In The Matter Of Greystone Iii Joint Venture

995 F.2d 1274 (1991)

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Nature of the Case

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Facts

D lent $8,800,000, evidenced by a non-recourse promissory note secured by a first lien, to P to purchase the venture's office building. P defaulted and D posted the property for foreclosure. P then filed Chapter 11. P owed D approximately $9,325,000, trade creditors approximately $10,000, and taxing authorities approximately $145,000. The court valued D's secured claim at $5,825,000, the appraised value of the office building, leaving D an unsecured deficiency of approximately $3,500,000. P's second plan separately classified the unsecured deficiency claim of D and the unsecured claims of the trade creditors. P's second plan separately classified the unsecured deficiency claim of D and the unsecured claims of the trade creditors. P was to pay D and the trade creditors less than four cents on the dollar for their unsecured claims, but it also provided that P's general partner would satisfy the balance of the trade creditors' claims after confirmation of the Plan. The Plan further provided for a separate class of security deposit 'claims' held by existing tenants of the office building. They were promised 25% of their deposits upon approval of the Plan and 50% of their deposits at the expiration of their respective leases. The Plan contemplated a $500,000 capital infusion by P's partners, for which they would reacquire 100% of the equity interest in the reorganized P. D rejected this Plan. The trade creditors and the class of security deposits voted to accept it. D testified that it was willing to fund its own plan of reorganization by paying off all unsecured creditors in cash in full after confirmation. The court affirmed P's Plan, and the district court upheld the confirmation. D appealed.