In Re Southeast Company, Debtor. Florida Partners Corporation, Successor-In-Interest to I.R.E. Florida Income Partners, Ltd. v. Southeast Company

This is a bankruptcy appeal asking us to review an order approving a plan of reorganization. The Bankruptcy Appellate Panel affirmed. In re Southeast Co., 81 B.R. 587 (9th Cir. BAP 1987).

In 1977, the debtor’s predecessor in interest and the appellant creditor’s predecessor in interest entered into a mortgage that called for, in the event of default, an increased interest rate as well as an option to the creditor to accelerate the note’s maturity. There was a default and acceleration two years later, and the debtor’s Chapter 11 bankruptcy petition followed.

In this appeal, appellant Florida Partners Corporation contends that while the Bankruptcy Code provides a way for the debtor to “cure” the maturity acceleration and restore the original payment term without impairing appellant’s security, 11 U.S.C. § 1124 (2) (1982 & Supp. IV 1986), appellant nonetheless remains impaired unless it receives the higher post-default interest rate provided for in the mortgage note. We hold that the Bankruptcy Court did not err in denying the appellant post-default-rate interest, because the Bankruptcy Code authorizes approval of a reorganization plan that restores the relation of contracting…