Dist. Ct. could properly find that Bankruptcy Ct.’s approval of debtors’ Chapter 11 reorganization plan that provided for, among other things, debtors’ payment of $65,000 to creditor for its tax lien essentially knocked out creditor’s tax lien on debtors’ property, even though creditor was never served with process regarding debtors’ proposed reorganization plan. While creditor contended that plan of reorganization did not affect it’s lien, because it had not been served with process regarding said plan by time plan had been entered, record established that creditor was “party” with respect to said Bankruptcy Ct. proceedings, and thus was bound by terms of reorganization plan due to creditor’s concession that it was party, as well as due to actions taken by creditor’s counsel, which included negotiating and obtaining better terms under proposed plan and claiming rights under said plan. Ct. further noted confirmed plan knocked out any entitlement that creditor may once have had to obtain tax deed and foreclose on said lien.
Federal 7th Circuit Court
Civil Court
Bankruptcy