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ARTICLE · 10 JULY 2023

Contiguous Condominiums Are Not "SARE"

Pillsbury Winthrop Shaw Pittman
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Real estate properties must share a common scheme or plan to be designated "single asset real estate" under the Bankruptcy Code.

United StatesInsolvency/Bankruptcy/Re-Structuring
Dania Slim
Dania Slim
Patrick E. Fitzmaurice
Patrick E. Fitzmaurice
Alana A. Lyman
Alana A. Lyman

TAKEAWAYS

  • Real estate properties must share a common scheme or plan to be designated "single asset real estate" under the Bankruptcy Code.
  • Sharing a common scheme or plan is the determinative factor in designating properties as a "single property or project."
  • A common mortgage or deed or being in close proximity is insufficient to qualify as single asset real estate.

To be classified as a single asset real estate case, the U.S. Bankruptcy Court for the Southern District of New York recently held that properties must share a common scheme or plan to constitute a "single property or project." See In re Nuovo Ciao-Di LLC, Case No. 23-10068 (JPM), 2023 Bankr. LEXIS 1331 (Bankr. S.D.N.Y. May 19, 2023). In reaching its decision, the Bankruptcy Court clarified the multifactor test to be used to determine whether property is single asset real estate and emphasized the high burden creditors (particularly secured creditors who obtain substantial benefits from the

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