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10-3597 & 10-3598 In the Matter of: River Road Hotel Partners, LLC

By: WISCONSIN LAW JOURNAL STAFF//June 28, 2011//

10-3597 & 10-3598 In the Matter of: River Road Hotel Partners, LLC

By: WISCONSIN LAW JOURNAL STAFF//June 28, 2011//

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Bankruptcy
Cramdowns

The Bankruptcy Code requires that cramdown plans that contemplate selling encumbered assets free and clear of liens at an auction satisfy the requirements set forth in sec. 1129(b)(2)(A)(ii).

“If, as the Debtors propose, Subsection (iii) permits a debtor to sell an asset free and clear of liens without permitting credit bidding, then it is difficult to see what, if any, significance Subsection (ii) can have. Similarly, the Debtors’ interpretation would permit properly-designed reorganization plans to sell encumbered assets without satisfying the conditions set forth in Subsection (i). We cannot conceive of a reason why Congress would state that a plan must meet certain requirements if it provides for the sale of assets in particular ways and then immediately abandon these requirements in a subsequent subsection. The infinitely more plausible interpretation of Section 1129(b)(2)(A) would read each subsection as stating the requirements for a particular type of sale and ‘construing each of the [] subparagraphs . . . [as conclusively governing] the category of proceedings it addresses.’ Bloate v. United States, 130 S. Ct. 1345, 1355 (2010). Under such a reading, plans could only qualify as ‘fair and equitable’ under Subsection (iii) if they proposed disposing of assets in ways that are not described in Subsections (i) and (ii).”

Affirmed.

10-3597 & 10-3598 In the Matter of: River Road Hotel Partners, LLC

Appeals from the United States Bankruptcy Court for the Northern District of Illinois, Black, Bankr. J., Cudahy, J.

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