determined as of the petition date the date on which the debtor files for bankruptcy this is embodied within a number of provisions of the bankruptcy code most notably section five zero two and that is one of the sections that we're going to be talking about today section five zero two b says that when there's an objection to a claim the court must allow the claim in the amount that so that on the petition date except to the extent that it is an enforceable for purposes of today's appeal you may assume that the trustee a non recourse claim against the salomon's estate against the salomon's which means that if all we were to do is to look at section five of two being we would conclude that on the petition date to the extent that the claim was not secured by real property it would be on enforceable in a chapter seven case the trustee would not be entitled to any claim for the deficiency in chapter twelve case which affects family farmers that would be the case and the thirteen case and individual reorganization that would be the case that's not the case in chapter eleven and that's because as part of an overall bundle of rights that congress gave to debtors and creditors as part of the as if the claimant had recourse against the debtor regardless of whether or not that's actually the case there's only three exceptions the congress determining congress chose these exceptions on purpose congress says the creditor has read it has is entitle to have its claim allowed as a recourse claim unless the creditor waves that right that makes sense and in the eleven eleven b parlance that's called the election election the other two exceptions are if the debtor during the bankruptcy case sells the property pursuant to section three sixty three of the bankruptcy code why is that important because congress also also built in a protection for creditors that allows them to credit three sixty three age that's why congress specifically chose sales under three sixty three b as the only type of sale that can occur during a bankruptcy case which triggers the exception to what i call the recourse rule the third exception to the recourse rule occurs when the debtor sells a plan sells the property pursuant to a chapter eleven plan why did congress choose that exception again because as part of eleven twenty nine b e inapplicable the tampa bay case actually virtually the entire case has nothing to do does not actually support this holding the tampa bay case what the court actually found when you look at the entire thing is they found that a foreclosure sale is similar enough to a three sixty three sale that we should treat foreclosure sales the same way and then after going through a long discussion about that which by the way i don't think that holding would actually hold up under current supreme court jurisprudence and how the supreme court interprets the bankruptcy but no one's actually urging you to reach that conclusion here today the actual main holding of tampa bay so after tampa bay goes through this whole process where it decides that a foreclosure sales essential another exception to the recourse rule then in a total of three sentences in the penultimate paragraph without any discussion without any real statutory analysis then just says and oh by the way because there was a foreclosure sale there's no longer a lien against a property of the estate actually if that were holding the entire part of the entire legal discussion that preceded it would be completely irrelevant because if you conclude that a foreclosure sale means that creditor no longer holds a claim secured by lena for property of the state for purposes of love and want to be it doesn't matter whether one of the exceptions of so it may not hold but it points in that direction pretty clearly it does it in in two sentences essentially without any analysis it does say that so the next court to come along has to build on the foundation actually but actually it does exactly right we're bad the bad had an opportunity ok and in my view the bad punted because my problem with the baptist scott decision is not only obviously i'm disappointed with the result but the bat discuss the fact discussed that in one paragraph bess says while the trustee makes this argument the section five zero two b requires us to look at the petition date but that's not what the cases say and then they cite  fixed as of the date of the bankruptcy filing that nothing ever changes as of that day and that even though the property is gone on your rights to stay the say that doesn't that's what i don't well your honor the the notion the it's not just the amount that's fixed that's it's not the only thing that you've got your argument is that everything is fixed so nothing ever changes and that's my problem that has to change during the course of the administration the bankruptcy  it does not it the the entitlement to the claim and whether or not the claim is entitle to treat two allowances a resource claim as a recourse a claim pursuant to eleven limby does not change there may be some other things such as there are plenty of other provisions of the bankruptcy code which actually do alter the rights and interests of debtors and creditors after the petition date for example section five zero six says that when you have an over secured claim that your claim will also include post petition to your writers and everything like hands on the exist you leave it on the petition date that is correct that that fact under section five zero six b the trustee was entitle to have that claim allowed as of the petition date and the amount that was owed on the petition date is if unless that claim was an enforceable like i said outside of the chapter eleven cont you'd say that was on the forcible and therefore he wasn't entitled to a deficiency claim but in the chapter eleven context where congress is specifically gone out of its way to provide that secured creditors are entitled to recourse claims regardless of whether or not they had recourse on the petition date when the trustee was entitle to have his claim allowed as a recourse going it's like the purpose of section eleven eleven p was to protect and secured under secured noncreative non recourse creditors from doubters who choose to retain the property preacher appreciation while cashing out the creditors at the low present value and s how how is that purpose implicated here because it's as if the actual purpose is a little bit more basic than that the purpose of section eleven limby combined with eleven twenty nine b which is crammed down provision is to ensure that a debtor does not take action by seeking usually it's by seeking a valuation which impairs the secured creditor in a way that the congress determined as a policy matter was improper so normally speaking this comes up in the context of a valuation issue better files for bankruptcy owns the property is ultimately wants to confirm a plan and seeks a valu from the bankruptcy court and let's say the bankruptcy court determines that the property is worth six hundred dollars and the creditors worth is owed a thousand the creditor at that point gets to make a decision do i want to elect to have my claim tree is a fully secure claim for the five thousand dollars and thus waive my deficiency claim or am i going to keep my deficiency claim and be paid under the plan pursuing you know and receive whatever treatment is being given to unsecured creditors congress decided that the bargain that a chapter eleven debtor has is the chapter eleven has the power to retain property absolutely chapter eleven or has the power to retain property and many chapter eleven debtors do but the chapter limits are also the power to sell property under three sixty three b has the power to sell property pursuant to a plan and if the debtors exercise the power to sell the property during the  sixty three or the exercises the power to sell the property through the plan then and only then absent the consent of the creditor only only in those types of sales does the creditor lose its right to have its claim allowed as a recourse claim how the trustee managed to the old to learn of or take action in response to the notice of foreclosure sale i don't think we got the notice of for notice of default and then after a certain amount time records a notice of sale and madly records publicly records and then if the sale does not go through on that day for example if a bankruptcy gets filed stating the sale at the at the actual on the courthouse steps so to speak and they announce when the continued sales to be they never actually record when the next sales going to occur and little sister used to be there on the first version if that's my question  if the trustee learns about it all and i'm not certain you know just because someone records something with the counter recorder's office of course doesn't mean that everybody is given actual notice of it and in fact in this case one of the one of the like ironies of this case is that the foreclosure sale occurred i think was in march of two thousand and fourteen or thereabout don't hold me to that but whatever it was and the debtor didn't even seem to know that it occurred because the debtor kept filing papers in the bankruptcy court indicating that there was going to be a foreclosure the initial notice gets recorded it's not necessarily served on everybody like a pleading or anything like that and these things just happen your honor i have two minutes of my time i'd like to reserve it if you don't mind the morning your honour's michael to throw me please the court and represent the solomons oh oh we have to first look at all the things well first of all let's understand something the trust in this case is not the trustee of the solomons property it is a separate bankruptcy proceeding and i don't want the term trustee to be construed in anybody's mind as being something special like it normally is for a trustee with all the producer he duties as far as i'm concerned  case to the foreclosure process did not respond to the foreclosure process did not sue the title company for the foreclosure process did not take any action except in this proceeding there were a number of different remedies available to mr masson as a creditor if he did not get notice now as a practical matter in california there is a notice of sale that is sent out to everybody he would have gotten them out he would not have got notice of the continued dicked sometimes they do that sometimes they don't but he's on notice that there is a sale so calendar it look at the things look at the real property questionnaires you know the real questor whatever you look at and you will find the foreclosure date we didn't care because we had already agreed to it but again there was no objection by the trustee to anything you know the other problem here is that this is a chapter eleven this is not a chapter seven where everything is fixed on the day of filing even in a chapter thirteen the value is fixed on the data file in this is a chapter eleven we are in a constant state of flux we have to be able to reorganize one of the things counsel did not mention that we have the ability to do is surrender the property now whether we're surrendering the property for the benefit of the creditors or not in the long run it is because it gives us more money to give to the other creditors if they did not want us to surrender the property then file an objection to the stipulation to lift the stake and as far as a credit bid goes sure maybe they could under the trustee i guess under state law you can't formally do a credit bid but they certainly could have used their three hundred thousand dollars as a bargaining point to refinance the property region present it's possible i mean finally to still comes into play because it says that one member five o two only counts to the amount of the claim not the status of the claim consuls ignore that part and if the amount of the claim subject on the other applicable law well the applicable law in this case is the anti deficiency statue and i don't know any court that would apply the bankruptcy statute to a state court proceeding under sternberg's of marshall  you're going to have to come back to state law eventually and state law says that once the property was removed from the estate all they had was an unsecured claim and if they really thought they had a secured claim why didn't they elect wanted to use their eleven eleven b election right away if they really thought the claim was secured at the date of the petition they could have filed an eleven eleven b election i mean we would have contested it but it would have been some indication on their part that they really thought this was a security claim  exactly and you agree with that i agree with that and the other problem is that the debtor didn't sell the property the bank sold the property we didn't sell the property so again if they didn't want to give turn the property over to the bank  credit right in three sixty three sale in a three sixty three sale i'm not sure and he'll just so the question the foreclosure sale deprived of that right i don't think well i'm a little unclear  state law on this according to council's papers the state court trustee would not have entertained their bid as a credit bid but then usually applies when you're trying to use your bid to apply it to the first mortgage but i think they could have used their credit their credit there if they would have come in and bid higher than the first mortgage they would have gotten credit for their three hundred thousand but i don't think under state law i'm sure counsel will tell me later whether they could have used that to reduce the first mortgage i don't think they could have earlier that they could've but the main point here is that by the time oh by the time we get to the plan confirmation we have an  it because they're entitled to a full claim but that doesn't apply when the property has been removed from the estate and we can't have a decision that says everything is fixed on the date of filing because then we have no ability in a chapter eleven to reorganize everything changes in the chapter eleven there is income changes expenses change properties change everything changes i don't have anything else and thank you thank you the rules actually provide that a stipulation are really from stays opposed to be granted only on full notice to creditors in this case they filed the stipulation in judgment entered it within two days there was no opportunity to object even if we did want to object i'm not sure that we would of because in our view eleven eleven be applied and as of the petition eight the trustee had a non recourse or i'm sorry it was entitled to have his claim allowed as a recourse claim there is no court as far as we could tell who has ever done a true analysis of is because it goes through your argument that the property of the state is a reference to the property that your argument that the claim has to be allowed is if that is if you argument the other alternative argument which also justifies reversal which is that congress specifically identified three sixty three sales and sales under the plan as the only exceptions to the recourse rule and our argument that them would be in the way that the debtor would debtors would have you actually write out the three sixty three exception i had argued to the bat that if you agree with the debtors interpretation you need to be able to explain please to the back how that the a debtor can sell property under c section three sixty three b at which point indisputably it is no longer a property of your state and yet eleven eleven be still applies even though the property is no longer property state in order to get to the exception that congress created the only way to read eleven eleven b in its entirety and to give effect to all of its words is to adopt the trustees interpretation the claim is to be determined al as a recourse claim on the petition date and less the debtor sells a property under three sixty three or sells the property pursuant to a plan or unless the creditor aleck's otherwise it is entitled to be a recourse claim the debtor had an