In re 495 Central Avenue Corporation
United States Bankruptcy Court for the Southern District of New York
136 B.R. 626 (1992)
495 Central Avenue Corporation (debtor) owned a parcel of real estate and a building subject to a mortgage held by John Hancock Mutual Life Insurance Company (creditor). John Hancock perfected its security interest in the building and was the priority lienholder. 495 Central defaulted on the mortgage and John Hancock moved to foreclose on the property. 495 Central filed for bankruptcy and the lower court stayed the foreclosure proceeding. As the debtor in possession, 495 Central sought permission from the bankruptcy court to obtain financing to undertake renovations to the property. Under the financing agreement, the post-petition lenders financing the renovations would be given a lien in the property that would have priority over John Hancock’s pre-petition lien. 495 Central’s principals had unsuccessfully tried to obtain other types of financing. John Hancock objected.
Rule of Law
Holding and Reasoning (Schwartzberg, J.)
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