Bankruptcy
In re Herring, 54 F.3d 328 (7th Cir. 1998)
Study notes for In re: Herring: professor notes, cold call prep, exam angles, and memory aids.
A single asset real estate debtor loses automatic stay protection if it fails to comply with Section 362(d)(3) requirements.
In re: Herring illustrates the strict compliance required by debtors under Section 362(d)(3) of the Bankruptcy Code. The case emphasizes that single asset real estate debtors must not only file a feasible reorganization plan but also commence payments within 90 days of filing for bankruptcy. The court's ruling reinforces the principle that failing to adhere to these timelines can significantly impact the automatic stay protections, as creditors may seek relief from the stay with less burden than would typically be required in bankruptcy cases.
Moreover, this case highlights the critical balance between the rights of creditors and the protections offered to debtors under the bankruptcy framework. The court's decision serves as a reminder to practitioners that diligent adherence to statutory requirements is paramount, particularly for single asset entities operating under the Bankruptcy Code. This case sets a precedent for the enforcement of timelines in Chapter 11 filings and underscores the importance of strategic planning in bankruptcy proceedings.
Stay in line, file on time, or lose your chance.
| Case | Distinction |
|---|---|
| In re: Circle K Corp. | In Circle K, the court found that the debtor had made sufficient progress towards a feasible plan, allowing for the continuation of the automatic stay. |
| In re: 610 A St., LLC | Unlike Herring, 610 A St. demonstrated compliance with payment and planning requirements, maintaining the automatic stay protections. |
Strict enforcement of deadlines encourages timely reorganization efforts and protects creditor interests.
Rigid adherence to deadlines may unfairly disadvantage genuine attempts at rehabilitation for financially distressed entities.
This case may appear on an exam in scenarios involving single asset real estate debtors, particularly focusing on the consequences of failing to comply with statutory obligations under the Bankruptcy Code. Students should be prepared to analyze implications for automatic stays and creditor rights.