Your Blanket (Lien) May Have Holes: Proposed Amendments May Further Erode Secured Lenders' Rights

February 2, 2015

Client Alert
This is the fourth installment of Chapman’s discussion of the proposals contained in the American Bankruptcy Institute’s Final Report and Recommendations to amend the Bankruptcy Code. As discussed in the previous three installments, many of the proposals contained in the Report will have significant and negative implications for secured creditors. This section establishes the extent and continuation of a creditor’s prepetition security interests in a borrower’s property following the commencement of a bankruptcy proceeding. The Report’s proposed amendments to Section 552 would codify a number of recent bankruptcy court decisions that have significantly damaged secured creditors’ rights by limiting the reach of their prepetition liens on debtors’ postpetition assets, thereby drastically reducing secured lenders’ recoveries. 

To view the previous three alerts in this series, click on the links below:

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