In re: B.R. Brookfield Commons, No. 1 LLC

Federal 7th Circuit Court
Civil Court
Case Number: 
No. 13-2241
Decision Date: 
November 4, 2013
Federal District: 
E.D. Wisc.
In instant Chapter 11 bankruptcy proceeding, Dist. Ct. did not err in finding that creditor’s second mortgage that was secured by lien on debtor’s shopping center was valid claim, even though said mortgage was non-recourse loan, and there was no equity in shopping center available to creditor at time of bankruptcy filing. While debtor argued that said mortgage should have been disallowed as claim against estate under these circumstances, 11 USC section 1111(b)(1)(A) provides that instant second mortgage should be treated as if creditor had recourse against debtor since only precondition to statute’s application was that creditor have claim secured by lien on property of estate. Thus, creditor’s second mortgage should be treated as unsecured deficiency claim against estate.