Post-Petition Application of Payments from Rent Collateral

Feb 13 2015

Reorganization under chapter 11 or 13 remains an attractive option for debtors to reorganize their income-producing real estate assets. Typically, the real estate creditor holds a mortgage or deed of trust against the real estate and a collateral assignment of the rents, but the creditor is often undersecured. Debtors and undersecured creditors routinely dispute the value of the collateral, the use of cash collateral, the need for adequate protection, and plan treatment (primarily interest rate and term of payments).