Castleton Plaza, LP v. EL-SNPR Notes Holdings, LLC

2 1 NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1 United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 Submitted  June  17,  2014∗          Decided  June  23,  2014       Before                   JOEL  M.  FLAUM,  Circuit  Judge                   FRANK  H.  EASTERBROOK,  Circuit  Judge                   ILANA  DIAMOND  ROVNER,  Circuit  Judge       Appeal  from  the  United   No.  14-­‐‑1735   States  Bankruptcy  Court  for   IN  THE  MATTER  OF:   the  Southern  District  of   Indiana,  Indianapolis     CASTLETON  PLAZA,  LP,   Division.       Debtor-­‐‑Appellant.         No.  11-­‐‑01444-­‐‑BHL-­‐‑11   Basil  H.  Lorch  III,  Judge.     Order       Our  first  decision  in  this  case  held  that  “[a]n  impaired  lender  who  objects  to  any   plan  that  leaves  insiders  holding  equity  is  entitled  to  the  benefit  of  competition.”  In  re   Castleton  Plaza,  LP,  707  F.3d  821,  824  (7th  Cir.  2013).  We  remanded  with  the  expectation   ∗  This  successive  appeal  has  been  submitted  to  the  original  panel  under  Operating  Procedure  6(b).  After   examining  the  briefs  and  the  record,  we  have  concluded  that  oral  argument  is  unnecessary.  See  Fed.  R.   App.  P.  34(a);  Cir.  R.  34(f).   No.  14-­‐‑1735     Page  2   that  Castleton  Plaza  (the  debtor)  would  propose  a  plan  that  either  eliminated  the   insiders’  equity  interest  or  allowed  competition.       Castleton  proposed  new  plans,  but  all  of  them  retained  an  equity  stake  for  insiders   and  omitted  any  opportunity  for  competition.  The  bankruptcy  judge  disallowed  all  of   these  plans,  ruling  that  they  failed  to  comply  with  this  court’s  mandate.  Given  one  final   opportunity  to  propose  a  plan  that  either  removed  the  insiders’  interest  or  allowed   competition,  Castleton  refused.  The  bankruptcy  court  dismissed  the  proceeding,  and   the  debtor  has  appealed.       It  contends  that  competition  is  unnecessary  because  EL-­‐‑SNPR,  the  secured  lender,   will  be  paid  in  full  and  is  not  “impaired”.  The  problem  with  that  argument  was  noted  in   our  first  opinion.  All  of  Castleton’s  proposed  plans  materially  change  the  terms  of  the   loan,  deferring  payment  for  as  long  as  30  years  (so  that  if  the  real  estate  market  declines   during  that  time  the  lender  will  not  be  paid),  reduce  the  rate  of  interest,  and  eliminate   several  security  features  of  the  transaction.  That  is  not  a  promise  of  full  repayment.  EL-­‐‑ SNPR  is  impaired  under  the  proposed  plans.       The  bankruptcy  court  properly  implemented  this  court’s  decision.  The  bankruptcy   is  over,  and  the  lender  can  foreclose  in  the  ordinary  course.  If,  as  debtor  maintains,  the   collateral  is  worth  more  than  the  loan,  then  it  can  find  another  source  of  capital  and   outbid  EL-­‐‑SNPR  at  the  auction.     AFFIRMED