Riverbend Condominium Assoc. v. Green, No. 14-31117 (CA 5th Cir., 7/13/2015).
Jul 13, 2015OUTCOME: The Fifth Circuit found that the Bankruptcy Court was correct in permitting the bifurcation of the debt, permitting the debtor to pay only a portion of the debt owed.
Chapter 13 Debtor proposed a Plan where only a portion of unpaid condominium fees were to be paid, a process known as bifurcation or lien stripping, where a debt is divided between a secured/priority d ... ebt, and an unsecured debt. The Bankruptcy Court found that the debt was a "statutory lien" which could be bifurcated, allowing the Debtor to pay only a portion of the debt as a priority debt, the remainder of the debt to remain unpaid as an unsecured debt. Riverbend disagreed, maintaining that they had a "security interest" (contractual debt) which must all be paid as secured debt, and appealed to the District Court for the Eastern District of Louisiana. The District Court upheld the findings of the Bankruptcy Court. Riverbend appealed the decision to the United States Court of Appeals. The Fifth Circuit found that the Bankruptcy Court was correct in permitting the bifurcation of the debt, permitting the debtor to pay only a portion of the debt owed.
