Document: 484 U.S. 365 108 S.Ct. 626 98 L.Ed.2d 740 UNITED SAVINGS ASSOCIATION OF TEXAS, Petitionerv.TIMBERS INWOOD FOREST ASSOCIATES, LTD. No. 86-1602. Argued Dec. 1, 1987. Decided Jan. 20, 1988. Syllabus When a bankruptcy petition is filed, § 362(a) of the Bankruptcy Code provides an automatic stay actions taken to realize value collateral given by debtor. Section 362(d) authorizes court grant relief from "(1) for cause, including lack adequate protection interest in property . [a] party interest," or "(2) with respect act against property," if debtor does not have equity such (i.e., creditor undersecured) and "not necessary effective reorganization." 361 that entity's may be provided granting "as will result realization entity indubitable equivalent its interest." After respondent filed reorganization under Chapter 11 Code, petitioner, undersecured creditor, moved Court on ground there was "adequate protection" within meaning 362(d)(1). The granted relief, conditioning continuance monthly payments estimated amount realizable foreclosure prevented. District affirmed, but Appeals reversed. Held: Undersecured creditors are entitled compensation 362(d)(1) delay caused foreclosing their collateral. Pp. 370-380. (a) language other provisions deal rights secured creditors, substantive dispositions those effect, establish "interest property" protected include party's right immediate foreclosure. First, petitioner's contrary interpretation contradicts carefully drawn disposition effected 506(b), which codifies pre-Code rule denying postpetition claims. Had Congress nevertheless meant give collateral, it would said so plainly 506(b). Moreover, 362(d)(1)'s phrase clarified use similar terminology 506(a), where must interpreted mean only creditor's security without regard his possession default. Second, 552(b), makes perfected rents profits condition having them applied satisfy claim ahead claims unsecured inconsistent 362(d)(1), who lacks effect could achieve same demanding "use value" Third, practical nullity 362(d)(2), theory fully both as of, on, nonetheless wanted foreclose. Petitioner's contention face inordinate extortionate they denied also belied requires unless establishes reasonable possibility successful time, numerous cases less than year filing petition. 370-376. (b) Denying petitioner 361(3)'s "indubitable equivalent." Although appears 1129(b), section, confirmation plan, claimant has receive present (including paid over time), source 1129 equivalent" provision guaranteeing value, date plan," equal Similarly, that, since general administrative expenses do priority claims, see §§ 506(c), 507(a), embodies principle prohibiting bearing any costs reorganization, merit. intended readoption work change readopted post-petition interest. Finally, although failure interpret require 726(a)(5), allows when proves solvent, this anomaly pertains rare occurrence likely product congressional inadvertence, and, case, inequitable effects entirely avoidable. 377-379. (c) General statements legislative history "[s]ecured should deprived benefit bargain" inadequate overcome plain textual indication 506 362(d)(2) Congress' intent, discussed above. It most improbable made major entitling specifically mentioning history. argument XI gave absolute foreclose, silence Code's withdrawal indicates intent provide during substitute, flawed. authorities far clear distinctive entitlement but, even assuming was, enacting current adopted approach Chapters X XII, did right. 379-382. 808 F.2d 363, affirmed. H. Miles Cohn, Houston, Tex., petitioner. Leonard Simon, Daphne Levey, Timothy J. Henderson, respondent. Justice SCALIA delivered opinion Court. 1 Petitioner United Savings Association Texas seeks review en banc decision States Fifth Circuit, holding debtor, undergoing bankruptcy, loan prevented possessing. In re Timbers Inwood Forest Associates, Ltd., 363 (1987). We certiorari, 481 1068, 107 2459, 95 868 (1987), resolve conflict Courts regarding application U.S.C. (1982 ed. Supp. IV). Compare Grundy Nat. Bank v. Tandem Mining Corp., 754 1436, 1440-1441 (CA4 1985); American Mariner Industries, Inc., 734 426, 432-435 (CA9 1984); Briggs Transp. Co., 780 1339, 1348-1351 (CA8 1985). 2 * On June 29, 1982, executed note principal $4,100,000. holder well created day apartment project owned Texas. included assignment project. March 4, 1985, voluntary 101 et seq. IV), Southern 3 18, enforcement liens triggered petition, 362(a), At hearing before Court, established owed $4,366,388.77, evidence presented somewhere between $2,650,000 $4,250,000. appreciating very slightly. therefore undisputed creditor. Respondent had agreed pay (covered after-acquired clause agreement), minus operating expenses. contended, however, additional compensation. April 19, conditioned respondent, at market rate 12% per annum, foreclosure, $4,250,000—commencing six months after reflect normal delays. Bear Creek Ministorage, 49 B.R. 454 (1985) (editorial revision earlier decision). held these payments. See id., 460. appealed cross-appealed affirmed Circuit 4 certiorari determine whether II 5 among things, central case 362(d), reads follows: 6 "On request notice hearing, shall subsection terminating, annulling, modifying, stay— 7 interest; 8 if— "(A) property; 9 "(B) 10 paragraph (1) foregoing further content relevant part "When required section 362 title property, by— 12 requiring trustee make cash payment periodic entity, extent results decrease 13 providing replacement lien 14 "(3) property." 15 common referred includes debt upon completion reorganization; adequately depreciating term stay. Thus, been declining entitled, decline, describes. crux dispute asserts, denies, (suspended stay) take defaulted security, apply debt. If embraced term, obviously reimbursed proceeds he 16 certainly summons up concepts "fee ownership," "life estate," "co-ownership," "security interest" more readily notion "right foreclosure." Nonetheless, viewed isolated context reasonably asserts. Statutory construction, holistic endeavor. A seem ambiguous isolation often remainder statutory scheme—because used elsewhere clear, see, e.g., Sorenson Secretary Treasury, 475 851, 860, 106 1600, 1606, 89 855 (1986), because one permissible meanings produces compatible rest law, Pilot Life Ins. Co. Dedeaux, 41, 54, 1549, 1556, 39 (1987); Weinberger Hynson, Westcott & Dunning, 412 609, 631-632, 93 2469, 2484, 37 207 (1973); Jarecki G.D. Searle 367 303, 307-308, 81 1579, 1582-83, 859 (1961). That here. series dealing creditors. provisions, persuade us 17 defines allowed conditions receiving 18 "(a) An estate estate's claim. 19 "(b) To greater claim, fees, costs, charges agreement arose." 20 means taking account latter were included, "value increase, proportions alter, continues—since rise passage time. No suggests intended. 506(a) "the collateral." H.R.Rep. 95-595, pp. 181, 356 (1977); S.Rep. 95-989, p. 68 (1978), Cong. Admin. News 1978, 5787, 5854, 6141, 6312. think 361(1) (2), same. 21 Even important our purposes 506's claims—just denies interest, added exceed 506(b) "[t]o claim." (Emphasis added.) Since permits out cushion," no cushion, falls disallowing 502(b)(2). thus surely set forth, obscured Instead intricate phraseology forth above, simply "on securing whichever lesser." regarded contradicting 22 avoid conclusion characterizing merely alternative method compensating oversecured imply available This duplicate implausible abstract, light historical principles law. 506(b)'s denial codified conscious allocation benefits losses "To allow worth thought creditors." Vanston Bondholders Protective Committee Green, 329 156, 164, 67 237, 240, 91 L.Ed. 162 (1946). considered unfair recover unencumbered assets recovered principal. 166, 241; Ticonic Sprague, 303 406, 412, 58 612, 615, 82 926 (1938). unlikely achieving purpose function rule, over-secured incomprehensible why want favor move inception process—thereby probably pushing into liquidation—but forbear seek reorganization. 23 structurally 552. 552(a) states prepetition reach acquired postpetition. 552(b) sets exception, allowing "proceeds, product, offspring, rents, profits" covered expressly "applicable nonbankruptcy law." See, Casbeer, 793 1442-1444 (CA5 1986); Johnson, 62 24, 28-30 Bkrtcy.App. Panel cf. Butner States, 440 48, 54-56, 99 914, 917-18, 59 136 (1979) (same former Act). satisfying Under interpretation, achieves 362. true gives despite compliance 552, creditors; compromise come "cushion" 24 nonsense 362(d)(2). theory, inability always "cause" (upon interest) is, paragraph, "lack But different standard "of course "if (A) [i.e., undersecured]; (B) By applying alleged "interest" earning power creates strange consequence entitles (and eligible 506(b)), (2) "is renders theoretical absurdity. fashion, (or being compensated depreciation) offers reason obstreperous thoroughly unharmed 25 belies lost Once movant burden issue "necessary 362(g). What showing conceivably needed it; essential prospect. means, many lower courts, properly said, "a time." F.2d, 370-371, nn. 12-13, cited therein. petition.1 And while courts demand detailed showings four exclusive put together 1121(b), (c)(2), period realistic prospect relief.2 III A. 26 contends sections just discussed. principally relies 361(3), 1129(b)(2)(A)(iii). context, standards confirming developed well-settled connoting security—thus 1129(b) plan arises, 1129(b)(2)(A)(iii), 1129(b)(2)(A)(i)(II) guarantees "deferred least [secured claimant's] formulation, though (properly) solely rendered assure him plan. contrast, pending need obvious (since entitle collateral) "realization" "result" once, then assured "realization point differently: similarity outcome 361(3) demanded read "such 27 Nor merit suggestion connotes reimbursement derived Murel Holding 75 941 (CA2 1935), bore meaning. involved proposed years, full due end term; provision, amortization maintenance collateral's term. rejecting words equivalence" specific reference (which assured), jeopardized loan: 28 "Interest indeed measure difference [between now years hence], fears safety scarcely that; wishes get money property. suppose statute deprive junior holders, substitute equivalence." Id., 942. 29 Of Murel, like 1129, premise value. can inferred requirement exists time reorganized supposed stand own two feet. process temporary protections operation 30 bear derives 507(a). follow particular rule. kind cost hardly none them. continues law supra, 737; infra, 381. understood readopted. 31 create inconsistency (admittedly rare) solvent. occurs, 726(a)(5) absurd portion creditors' disingenuous deny apparent anomaly, occur rarely inadvertence blatant inconsistencies produce. Its effects, moreover, avoidable, "surrender waive prove entire one." Chase Bank, 331 28, 34, 1041, 1044, 1320 (1947). solvent terms rather which, involves hardship. B 32 supported relying almost bargain." 339; 53, 5839, 6295. Such generalizations wish all relevant, tends subvert support thesis, contains hint existing rules text statute, Kelly Robinson, 479 36, 47, 353, 359-360, 216 (1986); mention 33 another based what contain. permitting foreclose; withdrawn history, wit, 34 As itself concedes, Brief XII case; foreclose rehabilitation Yale Express System, 384 990, 991-992 1967) (Chapter X); Nevada Towers Collier Bankr. Cas. (MB) 146, 151-156 (Bkrtcy.Ct.SDNY 1977) XII); Consolidated Motor Inns, 31-32 (Bkrtcy.Ct.ND Ga.1975) (same). correct XI, faced choice adopting asserted "replaces chapters X, Act" "single chapter business reorganizations." 9; 223-224, 5795, 6182, 6183. XII. event, concerned, alteration 35 weakened fact leading commentator concluded court's broad distinctions Chapters." Countryman, Real Estate Liens Business Rehabilitation Cases, 50 Am.Bankr.L.J. 315 (1976). cites dicta some suggesting automatically stay, uniformly found addition sufficiently unduly delayed. Bric America, 39-40 (Bkrtcy.Ct.MD Fla.1975); O.K. Motels, 416, 419-420 Fla.1974). reasoning cases. Coolspring Estates, 55, 60-61 Ind.1977); Royal Scot, Bankr.Ct. (CRR) 374, 376-377 (Bkrtcy.Ct.WD Mich.1976); Mesker Steel, 235, 236-237 (Bkrtcy.Ct.SD Ind.1974). best divided authority removes cause wonder departure commented 36 correctly never sought protection. Accordingly, judgment Affirmed. Findley, 76 547, 555 (Bkrtcy.Ct.N.D.Miss.1987) (61/2 months); Efcor, 74 837, 843-845 (Bkrtcy.Ct.M.D.Pa.1987) (41/2 Belton 71 811, 818 Iowa 1987) (1 year); Louden, 69 723, 725-726 (Bkrtcy.Ct.ED Mo.1987) (10 Playa Development 549, 556 Tex.1986) (71/2 Cablehouse, 309, 313 Ohio 1986) (111/2 Pacific Tuna 48 74, 78 Tex.1985) (9 Development, 998, 1005-1006 (Bkrtcy.Ct.Haw.1984) (6 Boca 624, 630 1982) Sundale 978, 980-981 Fla.1981) (5 Clark Technical 738, 740-741 (Bkrtcy.Ct.Conn.1981) months). Anderson Oaks (Phase I) Limited Partnership, 77 108, 109, 110-113 Tex.1987) ("immediately filings"); New Food Concepts, 70 254, 262 (3 6200 Ridge, 843-844 Pa.1987) Park Timbers, 647, 651 (Bkrtcy.Ct.Del.1985) (2 Bellina's Restaurants II, 52 509, 512 Fla.1985) month); Anchorage Boat Sales, 635, 641 (Bkrtcy.Ct. EDNY 1980) (4 Terra Mar 462, 466 (Bkrtcy.Ct.Conn.1980)

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