Bank of America National Trust and Savings Association v. 203 North Lasalle Street Partnership (526 U.S. 434)
U.S. Supreme Court · decided May 3, 1999 · Supreme Court Database (Spaeth)
- Citation
- 526 U.S. 434 · 119 S. Ct. 1411
- Decided
- May 3, 1999
- Term
- October Term 1998
- Vote
- 8–1
- Majority author
- Justice Souter
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Souter delivered the opinion of the Court. The issue in this Chapter 11 reorganization case is whether a debtor’s prebankruptey equity holders may, over the objection of a senior class of impaired creditors, contribute new capital and receive ownership interests in the reorganized entity, when that opportunity is given exclusively to the old equity holders under a plan adopted without consideration of alternatives. We hold that old equity holders are disqualified from participating in such a “new value” transaction by the terms of 11 U. S. C. § 1129(b)(2)(B)(ii), which in such circumstances bars a junior interest holder’s receipt of any property on account of his prior interest. rH Petitioner, Bank of America National Trust and Savings Association (Bank), is the major creditor of respondent, 203 North LaSalle Street Partnership (Debtor or Partnership), an Illinois real estate limited partnership. The Bank lent the Debtor some $93 million, secured by a nonrecourse first mortgage on the Debtor’s principal asset, 15 floors of an office building in downtown Chicago. In January 1995, the Debtor defaulted, and the Bank began foreclosure in a state court. In March, the Debtor tion for relief under Chapter 11 of the Bankruptcy Code, 11 U. S. C. § 1101 et seq., which automatically stayed the foreclosure proceedings, see § 362(a). In re 208 N. LaSalle Street Partnership, 126 F.…
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