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Bank of America v. 203 North LaSalle Street Partnership

United States Supreme Court
526 U.S. 434 (1999)


Facts

Bank of America (B of A) (plaintiff) loaned approximately $93 million to 203 North LaSalle Street Partnership (LaSalle) (defendant). The loan was secured by 15 floors of a Chicago office building. LaSalle defaulted in January 1995 and submitted a petition under Chapter 11 of the Bankruptcy Code in March 1995. At that point, the property securing B of A’s loan was worth $54.5 million. B of A, therefore, was left with an unsecured deficiency of $38.5 million. LaSalle submitted a reorganization plan to the bankruptcy court in which it proposed, inter alia, (1) payment of B of A’s secured claim in full over seven to 10 years, (2) discharge of B of A’s unsecured claim for 16 percent of its present value, and (3) a transfer of ownership of LaSalle to certain former partners thereof who would contribute $6.125 million in new capital over five years. The option to invest new capital in exchange for ownership was provided exclusively to the former partners for tax purposes. Over B of A’s objection, the court confirmed the plan. The district court affirmed, as did the Court of Appeals for the Seventh Circuit. B of A petitioned the Supreme Court.

Rule of Law

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Issue

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Holding and Reasoning (Souter, J.)

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Concurrence (Thomas, J.)

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Dissent (Stevens, J.)

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