JPMCC 2007-C1 Grasslawn Lodging, LLC v. Transwest Resort Properties Inc. (In Re Transwest Resort Properties, Inc.)

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN THE MATTER OF No. 16-16221

TRANSWEST RESORT

PROPERTIES, INC., D.C. Nos. Debtor, 4:12-cv-00024-RCC 4:12-cv-00121-RCC

JPMCC 2007-C1

GRASSLAWN LODGING, OPINION

LLC,

Appellant,

v.

TRANSWEST RESORT

PROPERTIES INCORPORATED;

SWVP LA PALOMA LLC;

SWVP HILTON HEAD LLC,

Appellees.

Appeal from the United States District Court for the District of Arizona Raner C. Collins, Chief District Judge, Presiding

Argued and Submitted October 25, 2017 San Francisco, California

Filed January 25, 2018 2 IN RE TRANSWEST RESORT PROPERTIES

Before: J. CLIFFORD WALLACE, MILAN D. SMITH, JR., and MICHELLE T. FRIEDLAND, Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.; Concurrence by Judge Friedland

SUMMARY *

Bankruptcy

The panel affirmed the district court’s affirmance of the bankruptcy court’s order approving a Chapter 11 “cramdown” reorganization plan of five related debtors.

The debtors had previously acquired two resorts. A lender, whose claim was undersecured, elected to have its entire claim treated as secured pursuant to 11 U.S.C. §…

Concurrence by Judge Friedland

OPINION

JPMCC 2007-C1 Grasslawn Lodging, LLC (Lender) objected to the Chapter 11 plan of five related entities (collectively, Debtors) who previously acquired two hotels. Despite these objections, the bankruptcy court approved a “cramdown” reorganization plan. The Lender appealed to the district court, but the district court concluded that the Lender’s appeal was equitably moot. In 2015, we reversed the district court’s equitable mootness determination, and remanded to the district court for consideration of the Lender’s appeal on the merits. See In re Transwest Resort Props., Inc., 801 F.3d 1161 (9th Cir. 2015) (Transwest I).

On remand, the district court evaluated the merits of the Lender’s appeal, and concluded that (1) an election under 11 U.S.C. § 1111 (b)(2) does not require that a Chapter 11 plan contain a due-on-sale clause; and (2) 11 U.S.C. § 1129 (a)(10) applies on a “per plan,” not a “per debtor,” basis. This appeal is limited to the construction of 11 U.S.C. § 1111 (b)(2) and 11 U.S.C. § 1129 (a)(10). 1 Based on the plain language of both statutory sections, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 2007, the Debtors acquired…

concurring:

I agree that 11 U.S.C. § 1111 (b)(2) does not require that a bankruptcy plan include complete due-on-sale protection for the creditor. And although I think the statutory language is somewhat ambiguous, I further agree that the better reading of 11 U.S.C. § 1129 (a)(10) is that it applies on a “per plan,” rather than “per debtor,” basis. I write separately, however, to acknowledge the argument advanced by JPMCC 2007-C1 Grasslawn Lodging, LLC (“Lender”) that it was unfairly deprived of the ability to object effectively to reorganization of the Mezzanine Debtors, despite being their only creditor. While Lender’s concern is not unfounded, I believe any unfairness resulted not from the interpretation of § 1129 that Lender challenged in this appeal, but instead from the fact that this particular reorganization treated the five Debtor entities as if they had been substantively consolidated—something Lender did not object to in the bankruptcy court.

Joint administration and substantive consolidation are both mechanisms to facilitate multi-debtor reorganizations. Joint administration is a tool of convenience; “[tjhere is no merging of assets and liabilities of the debtors,”…