Bankers' Bank of Kansas, NA v. Bluejay Properties, LLC (In re Bluejay Properties, LLC), Bankr. No. 12-22680 (10th Circ. Mar. 12, 2014)(unpublished)(Michael, Jacobvitz, and Marker, Judges).
- Citation:
- Bankers' Bank of Kansas, NA v. Bluejay Properties, LLC (In re Bluejay Properties, LLC), Bankr. No. 12-22680 (10th Circ. Mar. 12, 2014)(unpublished)(Michael, Jacobvitz, and Marker, Judges).
- Tag(s):
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- Ruling:
- Appellate Panel of 10th Circuit holds that secured creditor is "adequately protected" under Section 363(e) when the value of property securing creditor's claim exceeds the creditor's claim by a reasonable margin. Court held that when a creditor is not undersecured and/or where the value of property securing the creditor's claim is not decreasing in value then the creditor is not entitled to additional adequate protection for its secured interest in Debtor's rental income. (This unpublished opinion should only be cited for persuasive value.)
- Procedural context:
- Appeal from the bankruptcy court for the District of Kansas determining adequacy of protection, pursuant to 11 USC § 363(e), for secured creditor holding lien on Debtor's rents, reviewed de novo.
- Facts:
- Bluejay Properites,("Debtor"), is a single asset real estate debtor owning a 192-unit apartment complex ("Property"). Debtor filed a Chapter 11 bankruptcy on September 28, 2012. At that time, the value of the Property was appraised at almost $17 million. In addition, the Property generated about $2 million per year in rental income. Bankers' Bank of Kansas ("Appellant") held a secured claim on the Property totaling almost $14 million. This claim was secured not only by a lien on real property but by a lien on the rental income as well. The bankruptcy court granted an order permitting Debtor's use of the rents despite Appellant's objections that it held a separate lien on the rents. Appellant then filed this appeal.
The 10th Circuit Appellate Panel held that because the value of the Property more than covered the Appellant's total secured claim the Appellant was not entitled to any additional adequate protection for its contractual lien on Debtor's rents. The Court intimated it might agree to grant such additional adequate protection only if the creditor were undersecured in some way. But the Court refused to agree with Appellant's argument that each security interest is entitled to its own adequate protection regardless of whether the creditor's claim is oversecured or undersecured. "...Only the amount of the debt....need be adequately protected.", wrote Judge Michael, not the number of security interests a creditor may have.
- Judge(s):
- Judge Michael, Judge Jacobvitz, and Judge Marker
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