In In re Ditech Holding Corp., 2019 WL 4073378 (Bankr.
S.D.N.Y. Aug. 28, 2019), the U.S. Bankruptcy Court for the Southern
District of New York addressed several objections to confirmation
of a chapter 11 plan that proposed to sell home mortgage loans
"free and clear" of certain claims and defenses of the
homeowner creditors, contrary to a provision of the Bankruptcy
Code—section 363(o)—which was enacted in 2005 to
prevent free and clear sales of certain claims and defenses
relating to consumer credit agreements. The court ultimately ruled
that section 363 of the Bankruptcy Code does not apply to sales in
a chapter 11 plan and that the debtors proposed their plan in good
faith.
Importantly, however, the court initially denied confirmation of
the plan and refused to approve a related global settlement because
the debtors were unable to satisfy the "best interests"
test, which requires that creditors (the homeowners in this
instance) receive more under a plan than they
