which MAY contain (which CA courts are generally … “sweeteners” hostile toward)… post-petition collateral as security for Cross-collateralization clause pre-petition debt (and, MAYBE vice versa) Essentially an end-run around (post-petition for § 547(b) transfer antecedent debt)… thus, courts may NOT approve w/ cash collateral stipulation … (though, more cases” in cross-collateralization clause “special DE than CA) Findings of fact binding estate re: validity/perfection/amount of lien Again, some courts do NOT permit, while others allow for cases”… “special BUT, if permitted, then should be binding on AND DIP … (if to successor-trustee conversion Ch. 7) Findings of fact binding estate re: other Cs’ C-lender’s has liens lien priority over other (binding those that are NOT party to liens cash collateral stipulation) Waiver of waiver of on collateral (for § 506(c) surcharge preservation by 3rd party-professionals/successor-trustee… again, binding non-parties) Divesting of discretion in formulation of DIP plan of reorganization (judges dislike) DIP “hand-cuffing” Release of C-lender’s liability for pre-petition (NO in 9th Circuit) Waiver of actions against C-lender (NO in 9th Circuit) avoidance Automatic relief from upon default (NO in 9th automatic stay Circuit) Waiver of procedural requirements NO for foreclosure… BUT, MAYBE for perfection of replacement (i.e. court lien … order in place of though, difficult for 3rd parties to UCC-1… search/receive notice) on claim for relief substituted collateral b/c has NO Lien DIP unencumbered assets
… which MAY contain “sweeteners” (which CA courts are generally hostile toward)… Cross-collateralization clause post-petition collateral as security for pre-petition debt (and, MAYBE vice versa) Essentially an end-run around § 547(b) (post-petition transfer for antecedent debt)… … thus, courts may NOT approve cash collateral stipulation w/ cross-collateralization clause (though, more “special cases” in DE than CA) Findings of fact binding estate re: validity/perfection/amount of lien Again, some courts do NOT permit, while others allow for “special cases”… … BUT, if permitted, then should be binding on DIP AND successor-trustee (if conversion to Ch. 7) Findings of fact binding estate re: other Cs’ liens C-lender’s lien has priority over other liens (binding those that are NOT party to cash collateral stipulation) Waiver of § 506(c) waiver of surcharge on collateral (for preservation by 3rd party-professionals/successor-trustee… again, binding non-parties) Divesting DIP of discretion in formulation of plan of reorganization “hand-cuffing” DIP (judges dislike) Release of C-lender’s liability for pre-petition (NO in 9th Circuit) Waiver of avoidance actions against C-lender (NO in 9th Circuit) Automatic relief from automatic stay upon default (NO in 9th Circuit) Waiver of procedural requirements NO for foreclosure… … BUT, MAYBE for perfection of replacement lien (i.e. court order in place of UCC-1… though, difficult for 3rd parties to search/receive notice) Lien on claim for relief substituted collateral b/c DIP has NO unencumbered assets
Bankruptcy_Schechter-Fall-2009.docx