BAC Home Loans Servicing, LP v. Abdelgadir (In re Abdelgadir), 455 B.R. 895

Debtors Salaheldin Abdelgadir and Afaf Wahbi filed chapter 13 on July 27, 2009, with Las Palomas Drive, Las Vegas, listed as the only real property they owned and zero exemption on that property.
BAC Home Loans Servicing, as successor to Countrywide, held a first deed of trust on the Property for $739,748; Countrywide held a second mortgage for $175,979; appraised value of the Property was $425,000.
The Debtors signed an Occupancy Agreement at loan origination certifying the Property would be their primary residence; they previously lived in Wisconsin, moved to Las Vegas in January 2008, and later relocated to Aruba Beach Avenue in Las Vegas in 2010.
After filing, Debtors sought modification of BAC’s claim, initially asserting the Property was their residence; conversion to chapter 11 occurred on January 15, 2010; they later moved addresses and sought modification of BAC’s and Countrywide’s liens as investment property.
At the hearing, the court valued the Property at $440,000 and ultimately allowed modification of BAC’s claim, holding the residence determination would be made at plan confirmation, and found no bad faith in the Debtors’ move.
The bankruptcy court entered orders in December 2010 modifying BAC’s claim and confirming the Debtors’ plan; BAC appealed, challenging the residence characterization and modification.

Issue	Plaintiff's Argument	Defendant's Argument	Held
What is the determinative date for §1123(b)(5) residence status?	BAC urged a fixed date (petition date) or security-interest creation date rather than confirmation.	Debtors urged determining residence at plan confirmation only.	Determinative date is the petition date.
Is BAC’s claim secured by the debtor’s principal residence as of the petition date?	BAC contended the Property was the Debtors’ principal residence and fully secured.	Debtors argued the Property was not the principal residence as of petition.	The status must be assessed as of the petition date; the court’s later determination was incomplete.

Nobelman v. Am. Sav. Bank, 508 U.S. 324 (1993) (valuation under §506(a) determines secured vs unsecured status of a claim)
In re Zimmer, 313 F.3d 1220 (9th Cir. 2002) (continuing protection when partially secured; fully unsecured allows modification)
In re Cohen, 267 B.R. 39 (Bankr. D.N.H. 2001) (interpretation of 'principal residence' language in §1123(b)(5))
Scarborough v. Chase Manhattan Mortg. Corp. (In re Scarborough), 461 F.3d 406 (3d Cir. 2006) (anti-modification scope and the principal-residence concept)
In re Smart, 214 B.R. 63 (Bankr. D. Conn. 1997) (legislative-history considerations in residence-by-date analysis)
In re Crain, 243 B.R. 75 (Bankr. C.D. Cal. 1999) (valuation timing at confirmation possible)
In re Dean, 319 B.R. 474 (Bankr. E.D. Va. 2004) (petition-date use vs. plan-confirmation valuation discussion)