522 B.R. 849
Bankr. D.S.C.2015Background
- Debtor is a tax-exempt, non-profit religious corporation operating a church with two locations in South Carolina and ancillary programs (day care, summer camp, after-school) generating revenue.
- Debtor owns unencumbered Otranto Road property and a 5.5-acre North Charleston property with a billboard lease to Adams Outdoor Advertising; the billboard generates about $6,000 annually.
- On Nov 1, 2010, Debtor executed a note to Regions Bank secured by a mortgage on the North Charleston Property; the note and mortgage were later assigned to Alabama Capital, LLC, then Sun Circle, Inc. is successor in interest.
- A state foreclosure action by Alabama Capital/Sun Circle was filed May 30, 2013; a receiver was appointed Feb 4, 2014, and the automatic stay ended the receivership after Debtor filed for Chapter 11 on Feb 11, 2014.
- Debtor sought to sell a 99-year billboard easement to Landmark Dividend, LLC; a Sale Order authorized the sale and allocated proceeds, with $38,000 to be paid to Sun Circle from the sale proceeds; Debtor sought Sun Circle’s assent to a Non-Disturbance Agreement to perfect Landmark’s interest.
- Debtor filed an amended Chapter 11 plan (Aug 1, 2014) as modified by an Addendum (Oct 15, 2014); Sun Circle objected to confirmation on feasibility, impairment, and plan terms; a combined hearing occurred on Oct 15, 2014 after which the plan was amended and then confirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Class 1 is an impaired voting class capable of supporting cram-down | CCRC’s secured tax claim may be classified in Class 1 and is impaired | Bryson Properties pre-BAPCPA footnote limits impairment of secured tax claims | Class 1 is impaired and constitutes an accepting impaired class; cram-down viable |
| Whether Debtor’s plan is feasible under §1129(a)(ll) | Plan provides reasonable assurance of success with future revenue growth | Sun Circle contends income projections insufficient and reorganization likely | Plan feasible; no further reorganization required |
| Whether Debtor’s plan is fair and equitable under §1129(b) for Classes 2 and 5 | Plan preserves Sun Circle’s lien and provides adequate protection and payments | Some terms less favorable than original Note; risk of unfair discrimination | Plan fair and equitable; cram-down confirmed over objections |
| Whether Debtor may compel Sun Circle to execute the Non-Disturbance Agreement | Execution necessary to consummate billboard sale and distribute $38,000 | No good faith basis; opposition to confirmation; risk to N. Charleston Property | Motion to Compel denied at this time; non-disturbance agreement failure may forfeit Sun Circle’s $38,000 upon sale |
Key Cases Cited
- In re Pamplico Highway Devel., LLC, 468 B.R. 783 (Bankr.D.S.C.2012) (feasibility and impairment considerations for plan confirmation)
- In re Greenwood Point, LP, 445 B.R. 885 (Bankr.S.D.Ind.2011) (classification and impairment of claims in plan)
- In re DeLuca, 194 B.R. 797 (Bankr.E.D.Va.1996) (plan confirmation burdens and impairment)
- In re Edgefield Inn, LLC, 521 B.R. 116 (Bankr.D.S.C.2014) (secured tax claims and voting class issues under 1123(a)(1))
- In re K Lunde, LLC, 513 B.R. 587 (Bankr.D.Colo.2014) (classification constraints under 1123(a)(1))