This matter presents the issue of whether property that is subject to junior and senior liens not disputed on this motion may be sold pursuant to 11 U.S.C. § 363(f) (1984) by a debtor-in-possession free and clear of such liens for less than the aggregate amount of the liens over the objection of the junior lienholders.
I.
Among the creditors of Beker Industries Corp. (“Beker” or the “Debtor”) who found themselves before the bankruptcy court for
*475
this district when Beker filed its petition for reorganization under Chapter 11 of the Bankruptcy Code 11 U.S.C. § 101
et. seq.
(1984) (the “Code”), are the holders of Beker’s 15
Vs%
Secured Subordinated Debentures issued in 1983 and due July 1, 2003 (the “debentures”). A committee has been appointed to represent their interests (the “Committee”),
see In re Beker Industries Corp. and Beker Phosphate Corporation,
By order to show cause dated July 14, 1986, the Debtor seeks permission pursuant to 11 U.S.C. § 363 to sell the Conda Assets free and clear of the senior and junior liens by public auction to be held on August 1, 1986. The liens are to attach to the proceeds. A hearing to consider whether the auction sale should proceed under
Committee of Equity Security Holders v. Lionel Corp. (In re Lionel Corporation),
II.
The “starting point” in the exercise of statutory construction is the language of the statute itself.
Ernst & Ernst v. Hochfelder,
(3) ... the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
******
(5) such entity could be compelled in a legal or equitable proceeding, to accept a money satisfaction of such interest.
1Í U.S.C. §§ 363(f)(3) and (5) (emphasis added).
It is well settled that in construing statutory language, terms of particular meaning to the subject matter of the statute are to be interpreted in line with that meaning,
Ernst & Ernst v. Hochfelder,
Here, the term “value” has such meaning. That term is employed in the same context in § 506(a). There it is provided that
An allowed claim of a creditor secured by a lien on property [of the estate] ... is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property ... and is an unsecured claim to the extent that the value of such creditor’s interest ... is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.
*476 (emphasis added). It is thus plainly indicated that the term “value”, as used in § 506(a) with respect to the interest of a secured creditor, means its actual value as determined by the Court, as distinguished from the amount of the lien. That indication and the last sentence of § 506(a) requiring determination of value upon disposition of an asset standing as collateral strongly support the conclusion that the term “value”, as employed in § 363(f)(3) is to be similarly interpreted.
We reach this conclusion notwithstanding the statement in the House and Senate reports that “[t]he trustee may sell free and clear if ... the sale price of the property is greater than the
amount
secured by the lien...” H.Rep.No. 95-595, 95th Cong. 1st Sess. 345 (1977); S.Rep.No. 95-989, 95th Cong. 2d Sess. 56, U.S.Code Cong. & AdmimNews 1978, p. 5787, 5842, 6301-02 (1978) (emphasis added). But it is not at all clear that this language is anything more than colloquial or that the authors of these reports focused on the distinction between value and amount. Moreover, Congress, in enacting the Code, maintained that it is the value of the collateral that is protected by the Code. In discussing the adequate protection afforded a secured creditor under § 361 and linking that concept to value, the Senate Report emphasized: “This is consistent with the view expressed in
Wright v. Union Central Life Insurance Co.,
Our function is not to determine merely what the legislative history says. Rather, the inquiry concerns what the statute means. Here, the statutory language and scheme are patently clear enough; they control.
Ernst & Ernst v. Hochfelder,
Broad statements to the contrary, made without any analysis and without consideration of the interplay of § 506(a) and § 363(f)(3),
e.g., In re Red Oak Farms, Inc.,
Furthermore, it is undisputed that collat-eralized property can be sold for less than the amount of the lien at confirmation by cramming down a secured creditor. Section 1129(b)(2)(A)(ii) so provides without any references to the protections of § 363(f), so long as the lien attaches to the proceeds or the secured creditor can bid in its lien pursuant to § 363(k). Moreover, if a debtor desires to retain the property subject to the lien, it need pay only the allowed amount of the secured claim. 11 U.S.C. § 1129(b)(2)(A)(i). As noted, § 506(a) limits such a claim to the value of the collateral as determined by the bankruptcy court. § 1129(b)(2)(A)(i). No constitutional provision bars such an exercise.
E.g., Wright v. Union Central Life Ins. Co.,
But the power to sell speaks only little as to its exercise, particularly in the case of a major asset.
Lionel,
The Bankruptcy Court was required to ascertain the facts as to the value of the property to be sold and the value of all the security held by the lienor so as to determine the respective interests of the lienor and the general creditors in the security, whether the estate had any equity in it and whether there might be provable claims for a deficiency which might affect the rights of the general creditors. Any other circumstances bearing on the question of the relative interests of the lienor and the general creditors, or the advantages or disadvantages to either or both of the proposed methods of disposition, should have been considered also.
It was only then that the referee could exercise his sound discretion to determine whether the proposed sale by [the mortgagee] to [a third party] coupled with the waiver of deficiency conditioned upon [such] sale.... or a public sale, furnished adequate protection to the rights of the mortgagee and was in the best interests of the bankrupt estate. He was not bound to approve either of such sales unless he found that these conditions had been satisfied.
Because of the vagaries of the valuation process, particularly for assets like those at issue here,
see In re Beker Industries Corp. et al.,
Of course, the Debtor might assert that, were the property to deteriorate in value in the hands of the secured creditors, their deficiency claims might increase to the detriment of the estate. But the Court can consider this factor along with others.
Bernhard Altmann,
In determining whether there are special circumstances, it is to be remembered that the purpose of the general rule is to protect the secured creditor from a debtor cashing out its collateral and leaving it with an unsecured deficiency claim in the absence of special circumstances, and the determinations noted above. The cases that invoke the general rule usually concern secured creditors who desire foreclosure.
E.g., In re Unikraft Homes of Virginia, Inc.,
III.
None of these considerations are altered by § 363(f)(5) which the Debtor claims enables it to sell the property without constraint. As noted, that section enables a debtor-in-possession to sell property free and clear of the interest of another entity if that entity could be compelled to take a money satisfaction in a legal and equitable proceeding. Relying on
In re Hunt Energy Co. Inc.,
We disagree if by this assertion the Debtor is claiming that such property can be sold for less than the aggregate amount of all liens without the protections noted above. First, one would think that Congress, in authoring the Bankruptcy Code, could have easily found the words necessary to refer to § 1129(b)(2) of the Code had that been its intent. Rather, § 363(f)(5) is to be interpreted, in our judgment, as referring to those few interests in property that can, by operation of law, be reduced to dollars. Liens are addressed directly in § 363(f)(3) and it is that section which is to be applied. To interpret § 363(f)(5) in the fashion suggested by the Debtor would “swallow-up (f)(l)-(f)(4) ...”
Matter of Stroud Wholesale, Inc.,
Second, in Hunt, the court seemingly applied the cram-down theory in selling a major asset on the basis of its finding that the Debtor had valid business reasons as required by Lionel. But it ignored the policies of the general rule noted above and also that Lionel did not concern the sale of collateral over the objection of a secured creditor. Furthermore, at confirmation, the overall interest of all creditors and the Debtor becomes so strong that statutory cram-down on a dissenting secured creditor is justified by the need to confirm. Absent the existence of special circumstances prior to confirmation, the secured creditor should be protected as noted above.
Consequently, it appears that an eviden-tiary hearing is to be held to determine whether the Debtor has equity in the property and, if not, whether circumstances exist warranting sale of the property. That hearing is to be held on August 11, 1986, in conjunction with the related abandonment hearing previously scheduled by this Court. Since those circumstances are also related to the test set by the Lionel court for selling a major asset outside of a plan of reorganization, the hearing originally *479 scheduled for July 23,1986 is to be held the same time. It is
SO ORDERED.
Notes
. A further weakness in
Stroud
is its citation of
Matter of Riverside Investment Partnership,