In re Couture Hotel Corp.

536 B.R. 712 (2015)

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In re Couture Hotel Corp.

United States Bankruptcy Court for the Northern District of Texas
536 B.R. 712 (2015)

Facts

Couture Hotel Corporation (Couture) (debtor) owned and operated two hotels in Texas: a Howard Johnson in Corpus Christi (the Corpus hotel) and a Wyndham Garden Inn in Dallas (the Dallas hotel). In June 2013, Couture obtained a $3.2 million loan from Ability Insurance Company (Ability) (creditor). The Ability loan was secured by a first lien on the Corpus hotel. In July 2013, Couture borrowed $8.87 million from Mansa Capital, LLC (Mansa) (creditor) to finance renovations of the Dallas hotel. The Mansa loan was secured by a first lien on the Dallas hotel and a second lien on the Corpus hotel’s personal property. Couture subsequently began experiencing financial difficulties with respect to the Dallas hotel. Mansa declared a default on its loan and posted the Dallas hotel for foreclosure. Couture filed a chapter 11 bankruptcy petition in October 2014 to prevent the foreclosure. Couture’s chapter 11 plan proposed to pay creditors in Class 2 through Class 9 in full, plus interest, over a 60-month period after the plan’s effective date. The repayment period and terms depended on each creditor’s class. The proposed plan classified Propel Financial Services, LLC (Propel) (creditor) in Class 2. Propel had purchased various ad valorem tax claims on the hotels, and as a result, Ability’s and Mansa’s first liens on the hotels had been primed by (i.e., were subordinate to) Propel’s tax claims. The plan classified Ability in Class 4, which entitled Ability to repayment over three years based on a 25-year amortization. The plan classified Mansa in Class 5, which entitled Mansa to repayment over five years based on a 30-year amortization. Mansa objected to Couture’s proposed plan, arguing that Mansa was similarly situated to other secured creditors, including Propel and Ability, but had been improperly classified separately and treated differently in the plan. The bankruptcy court considered Mansa’s objection and issued a decision.

Rule of Law

Issue

Holding and Reasoning (Houser, J.)

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