Ninth Circuit BAP Dresses Down Lienstripping
Date: 10/20/08Could This Be the Last Dance for 363 Sales?
A recent decision of the Bankruptcy Appellate Panel (BAP) for the U.S. Court of Appeals for the Ninth Circuit (BAP) could have a significant impact on bankruptcy sales. In Clear Channel Outdoor, the bankruptcy court had authorized a sale of real estate to a credit-bidding senior lienholder free and clear of claims held by an objecting junior lienholder on the basis that the lienholder's claim could be crammed down under a plan of reorganization. The BAP reversed, holding that the closing of the sale, even in the absence of a stay, did not moot the appeal with respect to the stripping of the junior liens,
notwithstanding the good-faith purchaser protections afforded the senior lienholder, suggesting that the property could remain subject to the junior liens. The court remanded the case to the bankruptcy court for further proceedings.
Ninth Circuit BAP Dresses Down Lienstripping.pdf (pdf | 425.69 KB )