The facts of the case
The debtor, Sunnyslope Housing Limited Partnership (“Sunnyslope”), developed and operated an apartment complex intended to provide affordable housing. When Sunnyslope defaulted on the senior loan for the project, the Department of Housing and Urban Development honored its guarantee, acquired the senior loan from the original private lender, and resold it to First Southern National Bank. First Southern started the foreclosure process, which would have wiped out affordable housing restrictive covenants related to additional financing. The debtor then was put into bankruptcy, and it exercised the cramdown option of 11 U.S.C. § 1325(a)(5)(B) and elected to retain the property in exchange for a new payment plan that would require it to pay First Southern an amount equal to the present value of the secured claim at the time of bankruptcy.
Sunnyslope argued that the value of First Southern’s secured interest should be calculated with the affordable housing restrictions remaining in place. Continue reading “The US Sunnyslope–case: a slippery slope for creditors?”