Second Circuit Rules That Lien Is Extinguished Under Chapter 11 Only if Secured Creditor Participates in Case

A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected. This longstanding tenet, however, is at odds with section 1141(c) of the Bankruptcy Code, which provides that, under certain circumstances, "the property dealt with by [a Chapter 11] plan is free and clear of all claims and interests of creditors," except as otherwise provided in the plan or the order confirming the plan.

39 minute read November 30, 2015 at 11:00 PM
By
Dan B. Prieto And Mark G. Douglas
Second Circuit Rules That Lien Is Extinguished Under Chapter 11 Only if Secured Creditor Participates in Case

A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected.

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