Second Circuit Affirms Voiding of Secured Creditor’s Lien

A Chapter 11 reorganization plan may extinguish a secured creditor’s lien if: (1) the plan “does not preserve the lien”; (2) the court confirms the plan; (3) the plan “dealt with” the lender’s collateral; and (4) the lender “participated in the bankruptcy” case, held the U.S. Court of Appeals for the Second Circuit on Aug. 4, 2015. In re Northern New England Tel. Operations, LLC, 2015 WL 4619576 (2d Cir. Aug. 4, 2015). Affirming the bankruptcy and district courts, the Second Circuit explained that the debtor’s confirmed plan had extinguished a city’s (“City’s”) property tax lien, enabling the bankruptcy court to deny the City’s motion for allowance of its tax claim.