Document: 520 U.S. 953117 S.Ct. 1879138 L.Ed.2d 148 ASSOCIATES COMMERCIAL CORPORATION, Petitioner,v.Elray RASH et ux. No. 96-454. Supreme Court of the United States Argued April 16, 1997. Decided June Syllabus * Petitioner Associates Commercial Corporation (ACC) holds a loan and lien on tractor truck purchased by respondent Elray Rash for use in his freight-hauling business. Jean Rash, also respondent, filed joint petition repayment plan under Chapter 13 Bankruptcy Code (Code), listing ACC as secured creditor. Under Code, ACC's claim $41,171 balance owed was only to extent value collateral; its over above that unsecured. See 11 U.S.C. §506(a). The Rashes could gain confirmation their if accepted it, surrendered ACC, or invoked so-called "cram down'' provision. §1325(a)(5). cram down option allows debtor keep collateral objection creditor; creditor retains securing claim, see §1325(a)(5)(B)(i), is required provide with payments, life plan, will total present collateral, §1325(a)(5)(B)(ii). allowed governed §506(a) Code. power, proposing objected sought repossess truck, disputed had assigned truck. At an evidentiary hearing held resolve dispute, maintained proper valuation price would have pay purchase like vehicle (the replacement-value standard), estimated be $41,000. Rashes, however, net amount realize upon foreclosure sale foreclosure-value $31,875. adopted Rashes' figure approved plan. District Fifth Circuit affirmed. Held: §506(a), property retained because has exercised 13's cost incur obtain asset same proposed use. Pp. ____-____. (a) words "the creditor's interest estate's such property'' contained first sentence do not call standard Circuit. Even read isolation, phrase imparts no standard. sentence, whole, instructs divided into unsecured portions. tells court what it must evaluate, but enlightening how collateral. Section 506(a)'s second speaks question, providing " [s]uch shall determined light purpose disposition property.'' By deriving from §506(a)'s rendered inconsequential expressly addresses "value determined.'' "proposed use'' paramount importance question. Such "disposition turns which alternative chooses when refuses accept debtor's plan-in one case creditor, other, used debtor. Applying attributes significance different consequences choice. A standard, other hand, distinguishes retention surrender renders meaningful key statutory use.'' Surrender are equivalent acts. When surrenders property, obtains immediately, free sell reinvest proceeds. If keeps continues at once neither nor value, exposed double risks against affords incomplete protection: may again default deteriorate extended Of prime significance, accurately gauges "use'' property. this elected generate income stream. That actual use, rather than take place, guide prescription hinged property's (b) considered disrespectful Texas law, permits thereby obtaining foreclosure. In allowing debtors retain creditors, reshaped rights marked departure state law. It more disrupts law make authorize rearrangement power entails. There warrant uses midpoint between replacement values. 90 F.3d 1036, reversed remanded. GINSBURG, J., delivered opinion Court, REHNQUIST, C.J., O'CONNOR, KENNEDY, SOUTER, THOMAS, BREYER, JJ., joined, all n. 4 SCALIA, joined. STEVENS, dissenting opinion. Ben L. Aderholt, Raymond J. Blackwood, Chamberlain, Hrdlicka, White, Williams & Martin, Houston, TX, Carter G. Phillips, Shalom Kohn, David M. Schiffman, Jeffrey C. Steen, Sidley Austin, Washington, DC, petitioner. Kent Jones, amicus curiae special leave Court. John Durkay, Beaumont, respondents. Justice GINSBURG Court.* 1 We dispute concerning application bankrupt §1325(a)(5)(B) provides. Specifically, debtor, objection, seeks (1) through "foreclosure-value'' standard); (2) comparable "replacement-value'' (3) these two measurements? hold directs 2 DP1SIn 1989, $73,700 Kenworth made downpayment agreed seller remainder 60 monthly installments, pledged unpaid balance. loan, petitioner (ACC). 3 March 1992, §§1301-1330. time bankruptcy filing, $41,171. Because valid listed holding claim. To qualify 13, satisfy requirements set forth §1325(a) treatment particular, subsection (a)(5).1 provision, plan's claims can confirmed three conditions satisfied: accepts §1325(a)(5)(A); §1325(a)(5)(C); invokes §1325(a)(5)(B). option, permitted i.e, 5 power. business 58 months, equal alleged, $28,500. asked lift automatic stay so proof alleging fully 6 truck's value. hearing, urged benchmarks. vehicle, expert fixed $31,875; sum, found, right re 149 B.R. 430, 431-432 (Bkrtcy.Ct.E.D.Tex.1993). thereafter Eastern 7 panel Appeals reversed. 31 325 (1994). On rehearing en banc, affirmed limited $31,875, 1036 (1996). 8 reaching decision, highlighted, first, conflict perceived method advanced, defining creditors. id., 1041-1042 (citing Tex. Bus. Com.Code Ann. §§9.504(a), (c), 9.505 (1991)). Circuit's view, valuing federal proceeding standard-thereby setting generally higher pursuing state-law remedy-would "chang[e] obtained prior filing.'' F.3d, 1041. said, should resisted forum unless "clearly compel[led]'' Id., 1042. 9 then provision governing security interests, does compel approach. Instead, reasoned, requires valued perspective. 1044. And nature interest, giving nothing more[,] . start exercising right.'' Ibid. This consistent relevant provisions economic analysis, legislative history pertinent provisions. 1045-1059. Judge Smith, joined five judges, dissented, urging dictates 1061-1075. 10 Courts standards objection. contrast number Circuits followed See, e.g., Taffi, 96 1190, 1191-1192 (C.A.9 1996) (en banc), cert. pending sub nom. Taffi v. States, 96-881;2 Winthrop Old Farm Nurseries, Inc., 50 72, 74-75 (C.A.1 1995); Trimble, 530, 531-532 (C.A.8 1995). Other courts settled Hoskins, 102 311, 316 (C.A.7 1996); cf. Valenti, 105 55, 62 (C.A.2 1997) (bankruptcy discretion value). granted certiorari among Appeals, 519 ----, 117 758, 136 694 (1996), we now reverse judgment. II central resolution states: 12 "An estate less '' Over proposed, pursuant §1325(a)(5)(B), continued i.e., trade case, hold, (and thus §506(a)) willing buyer trade, business, situation seller. 14 Rejecting selecting instead typically lower trained attention relied words: "to 1044 (emphasis added). instruct "starting point [is] sold according agreement,'' namely, "repossess[ing] sell[ing] collateral.'' 15 find words-"the property''-the meaning advanced standard: direction simply consider interest'' reveal valued. 16 Reading satisfied instruction equate "creditor's sale. entirety, us portions, portion Ron Pair Enterprises, 489 235, 238-239, 109 1026, 1029, 103 290 (1989); King, Collier ¶506.02[1][a], p. 506-6 (15th ed. rev.1996). separate compare "such property,'' comparison sometimes complicated. own part ascertain "estate's Or, junior subordinate lien, require referring recognizes encounter, instances partial interests full short, say more; 17 speak "Such value,'' provides, "shall 18 As comprehend options handling claims: or, chooses-in choice it. 19 Tying points away invoking averted From perspective well debtor's, 20 recall here very advantage. supra, __. risks: Adjustments rate demands "adequate protection,'' §361, offset risks. 1066 (Smith, dissenting) ("vast majority reorganizations fail leaving creditors fraction compensation due them''; where, here, "collateral depreciates rapidly, receive far failed reorganization prompt foreclosure'') (internal cross-reference omitted); accord 1192-1193.3 21 values [repayment plan] reality: benefit derived [replacement] value.'' 75. ibid.4 22 "and more.'' Uniform §§9-504, 9-505, 3B U.L.A. 127, 352 (1992). Code's displaces immediate default. change, ordered attended look determining 23 Nor persuaded split-the-difference approach Seventh provides appropriate solution. 316. Whatever attractiveness picks values, there Code.5 506(a) calls possesses fact "proposed,'' various dispositions might been proposed. Cf. BFP Resolution Trust Corporation, 511 531, 540, 114 1757, 1762, 128 556 (1994) (court-made rule defining, purposes fraudulent transfer "reasonably value'' mean 70% fair market "represent[s][a] policy determinatio[n] gives apparent authority make''). rested "economics situation,'' 316, after concluding statute suggests particular method. agree "a simple needed'' serve predictability uniformity. 314. conclude, supplies complex "make valuations, split difference'' formulation. 24 use.''6 25 *** 26 For foregoing reasons, judgment reversed, remanded further proceedings 27 ordered. 28 dissenting. 29 Although entirely clear, I think text case. determine language perspective, worth, open market, hands, hands another party. 30 explains context, "purpose valuation'' Commonly known section authorizes objections reorganization, but, he elects so, "value'' "purpose'' hence put shoes were able exercise foreclose.* crucial mind applies throughout chapters code; is, words, "utility'' operates many contexts. did render them surplusage they operational applications. best comports reality. Allowing any grants general windfall undersecured expense 320 (Easterbrook, concurring judgment). Easterbrook explained rejecting rule, 318-320, larger scheme keeping respective recoveries chapters. 32 Accordingly, respectfully dissent. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Timber Lumber Co., 200 321, 337, 282, 287, L.Ed. 499. SCALIA joins footnote 1325(a)(5) Except provided (b), confirm if- ..... (5) respect each plan- (A) holder plan; (B)(i) claim; (ii) effective date distributed account (C) holder.'' Ninth contrasted fair-market latter apparently viewing incompatible. 1192. using term "replacement suggest entitled recover brand new. Rather, our understanding value; age condition. infra 1886-1887, 6. matter, amici supporting contended: ""Adequate protection' payments §§361, 362(d)(1) based assumption subject ordinary depreciation. Hence, even made, frequently compensate adequately usually rapid depreciation assets debtor.'' Brief American Automobile Manufacturers Association, al. Amici Curiae 21, 9. give weight noting unedifying, offering snippets support either valuation. Senate Report repeated S.Rep. 95-989, 95th Cong. 2nd Sess. 68 (1978) U.S.Code Admin.News 1978, pp. 5787, 5854. House Report, rejected cost'' 1056 (C.A.5 (quoting H. Rep. 95-595, 124 (1977) 5963, 6085). appears buying new replace interest. 124. event, excerpts enlightening, pivotal here-the §506(a)-did appear bill addressed Report. originated version bill, H.R. 8200, Cong., 1st Sess., (1977), S. 2266, included final House-Senate conference, Rec. 33997 (1978). reading makes plain, reject ruleless facts circumstances individual cases. 62-63 (permissible case-by-case). Our recognition governs cases leaves courts, triers fact, identification way ascertaining basis evidence presented. Whether retail wholesale some depend type note, include certain items. example, where measure adjustment necessary: portions price, any, reflect items warranties, inventory storage, reconditioning. 1051-1052. modifications property-e.g., addition accessories vehicle-to extend states "surrender acts'' risk deterioration. Ante, ----. disagree. irrelevant because, §1325(a)(5)(B)(ii) directs, receives Present includes both underlying time-value component similarly vitiates concern. Higher money premium opportunity cost. instance, receiving nine percent 1039 prevailing essentially risk-free Treasury Bond. Finally, concern deterioration demand including increased derogation during down.

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