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In re Dotson (Case No. 05-71314) 11/10/2005

The matter before the Court is the Debtor's Motion to Sell pursuant to 11 U.S.C. § 363(f), in which the Debtor seeks permission to sell certain tracts of real estate free and clear of liens and use the proceeds to pay down the balance on her second deed of trust.  The lienholder on the first deed of trust filed an objection.  The first lienholder maintains that the effect of the sale would be to deprive it of adequate protection of its interest and to limit its right to avoid confirmation of a plan that impairs its interest secured by the residence of the Debtor.  The Debtor asserts that because the first lienholder is oversecured, it has no grounds to object to the sale.

Section 363(f) permits the sale of property free and clear of all liens against it in only five situations, none of which are applicable here.  Therefore, the sale of the property free and clear of liens under Section 363(f) is impermissible in this case.  Further, the Court held that the Debtor could not modify the first lienholder's rights by releasing part of its collateral over its objection and paying the sale proceeds to a junior lien creditor.

Date: 
Thursday, November 10, 2005
Category: 
363 Sales
Sale of Property
Chapter: 
13