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Law360 Guest Column: Case Study - In Re Village At Camp Bowie
08/25/2011
Ian T. Peck, Robin E. Phelan, Jarom Yates

Law360, New York (August 25, 2011) -- Bankruptcy Judge Michael Lynn of the Northern District of Texas recently issued a noteworthy opinion in In re Village at Camp Bowie I LP that addresses two important Chapter 11 confirmation issues. Judge Lynn determined that a plan that artificially impaired a class of claims in order to meet the requirements of section 1129(a)(10) had not been proposed in bad faith and did not violate the requirements of section 1129(a). In his ruling, Judge Lynn also applied the Supreme Court’s cram-down “interest”[1] rate teachings in Till v. SCS Credit Corporation and approved an expert’s use of the “investment band” method for determining the appropriate rate of return for a secured lender.

Factual Background

The debtor’s primary asset was a mixed-use development property in Fort Worth, Texas. In addition to an equity investment of $10 million, the debtor financed the property through bank loans in excess of $30 million. After certain modifications, default and subsequent forbearance agreements, the debtor’s lender sold its position at a discount to Western Real Estate Equities LLC after the expiration of the final forbearance period. Western posted the property for foreclosure, and the debtor filed for relief under Chapter 11.

Excerpt from Bankruptcy and Texas Law360. To view the full article, click here (subscription required).