In the Matter of Transwest Resort Properties, Inc., No. 16-16221 (9th Cir. 2018)
Annotate this CaseAn election under 11 U.S.C. 1111(b)(2) does not require that a due-on-sale clause be included in a reorganization plan. 11 U.S.C. 1129(a)(10), which requires that at least one impaired class accept a cramdown plan, applies on a per plan basis, rather than a per debtor basis. In this case, the Ninth Circuit affirmed the district court's decision affirming the bankruptcy court's order that approved the Chapter 11 cramdown reorganization plan of five related entities (debtors).
Court Description: Bankruptcy. The panel affirmed the district court’s affirmance of the bankruptcy court’s order approving a Chapter 11 “cramdown” reorganization plan of five related debtors. The debtors had previously acquired two resorts. A lender, whose claim was undersecured, elected to have its entire claim treated as secured pursuant to 11 U.S.C. § 1111(b)(2). The plan restructured the lender’s loan to a term of 21 years and included a due-on-sale clause requiring the debtors to pay the lender the outstanding balance of the loan if the resorts were sold. The due-on-sale clause did not apply if the debtors were to sell the resorts between years five and fifteen. The panel held that an election under § 1111(b)(2) does not require that a due-on-sale clause be included in a reorganization plan.
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