The Single Asset Real Estate Debtor

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), considerably modified treatments of Single Asset Real Estate cases under Chapter 11.  Prior to this amendment, Single Asset Real Estate cases were limited to debtors with less than $4 million in secured debts.  The BAPCPA eliminates this limit and widened the Single Asset Real Estate definition to a huge amount of real estate cases.  According to 11 U.S.C. §101 (51B), the term Single Asset Real Estate means a single real property or project, other than residential real property with less than four residential units, which produces significantly all of the gross income of a debtor who is not a family farmer and on which no significant business is being conducted by a debtor other than the business of operating the real property and activities incidental.

The definition changes the designation of the of Single Asset Real Estate meaning in a Chapter 11 case.  The Single Asset Real Estate debtor must file a plan of reorganization within (1) 90 days immediately after the order for relief or (2) 30 days after the date if the court finds that the debtor complies with the Single Asset Real Estate provisions or must start off doing monthly payments on the secured creditor for the loan’s non-default rate of interest.  If the Single Asset Real Estate debtor fails to comply with these conditions, the bankruptcy court may grant a foreclosure or withdrawal of automatic stay over the real property.  The bankruptcy court interpreted the meaning of a single property or project that the debtor holds or owns a single piece of real property.  Therefore, multiple properties are not treated as a single project and the debtor cannot be considered as a Single Asset Real Estate debtor.  However, multiple real estate holdings within a single project may be treated under the designation of a Single Asset Real Estate.

The bankruptcy code provisions enable the Single Asset Real Estate debtor to avail the relief of an automatic stay in certain situations.  The bankruptcy provisions provide that all foreclosure and collection activity of the creditors are temporarily curtailed when the debtor files a bankruptcy.  The automatic stay provides the Single Asset Real Estate debtor to develop some cash flow or rental income out of the real property.   However, the automatic stay has limited period, i.e., 90 days in a Single Asset Real Estate case.  At the end of the 90 day period, the Single Asset Real Estate debtor must provide a plan of reorganization or start the monthly payments to the creditors.


Inside The Single Asset Real Estate Debtor