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United Savings Assoc. of Texas v. Timbers of Inwood Forest Assoc.

United States Supreme Court
484 U.S. 365 (1988)


In June 1982, Timbers of Inwood Forest Associates, Inc. (Timbers) (debtor) borrowed $4.1 million from United Savings Association of Texas (United Savings) (plaintiff). The loan was secured by an apartment project owned by Timbers and an assignment of rents therefrom. In March 1985, Timbers filed a Chapter 11 bankruptcy petition, triggering the automatic stay. Soon thereafter, United Savings sought relief from the stay on the ground that it lacked adequate protection of its interest in the secured property, for which 11 U.S.C. § 362(d)(1) authorized relief. It was established that Timbers owed United Savings $4,366,388.77 and that the apartment project, which was slowly appreciating in value, was worth at most $4.25 million, leaving United Savings undersecured. The bankruptcy court ordered that the automatic stay would remain in place only if Timbers made monthly payments to United Savings, beginning six months after the commencement of the bankruptcy case and at the market interest rate, on the estimated amount United Savings would realize if it were able to immediately foreclose, assuming sale of the property for $4.25 million. Both parties appealed: Timbers as to the decision and United Savings as to the payment amount. The district court affirmed, but the Court of Appeals for the Fifth Circuit reversed. United Savings petitioned the Supreme Court for certiorari.

Rule of Law


Holding and Reasoning (Scalia, J.)

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