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ARTICLE · 18 SEPTEMBER 2013

What Must A Secured Creditor Do To Get Its Due?

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
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Last month, the Fifth Circuit Court of Appeals ruled that a secured creditor’s claim survives bankruptcy where the secured creditor received notice of the case and was found to have not actively participated in it.

United StatesInsolvency/Bankruptcy/Re-Structuring
Kevin Walsh
Kevin Walsh
Ella Shenhav
Ella Shenhav
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Last month, the Fifth Circuit Court of Appeals ruled that a secured creditor's claim survives bankruptcy where the secured creditor received notice of the case and was found to have not actively participated in it. Acceptance Loan Co. v. S. White Transp., Inc. (In re S. White Transp., Inc.), 2013 U.S. App. LEXIS 16181 (5th Cir. Aug. 5, 2013).

It is well-known that under most circumstances, liens pass through bankruptcy unaffected — that is, a secured claim survives the bankruptcy process and continues to exist. An exception to this rule is created by Bankruptcy Rule § 1141(c), which provides that under certain circumstances, after confirmation of a plan, property can become "free and clear" of all liens. For such treatment to take place, four conditions must be met: (1) a plan must be confirmed; (2) the property that is subject to the lien must be dealt with by the plan; (3) the lien holder must participate in the reorganization, and (4) the plan must not preserve

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