Jason DeJonker Published in Law360
"Case Study: In Re Heritage Highgate"

Seyfarth Shaw Litigation partner Jason DeJonker wrote an article in the June 8 edition of Law360 regarding the ruling of the Third Circuit Court of Appeals in Re Heritage Highgate Inc., et al. This case clarifies the burden of proof with respect to the valuation and ultimate allowance of alleged secured claims under Bankruptcy Code section 506(a).
 
Jason explains that the value of collateral is based on the fair market value of the collateral at the time of confirmation, and not based on any proposed future disposition or use of the collateral. The committee claimed that the market value of the property at the time of confirmation should control for purposes of determining whether the cornerstone investors held fully secured claims under Section 506(a).

The Heritage decision provides several practice points for commercial real estate and commercial/industrial Chapter 11 cases. It clarifies the burden-shifting analysis for allowing secured claims under Section 506(a) in the Third Circuit.