidated claim or
interest is not required to file a proof of claim or a proof of
interest.
Secured claims:
In a
Chapter 11 case, both recourse and
non-recourse secured claims are treated as recourse claims for the
purpose of allowance. [B.C. § 1111 (b)( 1 )(A)] Thus, while an
under-secured creditor holding a non-recourse claim, either under an
agreement or under applicable non-bankruptcy law, ordinarily cannot
assert a deficiency claim for the portion of her claim exceeding the
value of the collateral, the creditor is given recourse status under
Chapter 11, with the effect being that the unsecured part of the
claim will not be disallowed under Bankruptcy Code section 502(b)(l)
(see supra, §502)..
(1) Example: Creditor holds a $500,000 claim secured by a first
mortgage on Blackacre, which is valued at $400,000. The agreement
between Creditor and Debtor provides that Creditor's claim is
non-recourse, which means that Creditor may not seek a personal
judgment against Debtor for any deficiency. Debtor files a Chapter
11 bankruptcy petition. Under section 1111(b)(l)(A), Creditor's
claim will be treated as if it were a recourse claim, and thus the
$100,000 deficiency will be allowed as a general unsecured claim.
(Note that, absent this provision, the unsecured portion of
Creditor's claim would not be allowable under section 502(b)(l)
because of its non-recourse character.) Of course, Creditor also
holds an allowed secured claim in the amount of $400,000 [B.C.
§506(a)].
(2) Exceptions: There are a few situations in which a claim is not
treated as if the holder has recourse, thus barring any unsecured
claim for a deficiency:
(a) If the creditor does not have recourse, and the property is sold
either under Bankruptcy Code section 363 (see supra §§816 et seq.)
or under the plan of reorganization [B.C. §1111(b)(l)(A)(ii)];
(b) If the creditor does not have recourse and, during the case (i)
the collateral is abandoned or returned to the secured creditor, or
(ii) the secured party forecloses on the property after having been
granted relief from the automatic stay or;
(c) If the class to which the claim belongs makes the section 1111
(h) election by at least two-thirds in amount and more than half in
number
Click here
for Chapter 11 denial of confirmation. |
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Chapter 7&13
If you qualify
STOP
- Creditor
Harassment
- Stop utility
shutoffs
- eliminate payments
on unsecured debts.
- Improve bad credit
-
Surrender car, and other secured collateral without
incurring a "deficiency"
**For
Chapter 13 cases with wage order
and balance paid through a trustee as part of a partial re-payment plan
and not paid directly to the attorney. Court filing fee is
extra.
- Emergency Petitions
filed
- Ask to see a statement
of clients rights and responsibilities
Free Consultation
Reasonable rates
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