What Is A Single Asset Real Estate Debtor In Chapter 11 Bankruptcy?

Within the broad categories of Chapter 11 bankruptcy filers, there are certain filers who are subject to specific requirements under the U.S. Bankruptcy Code, or can be eligible for certain forms of relief that are not available to other types of debtors. One of those types of filers is known as a “single asset real estate debtor.” What is a single asset real estate debtor, and how do Chapter 11 bankruptcy filings change for this type of filer? Our West Palm Beach bankruptcy lawyers can provide you with more information.

Defining a Single Asset Real Estate Debtor 

The U.S. Bankruptcy Code defines a single asset real estate debtor as:

“[A] single property or project, other than residential real property with fewer than four residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental.”

There are various types of properties that may qualify a filer as a single asset real estate debtor, such as:

• Apartment complex;
• Office building;
• Warehouse; or
• Shopping mall.

It is important to understand what types of debtors are not considered to be single asset real estate debtors. The definition itself makes clear that family farmers are not single asset real estate debtors (family farmers can be eligible for certain forms of relief by filing for Chapter 12 bankruptcy). In addition, any property that has four or more residential units will not qualify as a single asset real estate debtor. Finally, if a debtor earns a portion of income from a source other than the real property, the debtor is not likely to be a single asset real estate debtor.

Specific Requirements for Single Asset Real Estate Debtors 

Single asset real estate debtors cannot qualify for Subchapter V bankruptcy, and they do not qualify as a small business for bankruptcy purposes. In addition, single asset real estate debtors should know that the automatic stay is limited and does not necessarily stay in effect throughout the Chapter 11 case.

When a single asset real estate debtor files for Chapter 11 bankruptcy, the creditor can more easily have the automatic stay lifted. As the U.S. Courts explain, “on request of a creditor with a claim secured by the single asset real estate and after notice and a hearing, the court will grant relief from the automatic stay to the creditor unless the debtor files a feasible plan of reorganization or veins making interest payments to the creditor within 90 days front eh date of the filing of the case, or within 30 days of the court’s determination that the case is a single asset real estate case.”

Seek Advice from a West Palm Beach Chapter 11 Bankruptcy Lawyer

 When you have questions or concerns about Chapter 11 bankruptcy and single asset real estate debtors, you should get in touch with one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller to seek advice and to move forward with your bankruptcy case.

Sources:

law.cornell.edu/uscode/text/11/101

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics