REAL PROPERTY VALUATIONS IN CHAPTER 11 AND 13 BANKRUPTCY PROCEEDINGS
Real property valuations are used in Chapter 11 and Chapter 13 bankruptcy proceedings to determine if liens are unsecured or secured, and thus whether or not they can be removed. Valuations are also used to determine if the debtor (the filing party) falls within the debt eligibility limits—if a lien is fully unsecured, it will go toward the unsecured debt limitation, and if it is fully secured or partially secured, it will go toward the secured debt limitation limit.
Property values change constantly, making a critical question, when does the court value the property for the purposes stated above? Unfortunately, due to a lack of clarity in the bankruptcy code, the time for determining when a property is valued varies by Judge.
- In re Abdelgadir, 455 B.R. 896 (9th Cir. BAP 2011). The United States Bankruptcy Appellate Panel of the Ninth Circuit determined that the valuation date for a secured claim was the petition date.
- In re Crain, 243 B.R. 75 (Bankr. C.D. Cal. 1999). Judge Vincent P. Zurzolo of the Central District of California stated: “I conclude that the appropriate date of valuation for the Subject Property is the “effective date of the plan” or ten days after entry of the order confirming the plan, provided no timely appeal has been made.”
- Judge Neil W. Bason of the Central District of California has has issued a tentative ruling that the petition date is the appropriate date (not the current date/confirmation hearing date).
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