Associates Commercial Corporation v. Elray Rash et Ux. (520 U.S. 953)
U.S. Supreme Court · decided June 16, 1997 · Supreme Court Database (Spaeth)
- Citation
- 520 U.S. 953 · 117 S. Ct. 1879
- Decided
- June 16, 1997
- Term
- October Term 1996
- Vote
- 8–1
- Majority author
- Justice Ginsburg
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Ginsburg delivered the opinion of the Court. We resolve in this case a dispute concerning the proper application of § 506(a) of the Bankruptcy Code when a bankrupt debtor has exercised the “cram down” option for which Code § 1325(a)(5)(B) provides. Specifically, when a debtor, over a secured creditor’s objection, seeks to retain and use the creditor’s collateral in a Chapter 13 plan, is the value of the collateral to be determined by (1) what the secured creditor could obtain through foreclosure sale of the property (the “foreclosure-value” standard); (2) what the debtor would have to pay for comparable property (the “replacement-value” standard); or (3) the midpoint between these two measurements? We hold that § 506(a) directs application of the replacement-value standard. I In 1989, respondent Elray Rash purchased for $73,700 a Kenworth tractor truck for use in his freight-hauling business. Rash made a downpayment on the truck, agreed to pay the seller the remainder in 60 monthly installments, and pledged the truck as collateral on the unpaid balance. The seller assigned the loan, and its lien on the truck, to petitioner Associates Commercial Corporation (ACC). In March 1992, Elray and Jean Rash filed a joint petition and a repayment plan under Chapter 13 of the Bankruptcy Code (Code), 11 U. S. C. §§1301-1330. At the time of the bankruptcy filing, the balance owed…
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