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In re Devlin

United States Bankruptcy Court for the Middle District of Florida
185 B.R. 376 (1995)


Facts

Devlin (debtor) operated a motel in Florida. Devlin filed for reorganization under chapter 11 of the bankruptcy code. The motel’s air conditioning, boiler, and hot-water systems were broken and needed immediate replacement in order for the motel to continue operation. Devlin did not have the cash available to replace the systems. The motel was encumbered by a first-priority lien held by Resolution Trust Corporation (RTC) (creditor). Devlin’s mother, Irene Devlin, agreed to finance the replacement of the motel’s systems if she was granted a first-priority lien on the motel. Devlin petitioned the bankruptcy court for authorization to incur the debt and give Irene a super-priority lien.

Rule of Law

Issue

Holding and Reasoning (Funk, J.)

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