Secured lenders have their own special set of concerns when borrowers file for bankruptcy, which effectively thwarts lenders from taking any remedial action on their collateral. Lenders must be prepared for the shift in leverage that bankruptcy entails, while also remaining aware of the strategies available to them in Chapter 11 to maximize their recoveries and protect their rights.
Two areas significantly implicating secured lenders’ rights in bankruptcy are the treatment of assignments of leases and rents (ALRs) and so-called “cramdown notes,” which are coerced loans imposed upon lenders under a plan of reorganization that is confirmed over lenders’ dissenting vote. Given the limited case law on these unsettled issues, secured lenders should take note of the following two opinions that have recently shed light on these issues: In re Buttermilk Towne Center, LLC1 and Good v. RMR Investments Inc. (In re Good).2
Assignment of Rents
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