October 6, 2014
Authored by: Amanda Cartwright and Bob Miller
In Ryerson, the court held that a debtor’s burden of showing a successful reorganization changes depending on the timing in the case. The court found that early in the case, a debtor must show that reorganization is “plausible,” near the expiration of the exclusivity period a debtor must show that reorganization is “probable,” and, after expiration of the exclusivity period, the debtor must show reorganization is “assured.”
I. Short Factual Background.
In 2003, the debtor, a real estate developer, used funds from a line of a credit to purchase acres of contiguous lakefront land on Lake Coeur d’Alene in Idaho. The debtor’s obligations under the line of credit were restated and evidenced by three promissory notes secured by liens on the property. In 2013, the debtor defaulted on his obligations and filed for chapter 11 relief less than two weeks prior to the scheduled foreclosure sale for the property. Twenty-six