A debtor filed a Chapter 11 bankruptcy case and moved to sell property free and clear of liens. With the sale of a portion of real property, the lienholder would retain its liens and claims to the remaining property. The sole lienholder objected under 11 U.S.C.S. §363(f), stating the balance owed was more than the amount the debtor would receive for the sale. The lienholder also requested the right to “credit bid” under §363(k).
In In re Lee, No. 19-71337- JTL, 2024 WL 478060, 2024 Bankr. LEXIS 296 (Bankr. M.D. Ga. February 7, 2024) (opinion not yet released for publication), the court found that the sale would be proper, and that the lienholder had no right to credit bid. First, the court addressed the lienholder’s §363(f)(3) objection, which requires “that property can be sold free and clear of liens only if such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property.” The lienholder argued that the lien had continued to accrue to an amount greater than the sale price. However, the lienholder provided no evidence as to that amount, and instead, its proof of claim stated that the value of the claim was less than the proposed sale price. Further, even if the debtor had not met the requirements of §363(f)(3), the court need only find one of five sections of §363(f) applied, and §363(f)(4) meets that standard by showing “there is a bona fide dispute as to the value [of the lienholder’s] interest in the [d]ebtor’s property.” Next, the court addressed the lienholder’s request for the right to credit bid, finding that the lienholder “do[es] not have an allowed claim as required by §363(k).” This section did not apply because the debtor had filed an objection to the lienholder’s claim, causing the claim to not be allowed for a credit bid. Finally, the court waived the waiting period of Federal Rules of Bankruptcy Procedure Rule 6004(h), allowing the parties to “finalize the sale expeditiously,” with the debtor’s home to serve as “substantial collateral to secure any deficiency” arising from the sale.
By Ashley Boyce [email protected]
Edited By Hayden Mariott [email protected]