444 B.R. 681
Bankr. N.D. Ga.2011Background
- Debtor filed Chapter 11; Northside Bank holds ~ $907,000 secured by a first-priority deed on Highway 411/Dodd Blvd property and a second-priority deed on Heritage Square, plus a judgment lien.
- Plan proposes surrender of Highway 411/Dodd Blvd property to Bank in full satisfaction of its claim, cancelling the Heritage Square second-deed and the judgment lien.
- Bank objects to confirmation because not all impaired classes accepted the plan, which would violate 11 U.S.C. § 1129(a)(8).
- Debtor seeks confirmation under 11 U.S.C. § 1129(b) (cram-down) despite Bank’s non-acceptance, arguing the Bank can realize the indubitable equivalent of its claim.
- Court made findings of fact at the January 27–28, 2011 hearings: fire-sale value of Highway 411/Dodd Blvd property about $990,000; net after selling costs and taxes approximately $931,000; Heritage Square net at least $100,000; these values suffice to satisfy the Bank’s claim in full, justifying indubitable equivalent; credibility attributed to Debtor’s valuation.
- Court concluded plan satisfies all § 1129(b) requirements for the Bank’s claim and thus Bank’s acceptance was not required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the plan provides the indubitable equivalent for the Bank’s secured claim | Riddle contends the Highway 411/Dodd Blvd property transfer suffices as indubitable equivalent | Bank argues the plan does not provide indubitable equivalent and discriminates unfairly | Yes; transfer yields indubitable equivalent and satisfies the claim |
| Whether the plan discriminates unfairly against the Bank | Plan treats Bank’s secured claim similarly given collateral, terms. | Treatment is unfairly discriminatory because only Bank’s claim is satisfied with collateral | No; secured-treatment uniqueness does not render discrimination unfair; plan legitimate under §1129(b)(1) |
| Whether the plan is fair and equitable under §1129(b)(2)(A)(iii) | Indubitable equivalent constitutes fairness and equity for the Bank | Not satisfied because plan does not adequately secure all interests | Yes; plan is fair and equitable for the Bank under indubitable equivalent standard |
| Whether the cram-down provisions are applicable given the overall plan feasibility | Plan is feasible with collateral release enabling reorganization | Objection remains on feasibility and fairness | Applicable; the plan satisfies cram-down feasibility in relation to the Bank |
Key Cases Cited
- Arnold & Baker Farms v. United States (In re Arnold & Baker Farms), 85 F.3d 1415 (9th Cir. 1996) (indubitable equivalent requires complete compensation; conservatively valued collateral may satisfy)
- Sandy Ridge Development Corp. v. Louisiana National Bank (In re Sandy Ridge Development Corp.), 881 F.2d 1346 (5th Cir. 1989) (indubitable equivalent concept applied to secured claims)
- In re Atlanta Southern Business Park, Ltd., 173 B.R. 444 (Bankr.N.D.Ga. 1994) (careful valuation to ensure indubitable equivalence; dissolution of other collateral may be necessary)
- Freymiller Trucking, Inc., 190 B.R. 913 (Bankr.W.D. Okla. 1996) (considerations for fair and equitable treatment of secured claims under cram-down)