Disclaimer:  It is important to realize that changes may occur in this area of law. This information is not intended to be legal advice regarding your particular problem, and it is not intended to replace the work of an attorney you hire to assist you.

On February 28, 2019, Senate Bill 608 (“SB 608”) was signed into law. The law is effective as of February 28, 2019 due to an emergency clause. SB 608 creates two major changes to Oregon Residential Landlord Tenant Act by limiting the scope of termination notices without stated cause (End of Tenancy Notices) and the implementation of rent control. SB 608 does not affect landlords’ rights to issue other termination notices. Those changes are discussed below:

Does SB 608 apply to my tenancy?
The provisions of SB 608 apply:
1. To any fixed-term tenancy entered into or renewed after February 27, 2019;
2. To the termination of any month-to-month tenancy that occurs after March 30, 2019; and
3. To all rent increase notices.

How does a landlord send a termination notice to a tenant?
SB 608 did not change how termination notices are issued. Any termination notice must be in writing
(paper, not email or text) and can be served by personal hand-to-hand delivery or first-class mail (add three additional days to any notice period if using first class mail). Some rental agreements allow the use of “post and mail,” but only if certain necessary information is contained within the rental agreement and other conditions exist.

Can a landlord terminate a month-to-month tenancy under SB 608?
In most jurisdictions, a landlord can issue a written 30-day “no cause” eviction to month-to-month tenants during the first year of occupancy. In other jurisdictions, including Portland and Milwaukie, 90 days are required instead of 30. “First year of occupancy” means the first year of any tenant’s residency at a rental property with a month-to-month rental agreement. After the first year of occupancy, a landlord with month-to-month tenants can issue a 90-day termination notice if the landlord has a “qualifying landlord reason.” (See below for a discussion of qualifying landlord reasons.)

If a landlord has a qualifying landlord reason justifying a 90-day termination notice, the landlord must:
1. Issue a termination notice that states the reason for the termination and supporting facts allowing
termination;
2. State the rental agreement will terminate on a specified date at least 90 days later; and
3. Pay the tenant one month’s rent when the written termination notice is issued UNLESS the
landlord has an ownership interest in four or fewer residential dwelling units anywhere (not just
Oregon). Ownership interest includes being sole owner of a premises, a co-owner of a premises, or
an owner of an LLC that owns real property.  A landlord can also issue a “no cause” termination notice after the first year of occupancy if the landlord’s primary residence is in the same building or on the same premises as the tenant, and the building or premises only has one or two dwelling units. This could occur if a tenant lives in an Accessory Dwelling Unit on the premises. In most jurisdictions this is a 60-day notice; in others, including Portland, Bend and Milwaukie, a 90-day notice is required.

The timeline can be different when a property sale is involved, if:
1. The landlord has accepted an offer to sell a dwelling unit separately from any other unit;
2. The buyer is a person who intends in good faith to occupy the unit as the buyer’s primary
residence; and
3. Within 120 days after accepting the purchase offer, the landlord provides the tenant with written
notice of termination with a specific termination date and written evidence of the offer to purchase
the dwelling unit.  The time period for this type of notice is 30 days in most jurisdictions; it is 90 days in Milwaukie or Portland.

Finally, a landlord can issue a written “for cause” termination notice at any time during the tenancy.
Reasons for terminating a tenancy “for cause” include, but are not limited to: material breach of the rental agreement (ORS 90.392), failure to pay rent (ORS 90.394) and outrageous conduct by a tenant (ORS 90.396). Each of these “for cause” terminations has its own notice requirements.

Can a landlord terminate a fixed-term tenancy under SB 608?
A landlord can issue a written “for cause” termination notice at any time during this type of tenancy for the same reasons as a month to month tenancy, including pursuant to the statutory provisions mentioned in the last paragraph above.
For a fixed-term tenancy with an expiration date within the first year of occupancy, the landlord may
terminate the tenancy at its expiration without cause. In most jurisdictions, the landlord must give the
tenant a 30-day written notice. That means 30 days prior to the ending date of the fixed term, or 30 days
prior to the date designated in the notice for the termination of the tenancy, whichever is later. Once again, the notice period is 90 days in certain jurisdictions, including Portland and Milwaukie.

For a fixed-term tenancy with an expiration date after the first year of occupancy, the fixed-term tenancy
automatically becomes a month-to-month tenancy at its expiration unless:
1. The landlord and tenant agree to a new fixed-term tenancy;
2. The tenant gives 30-day written notice of termination; or
3. The landlord has a “qualifying landlord reason” to issue a 90-day termination notice.

A landlord may terminate a fixed-term tenancy at its expiration without cause by giving the tenant notice
not less than 30 days prior to the expiration date for the fixed terms, or 30 days prior to the date designated in the notice for the termination of the tenancy, whichever is later (90 days in Portland or Milwaukie), if the following are true:
1. The landlord resides in the same building or on the same premises as the tenant; and
2. The building or the property has one or two dwelling units.

There is also a “Three Strikes Rule” for fixed-term tenancies. A landlord can prevent the tenancy from
automatically becoming a month-to-month tenancy when it expires if:
1. The tenant has committed three or more violations of the rental agreement within the preceding
12-month period; and
2. The landlord has given the tenant a written warning notice at the time of each violation; and
3. The landlord issues written notice at least 90 days before the end date for the fixed term or 90 days
before the termination date in the notice, whichever is later.

Each written warning notice must:
1. Specify the violation;
2. State that the landlord may terminate the tenancy at the end of the fixed term if there are three
violations within a 12-month period during the fixed term; and
3. State that correcting the third or subsequent violation is not a defense to eviction.

The 90-day notice of termination for a “Three Strikes Rule” termination must be in writing. It also must:
1. State that the rental agreement will terminate upon the ending date for the fixed term or upon a
designated date at least 90 days after delivery of the notice, whichever is later;
2. Specify the reason for the termination and supporting facts; and
3. Be served to the tenant concurrent with or after the third (or final) written warning notice.

What are the “qualifying landlord reasons” under SB 608 when a landlord can issue a 90- day
termination notice?
The “qualifying landlord reasons” for termination are:
1. The landlord intends to demolish the dwelling unit within a reasonable time;
2. The landlord intends to convert the unit to a use other than residential within a reasonable time;
3. The landlord intends to undertake repairs or renovations to the dwelling unit within a reasonable
time and:
a. The premises are currently unsafe or unfit for occupancy; or
b. The dwelling unit will be unsafe or unfit for occupancy during the repairs or renovations;
4. The landlord has accepted an offer to sell a dwelling unit separately from any other unit and:
a. The buyer is a person who intends in good faith to occupy the unit as the buyer’s primary
residence; and
b. Within 120 days after accepting the purchase offer, the landlord provides the tenant with
written notice of termination with a specific termination date and written evidence of the
offer to purchase the dwelling unit;
5. The landlord or a member of the landlord’s immediate family intends to occupy the unit as a
primary residence; and the landlord does not own a unit in the same building that is available for
occupancy at the same time that the tenant receives notice to terminate the tenancy.

How can a landlord increase the rent under SB 608?
During any 12-month rolling period, most landlords may not increase the rent more than 7% plus the
Consumer Price Index (CPI) above the existing rent. The Oregon Department of Administrative Services
will publish the maximum annual rent increase allowed, which for 2019 is 10.3%.

A landlord is not subject to this limitation on rent increases if:
1. The first certificate of occupancy for the dwelling unit was issued less than 15 years before the rent
increase notice; or
2. The landlord is providing reduced rent to the tenant as part of a federal, state or local program or
subsidy.

A rent increase notice must be in writing, served upon the tenant at least 90 days before the effective date, and state:
1. The amount of the rent increase;
2. The amount of the new rent;
3. The date on which the increase becomes effective; and
4. If the increase is more than 7% + CPI, facts supporting why the landlord is not subject to the rent
increase limitation.

A landlord who terminates a tenancy with a 30-day “no cause” notice during the first year of occupancy may not increase rent for the next tenancy by more than the maximum annual rent increase, which is 10.3% for 2019. This applies with a 30-day “no cause” termination notice under ORS 90.427 (3) (termination of month-to-month tenancy during first year) or ORS 90.427 (4) (termination of fixed-term tenancy to prevent it from becoming month-to-month).

This information is reprinted from information developed by the Oregon State Bar with support from the Oregon Housing and Community Service Department.  

A brief summary of the law of implied easements is provided by the Oregon Court of Appeals in its recent decision in Manusos v. Skeels, 263 Or. App. 721 (2014).
The court wrote, “When land in one ownership is divided into separately owned parts by a conveyance, an easement may be created * * * by implication from the circumstances under which the conveyance was made alone.” Rose et ux. v. Denn et ux., 188 Or 1, 19, 212 P2d 1077 (1949), on reh’g, 213 P2d 810 (1950) (quoting Restatement (First) of Property § 474 (1936)). That is, an implied easement is created “when the circumstances that exist at the time of severance of a parcel establish that the grantor of the parcel intended to create an easement.” Bloomfield v. Weakland, 193 Or App 784, 795, 92 P3d 749 (2004), aff’d on other grounds, 339 Or 504, 123 P3d 275 (2005). “A number of factors are used to determine whether an easement has been created by implication, including ‘the claimant’s need for the easement, the manner in which the land was used before its conveyance, and the extent to which the manner of prior use was or might have been known to the parties.'” Fischer v. Walker, 246 Or App 589, 598, 266 P3d 178 (2011) (quoting Penny v. Burch, 149 Or App 15, 19, 941 P2d 1049 (1997)); see also Cheney v. Mueller, 259 Or 108, 118-19, 485 P2d 1218 (1971) (listing relevant considerations regarding creation of an easement by implication); Jack v. Hunt et ux., 200 17 Or 263, 267-70, 264 P2d 461 (1953), on reh’g, 265 P2d 251 (1954) (same). Implied easements are disfavored and must be established by clear and convincing evidence. 19 Thompson v. Schuh, 286 Or 201, 203, 593 P2d 1138 (1979).
It is black-letter law that an easement may be implied “by inference when
the circumstances that exist at the time of severance of a parcel establish that the grantor
of the parcel intended to create an easement.” Bloomfield, 193 Or App at 795. It is equally well established that “severance of a parcel” refers to the division of ownership of land, not a division that occurs through a platting process or partition but does not change ownership of the parcels. That is, without exception, implied easement cases have focused on a common grantor’s intent at the time of conveyance of a parcel. E.g., Cheney, 259 Or at 118 (“Rose and Dressler approved the rule as stated in 5 Restatement, Property § 476, setting forth the following factors as ‘important’ in determining ‘whether the circumstances under which a conveyance of land (was) made imply an easement'” (Emphasis added.)); Eagles Five, LLC, 250 Or App at 424 (“Such an easement arises as an inference of the intention of the parties to a conveyance of land based on the circumstances existing at the time of the conveyance * * *.” (Emphasis added.)); Fischer, 246 Or App at 598 (same); Garrett, 144 Or App at 341 (“[T]he essential question is whether a reasonable purchaser would be justified in expecting the easement under the circumstances in which he or she purchased the land.” (Emphasis 1 added.)). Until the moment of conveyance–when common ownership is severed–the question of an implied easement does not arise, because the owner has unrestricted use of both parcels. Cf. Witt v. Reavis, 284 Or 503, 509, 587 P2d 1005 (1978) (following the Restatement rule that an easement is permanently extinguished when the dominant and servient parcels are acquired by the same owner, and observing that “this rule will enable the parties to focus on the separate issue of whether a new easement was thereafter created by implication and will, we hope, avoid confusion as to the precise issues involved in such cases”). Also See Garrett, 144 Or App at 341 (“If there was a previous apparent and permanent use of the land that is important for the enjoyment of the parcel that the common owner sold, the courts may imply that the purchaser received an easement, measured by the pre-existing use, over the parcel that the common owner retained.”).  If you think you have an implied easement and someone has stopped you from using your easement, then contact Deborah K. Vincent, Attorney at Law to help you at oregonlawyeronline.com

 

Oregon Revised Statute (ORS) 105.620 sets out the elements required to obtain title to property through adverse possession.

(1) A person may acquire fee simple title to real property by adverse possession only if:

(a) The person and the predecessors in interest of the person have maintained actual, open, notorious, exclusive, hostile and continuous possession of the property for a period of 10 years;

(b) At the time the person claiming by adverse possession or the persons predecessors in interest, first entered into possession of the property, the person entering into possession had the honest belief that the person was the actual owner of the property and that belief:

(A) By the person and the persons predecessor in interest, continued throughout the vesting period;

(B) Had an objective basis; and

(C) Was reasonable under the particular circumstances; and

(c) The person proves each of the elements set out in this section by clear and convincing evidence.

(2)(a) A person maintains hostile possession of property if the possession is under claim of right or with color of title. Color of title means the adverse possessor claims under a written conveyance of the property or by operation of law from one claiming under a written conveyance.

(b) Absent additional supporting facts, the grazing of livestock is insufficient to satisfy the requirements of subsection (1)(a) of this section.

Oregon’s elements are slightly different because of the “honest belief” element. In other words, if you knew you possessed someone else’s property, then you couldn’t have an honest belief that it was your own property and your claim fails.

Also, 2(b), the grazing of livestock doesn’t constitute “USE.” It must be more use. There are so many rural lands in Oregon where owners put up barbed wire fencing without the benefit of a surveyor for the purpose of grazing cattle. That situation doesn’t create adverse possession.

The burden of proof is on the person trying to acquire title by adverse possession. You must prove by “clear and convincing” evidence which is a very high standard.

The vesting period is 10 years. Therefore, it can’t be that you used the property for 9 years and 11 months. It must be 10 years or more.

Your use must be continuous. It can’t be that you used it 5 years and then a few years went by without using the land and then you move back and use it 5 more years.

In addition, you cannot get adverse possession against a government owned property. You can sit on government land for 10 years, continuously, openly, etc. but you can’t take it by adverse possession.

Your possession and use must be “open” meaning that it can’t be hidden where there is no chance for anyone to know of your use.

The owner of the land cannot have given you “permission” at some point. If you have “permission” then the use is not hostile, but permissive use. You can’t get adverse possession of land where the real owner has given you permission to use their land.

If you are successful in bringing a claim for adverse possession and can meet each and every element required, then a Circuit Court Judge can grant you the disputed area and you will become the new owner of the land.

Two tips:

Tip 1: Be sure to have the disputed area surveyed and a legal description created for the disputed area. Then have your surveyor create the new legal description for the land that the disputed area is being added to and the new legal description where the disputed area is being taken away from. Your proposed judgment should include an order that requires the recording of these new legal descriptions.

Tip 2: Use Google Earth history to provide you with aerials of exactly what is going on with the property and the disputed area from the various years in which Google Earth photographed the property. It’s great evidence!

For help with adverse possession claims or claims for prescriptive easement, easement disputes, boundary disputes, contact Deborah K. Vincent who is quite knowledgeable in this area of law.

 

Did you ever hear that you can’t squeeze blood from a turnip? Well, that is true! You may have spent considerable time and expense to obtain a judgment against a debtor that owes you money, but you have likely wasted your time if that debtor is judgment proof. It is best to assess whether the person you are suing has anything worth money. Does the debtor own real estate? Does the debtor have a job? Does the debtor have an automobile worth enough to reimburse you for the selling costs or more?  Does the debtor have any asset you can attach? If your answer is no to all of these questions, then frankly, what’s the point in getting a judgment? The debtor can also file for bankruptcy and make your unsecured debt go away forever. However, if your answer to any one of these questions is yes, now we have something to talk about!

The Oregon Revised Statutes provide for multiple remedies to get at a debtor’s assets. ORS 18.270(1) provides at any time after a judgment is entered a judgment creditor may serve written interrogatories relating to the judgment debtors property and financial affairs on a judgment debtor. The interrogatories may be personally served in the manner provided for summons or may be served by any form of mail addressed to the judgment debtor and requesting a receipt. Service by mail under this subsection is effective on the date of mailing. You must notify the judgment debtor that judgment debtors failure to answer the interrogatories truthfully shall subject the judgment debtor to the penalties for false swearing and for contempt of court. In other words, the creditor gets to ask a bunch of written questions of whether the debtor has a job, where, contact information for employer, what they own in terms of vehicles, real property, other assets, etc. The debtor must truthfully answer those questions and get that information back to the creditor within 20 days, and the interrogatories must be notarized with the debtor’s signature. Failure of the debtor to do this means the creditor can commence proceedings for contempt of court. Circuit Court judges will issue a warrant for the debtors arrest if the debtor fails to appear at this show cause hearing. A creditor can find out a lot when interrogatories are received back from the debtor. You could also do a debtor examination under ORS 18.265 to find out what the debtors assets are and where they work, where their checking account and savings accounts are, etc., but that’s more time consuming than using interrogatories to elicit the same information.

Following the information the creditor receives back from the debtor, if the debtor has a job, you can now file a Writ of Garnishment on their employer to receive payment out of their paycheck. Follow the statutory process for doing this with notice to the debtor and their employer.  See ORS 18.830-18.850.

If you learn through your interrogatories that the debtor owns tangible personal property you can file a Writ of Execution and have the local Sheriff seize the property. See ORS 18.860 – 18.196.

Be sure to follow all the procedures when taking personal property through a levy under these rules. One type of personal property, you can levy upon is a personal vehicle. If you learn through the interrogatories or a debtor exam that the debtor owns a vehicle with enough value that you could realize some satisfaction of your judgment if that vehicle was sold, then you could do a Writ of Execution on the vehicle. You will have to pay fees to the Sheriff’s Department for the towing and 10 days of storage, advertising and auction sale. Those fees are generally as high as $1100.00. Those sale fees can be added to your judgment before the proceeds of sale are subtracted from your judgment in partial or full satisfaction. The Writ of Execution can be ex parte, meaning the debtor never knows you are about to seize their vehicle. Be sure that there are no other lienholders on the vehicle first so that seizing the vehicle makes it worth your investment in the cost of seizing it. You can find out that information through the DMV by requesting a copy of the current title. Determine first that your debtor actually is the registered owner of the vehicle and that there are no lienholders. Under ORS 18.878(1)(c) you could save some storage fees of the vehicle prior to the sale by securing the personal property at the debtor’s location, but I personally think this is risky because the debtor may destroy the property or secret the property, even though there are criminal statutes that should prevent that. People in desperate situations sometimes do desperate acts regardless of the consequences. I prefer the element of surprise in seizing a vehicle.  In other words, the Sheriff just comes out one day and tows their vehicle away to a secure storage yard.  The debtor will receive documents to challenge the seizure, but do not always challenge.  The debtor also gets a $3,000.00 exemption, but not if the vehicle you are seizing was the vehicle the creditor loaned money on and that unpaid loan was the subject of the judgment.  See ORS 18.305.  If the personal property you are seizing is located inside the debtor’s residence you can file a motion for forcible entry to allow the Sheriff to use reasonable means to seize the property, which includes forcible entry, under ORS 18.887(1).

The point I’m making here is that once you have a judgment, the Oregon Revised Statutes provide many remedies with some real teeth in collecting on your judgment. If you are aggressive in going after your money, AND the debtor has anything, chances are you are going to get it if you are diligent in using the law to help you find the assets and seize them.  The key to this is whether your debtor has a job or any assets.  If not, all you have is a judgment, and you can’t squeeze blood from that turnip.

If you need any guidance or assistance in going through this process to help you realize some money from your judgment, Deborah K. Vincent, Attorney at Law can help you. Www.oregonlawyeronline.com

 

Credit Counseling Is Part Of The Bankruptcy Process

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When your debt piles up so high that you can’t see any way to get out of it, there are options open to you. One of them is to file for bankruptcy. When you file for bankruptcy, you are making an agreement with your creditors that you will pay back some portion of what you owe them. But what is the process of filing for bankruptcy like?

Pre-Filing Credit Counseling

A few years ago, Congress changed the laws around filing for bankruptcy. One of the things that was put into place was credit counseling. You will need to work with an approved credit counseling organization before you are able to file for bankruptcy. That needs to happen 180 days before you actually file for bankruptcy. There are a lot of things that the credit counseling organization can help you with. The counselor that you are working with will look at your entire financial picture. That means that you are going to have to tell them everything. It doesn’t matter if you haven’t told anyone else, the counselor won’t judge you. They are there to help you. Tell them all your debt, and all your income. That includes child support, SNAP, AFDC, or anything that brings any money into your house. The counselor may also ask you to track your spending so that you know where all your money is going.

Post-Filing Assistance

As part of your bankruptcy filing, you may be required to go to some money management classes. Those classes can be very helpful to you. At those classes you can get information about creating a realistic budget, setting up savings and retirement accounts, and how to build your credit history back up. Learning these things will help to keep you out of debt in the future. You may be going to those classes for a few weeks, but you will find that they will be helpful to you.

If you feel like you are out of options when it comes to debt, it is better to avoid things that might get you further into debt. Instead what you should do is consult with an attorney who deals with debt and bankruptcy. They can talk to you and tell you what your options are. When it comes time to do the actual filing, they will be able to do that and appear before the judge with you. The lawyer will make sure that you will have all the information you need to make a good decision.

For more information about debt, contact a lawyer like Deborah K Vincent Attorney at Law.

Financial troubles can take many forms, but debt is often one of the more common reasons for individuals to encounter issues. While having immense debts can be extremely stressful, it is important to understand that you have some basic rights as a debtor that should be protected. Unfortunately, it is common for people to assume a couple of common myths about debt, and learning the truth behind these notions will make it easier for you to understand how to best handle this problem.

Myth: Bankruptcy Is The Only Option For Battling Debt

There is a common assumption among some people that bankruptcy is the only option for freeing themselves from crushing debt obligations. While bankruptcy is certainly a viable option, it should be noted that this is far from the only way that you can find relief from this problem. When a debtor files for bankruptcy, it can be a lengthy and expensive endeavor for creditors because the courts will essentially restructure or forgive the debts. In these instances, the creditor will lose much of their ability to enforce payment for the full amount owed. To avoid this potential outcome, it is common for creditors to agree to negotiated payment terms with their debtors. Unfortunately, if you find that the creditors are unwilling to negotiate with you, it may be necessary to hire a debt attorney for this task. Creditors may be more receptive to negotiating with these professionals as it indicates the debtor may be on the verge of filing bankruptcy.

Myth: You Will Always Have To Pay Debts That Were Accrued Due To Identity Theft

Identity theft is a common crime in the modern world, and it can have long lasting impacts on a person’s financial health. Sadly, there are some victims of identity theft that may believe that they have no option other than to pay these debts. However, it should be noted that debtors are entitled to request proof of their debts. As a result, you should request for the debt holder to provide you with any evidence of your ownership of the debt. Often, it may be possible to contest these charges, because merchants and creditors are legally liable if they failed to verify a person’s identity before granting them credit. By having your attorney research this information about the debt, it may be possible to have it stricken from your credit without having to pay it.

Debts can represent a crushing financial burden, and you need to be aware of the protections that you enjoy when it comes to debt. By understanding that it may be possible to negotiate friendlier payment terms and that debts accrued due to identity theft can be contested, you will be better able to get a hold of this part of your financial life.

Talk to a professional like DEBORAH K. VINCENT, ATTORNEY AT LAW to learn more.

The absolute priority rule is a judicially-created doctrine that, “provides that a dissenting class of unsecured creditors must be provided for in full before any junior class can receive or retain any property under a reorganization plan.” The rule was codified in Sec. 1129(b)(2)(B)(ii) with the enactment of the Bankruptcy Code in 1978.   

            In a case of first impression before the 9^th Circuit, Zachary v. California Bank & Trust, No. 13-16402, 2016 (9^th Cir. Jan. 28, 2016), the Court held that the Absolute Priority Rule applies in all chapter 11 cases, even if the debtor is an individual. Through this opinion, the 9^th Circuit has now expressly overruled In re Friedman, 466 B.R. 471 (B.A.P. 9^th Cir. 2012), that Congress intended abrogation of the absolute priority rule by the BAPCPA amendments to the Bankrupty Code in 2005.   The absolute priority rule applies to any property owned by the debtor at the commencement of the bankruptcy case.             

            The courts have established an exception to the absolute priority rule known as the new value exception (also called the new value doctrine or the new value corollary). The new value doctrine opens the door for plan proponents to overcome the absolute priority rule by requiring equity holders to make a substantial and essential contribution in exchange for their continued ownership of the debtor.  To be substantial, most courts require that the contribution (i.e., new value) be: (1) a present contribution; (2) freely tradable in the market; and (3) money or money’s worth.  To be essential, the case law generally mandates that this new contribution be directly related to the success of the reorganization plan.   

            When the Supreme Court decided Bank of America National Trust and Savings Assn. V. 203 North LaSalle Street Partnership, 526 U.S. 434 (1999), the decision focused on the importance of exposing valuable property to a free market of potential bidders, a “market test.”  The new value doctrine is a long-recognized corollary to the absolute priority rule, one that is very much alive after LaSalle.  The lesson learned from the cases is that a new value plan cannot be confirmed if the old equity holders are the only ones given an opportunity to bid on the debtor’s ownership interests.  It is likely that new value contributions that are substantial and essential to the debtor’s reorganization efforts will continue to provide a basis for confirming plans that would otherwise violate the absolute priority rule. 

            Several bankruptcy court cases, decided both before and after the 203 North La Salle Street decision have discussed the need for an auction in cases involving new value plans. None of those cases discuss the procedures to be used in conducting such an auction.  There are two ways to meet the market test as described in LaSalle.  1) opportunity to file competing plans, and 2) some form of auction.  This blogger contends that an auction in an individual case is an impossibility.  For help with Bankruptcy see Deborah K. Vincent at www.oregonlawyeronline.com