In Re Puff

2011 WL 2604759 (2011)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Ds objected to P's Third Amended Disclosure Statement. The Court held an evidentiary hearing to address the objections. P has both residential and commercial property. The expert evidence presented disclosed sharp and significant difference in the valuation between P and D on the secured property in her reorganization. Secured claims are largely to be paid in full. Unsecured claims will receive approximately one cent on the dollar. Under P's valuation, the secured claims of Ds are reduced significantly from what each of them claims, resulting in a larger unsecured claim for each. Ds offered higher valuations. This would result in smaller unsecured claims paid at the nominal rate. Wells argues that some or all of its claims are in fact true leases and not secured claims. This is significant because 'true leases' would require either substantially greater payments than those offered on the secured portions of Wells' claims, or repossession by Wells of property critical to the reorganization if those leases were ultimately rejected. If Wells' obligations are true leases and not secured claims, the Plan proposed may not be feasible. Everyone filed post-hearing briefs. Ds shifted their arguments slightly to focus on the lack of adequate information available to general unsecured creditors. Ds argued that disclosure of at least the competing valuations and the possibility that Wells was holding true leases instead of security agreements was necessary to allow unsecured creditors to decide on how to vote on the Plan. Ds asked the Court to find specifically that their valuations for the property were correct and should be disclosed to all parties. They believe such findings would essentially render the Plan nonfeasible.