On March 9, 2012, Judge Kevin Carey of the United States Bankruptcy Court for the District of Delaware entered a memorandum opinion in In re Huntingon Development, LLC (Case No. 10-12461-KJC), (i) granting RBS Citizens, N.A.’s (“Citizens”) stay relief motion (the “Motion”) to resume foreclosure proceedings against Huntington Development, LLC (“Debtor”) in Superior Court for the State of Delaware (“Superior Court”), and (ii) dismissing Debtor’s objection (the “Claim Objection”) to Citizens’s secured claim.
The facts of record in Huntington established that prior to filing its petition in bankruptcy, the Debtor had defaulted on a guaranty secured by a mortgage it had granted to Citizens on certain real property (the “Real Property”). Citizens commenced foreclosure proceedings in Superior Court which were halted by the Debtor’s bankruptcy filing. Citizens moved to dismiss Debtor’s bankruptcy case as a bad faith filing, or, in the alternative, for stay relief to resume foreclosure proceedings in Superior Court, because its interest in the Real Property was not adequately protected; Debtor had no equity in the Real Property; and no reorganization was possible.
The Court granted Citizens stay relief. First, it found that Citizens was not adequately protected, basing its decision on the Real Property’s value. Specifically, the Court accepted Citizens’s 2010 valuation of the Real Property, while denying its motion to present additional valuation evidence, finding that Citizens would not be prejudiced since any further evidence would have only reinforced the Real Property’s depressed value. Second, the Court found that that there was no equity in the Real Property, whether it granted or denied the Claim Objection, which Debtor asserted to reduce Citizens’s claim’s principal amount. Finally, the Court found that since there was no equity in the Real Property and that Debtor had no other assets, Debtor had no ability to effectively reorganize. Since Citizens had satisfied all three grounds for stay relief , the Court granted the Motion.
A copy of the memorandum opinion can be found here.