Opinion ID: 1658367
Heading Depth: 1
Heading Rank: 2

Heading: Effect of the Bankruptcy Proceedings.

Text: The assignee defendants also contended, and the trial court held, that when the bankruptcy court by its orders and approved plan of reorganization excised the plaintiffs' right to obtain a deficiency judgment against the Currys, any rights the plaintiffs had against the assignee defendants were likewise cut off. The circumstances of this case, however, do not support that conclusion. First, by the terms of the bankruptcy court's orders the plaintiffs reserved their rights to enforce the assignments against the assignee defendants as third parties, and the only rights plaintiffs waived were claims against [Currys] for any deficiency arising from plaintiffs' proposed forfeiture of the real estate contract, the prerequisite for lifting the stay of the foreclosure proceedings. There is no merit to the defendants' contention that the assignee defendants were junior lienholders with interests that the bankruptcy court intended to protect. Lienholders are, by definition, persons who hold a charge upon property for the payment of a specific obligation. Federal Land Bank of Omaha v. Boese, 373 N.W.2d 118, 120 (Iowa 1985). Nothing in this record suggests that the assignee defendants held such a charge upon the property, or purchased their individual one-sixth interests in the farm for security purposes. Confirmed reorganization plans do bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in, the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan. 11 U.S.C. § 1141(a) (Supp. III 1982). An equity security holder is defined as a holder of an equity security of the debtor. See 11 U.S.C. § 101(16) (1982); the term equity security means (A) share in a corporation, whether or not transferable or denominated stock, or similar security; (B) interest of a limited partner in a limited partnership; or (C) warrant or right, other than a right to convert, to purchase, sell, or subscribe to a share, security or interest of a kind specified in subparagraph (A) or (B) of this paragraph.... 11 U.S.C. § 101(15) (1982). The assignee defendants' interest in the farm, arising from the joint venture contract and the Currys' assignment, was not that type of equity security nor an interest which the Curry reorganization plan was designed to protect. The trial court's contrary determination cannot be squared with the specific language of the bankruptcy court's orders which allowed the plaintiffs to proceed against the assignee defendants in the state court foreclosure proceedings. We conclude that the bankruptcy court proceedings were not designed or concluded with the intent of affecting adversely the plaintiffs' rights against the assignee defendants.