## Facts

- An irrevocable trust filed a Chapter 11 petition as a single-asset real estate case; its only asset was oceanfront real property in Pawley’s Island, South Carolina.
- The trust owned about a 70% interest in the property; the trustee and his wife held the remaining interests.
- A bank held first and second mortgages on the property, with secured debt exceeding $2 million at the time of the hearing.
- A state court had appointed a receiver to manage the property; the trust’s trustee obtained receiver-held funds and used them personally, prompting state-court contempt-related proceedings.
- The bank had previously foreclosed and purchased the property at a sale; an earlier Chapter 11 filing by the trustee (individually) stayed completion of foreclosure, the stay was later lifted, and that case was eventually dismissed.
- Shortly after dismissal and before a new foreclosure could be completed, the trust filed the present Chapter 11 case, reimposing the automatic stay.
- The schedules showed the property produced no income and the debtor had no operating business.
- The bank moved for relief from stay under 11 U.S.C. § 362(d)(1) and (2) and sought in rem relief to prevent renewed stays from future filings affecting the property.
- The trustee offered testimony about potential rental income and funding payments, which the court found unsubstantiated and not credible.

## Issues

1. Whether the bank was entitled to relief from the automatic stay under 11 U.S.C. § 362(d)(1) for lack of adequate protection and under § 362(d)(2) because the debtor lacked equity and the property was not necessary to an effective reorganization.
2. Whether serial, strategically timed filings involving the same property constituted bad faith justifying in rem relief preventing the stay from attaching to the property for a fixed period.
3. Whether the court should waive the 14-day stay of a stay-relief order under Fed. R. Bankr. P. 4001(a)(3).

## Decision

- Relief from the automatic stay was granted under 11 U.S.C. § 362(d)(1) and (2).
- In rem relief was granted: for six months, any bankruptcy filing in any jurisdiction would not stay the bank’s efforts to collect its debt and foreclose on the property.
- The court declined to waive the Rule 4001(a)(3) 14-day stay, finding no equitable basis to do so.

## Legal Principles

- A secured creditor is entitled to stay relief for “cause” under § 362(d)(1) when the collateral is declining in value, the secured debt is increasing or exceeds value, and the debtor lacks a credible, concrete means to provide adequate protection.
- Stay relief is warranted under § 362(d)(2) when the debtor has no equity in the property and cannot show the property is necessary to an effective reorganization in prospect (i.e., a feasible reorganization within a reasonable time).
- Bankruptcy courts may issue in rem stay-relief orders when a record shows serial, property-focused filings timed to impede foreclosure rather than to reorganize, and when ordinary stay relief is inadequate to prevent repeated reimposition of the stay.

## Conclusion

The court lifted the stay and entered a six-month in rem order after finding the debtor lacked adequate protection and equity, had no realistic reorganization in prospect, and had used serial, strategically timed bankruptcy filings to delay foreclosure.


In re Henderson, 395 B.R. 893 (Bankr. D.S.C. 2008)