Plan Confirmation and Lien Extinguishment in Greater American Land ResourcesFebruary 2, 2012 – Articles ABI Journal
Secured creditors should be mindful of the disposition of property for which they hold a security interest because liens can be (and often are) extinguished under the terms of a chapter 11 plan. In In re Greater American Land Resources, Inc., the Bankruptcy Court was presented with the issue of whether a secured tax lien passed through the bankruptcy proceeding and survived a confirmed chapter 11 plan. The Court ultimately found that the tax lien at issue passed through the plan and was not extinguished. The decision is helpful for secured creditors to understand how lien rights can be protected and/or treated in the plan context and the potential dangers that can arise, depending on their level of involvement in any particular case. Conversely, it is instructive where debtors seek to address a security in anticipation of reorganization, and shows that the debtor must, among other things, clearly address the lienholders’ interest in the plan and include language which specifically deals with and extinguishes the lien.