The filing of a petition for relief under title 11 of the United States Code (the “Bankruptcy Code”) results in an automatic stay, which generally enjoins any creditor from taking action against the debtor or its property. Pursuant to section 362(d)(1) of the Bankruptcy Code, an automatic stay may be terminated upon a showing of “cause.” Additionally, under section 362(d)(2) a stay may be terminated as to property if the debtor has no equity in the property, and the property is not necessary to an effective reorganization. Further, under section 362(d)(3), an automatic stay may be lifted as to “single asset real estate,” if the debtor has not “filed a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time,” no later than 90 days after the creditor requests relief from the stay or 30 days after the court determines that the debtor is a SARE. A court will not, however, lift the automatic stay under section 362(d)(3) if the debtor commences monthly payments made from the “rents or other income generated” by the property, and are equal in amount to the agreed upon interest payments.
This article examines whether section 362(d)(3) is the exclusive basis for a court to lift the automatic stay as to a SARE. Part I of this article discusses how bankruptcy courts have concluded that section 362(d)(3) is not the exclusive basis to lift the automatic stay as to a SARE. Part II explains how secured creditors may obtain relief from an automatic stay under sections 362(d)(1) and (d)(2) as to a SARE.