City of Concord, N.H. v. Northern New England Telephone Operations LLC (In re Northern New England Telephone Operations LLC)

No. 14-3381-bk (Aug. 4, 2015)
The Court adopts the view that a lien can be extinguished by a Chapter 11 plan under 1141(c) only if the creditor has "participated" in the bankruptcy proceeding. See Penrod, 50 F.3d 459 (CA7 1995). The Court distinguishes Penrod by holding that the plan must have dealt with the property subject to the lien, but need not deal with the lien itself. The Court rejects the view that the plan must mention the specific piece of property, holding that broad terms like "all property" are sufficient. As to the participation requirement, the Court declines to decide whether any participation is sufficient or whether the creditor's participation must relate to the lien or the liened property. In this case, the creditor participated under either view because it had filed claims for different debts that were secured by the same lien on the same properties. Curiously, some of the Court's language suggests that the party's participation must be voluntary, thus raising the possibility that secured creditors can chose to ignore the bankruptcy and preserve their liens.
Procedural context:
Appeal from Post-confirmation Motion to Allow and Pay unfiled secured claims
City was owed property taxes that were billed quarterly. All property taxes were secured by a statutory lien on the property. The city filed secured proofs of claim for the quarterly taxes billed pre-petition but failed to file claims for taxes billed immediately post-petition. While the filed claims were paid, the Plan provided that "all property" would revest free of liens. Post-confirmation the city sought to file late claims and, in the alternative, argued that the liens securing the unfiled claims passed through bankruptcy unaffected.
Jacobs, with Newman & Raggi

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