In re Majaraj
May
09
2011
Ruling
Debtors could not cram down subordinate deed of trust as absolute priority rule continued to operate in individual chapter 11 cases with regard to non-exempt property owned on petition date.
Procedural posture
Debtors, who operated an auto body business, sought confirmation of a chapter 11 plan. Confirmation was opposed by a nominally secured creditor ("NSC"), whose subordinate deed of trust against the debtors' residence would have been stripped off. Additionally, the plan had not been accepted by the class of general unsecured creditors, who would have received an estimated 1.7 cents on the dollar over a period of five years.
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Court
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