## Facts

- Motors Liquidation Company (formerly General Motors Corp.) filed for Chapter 11 in 2009 and sold most operating assets through a § 363 going-concern sale to a new entity.
- A syndicate of term lenders had made a $1.5 billion secured term loan to the debtor.
- Before the petition date, a mistaken termination of a principal UCC financing statement triggered disputes over whether, and to what extent, the term lenders remained perfected.
- The term lenders relied on real-estate fixture filings in Michigan and Ohio to assert perfected security interests in plant equipment alleged to be fixtures.
- The Avoidance Action Trust, acting for unsecured creditors, challenged whether the equipment was legally a fixture and contested the value of any secured claim.
- The disputed collateral included industrial presses, conveyor systems, and robotic equipment used in manufacturing facilities; many items were customized to particular plants and costly to remove.
- Because the debtor had more than 200,000 pieces of equipment, the court tried the issues using a representative set of roughly 40 assets.

## Issues

1. Under Michigan and Ohio law, which representative items of manufacturing equipment qualified as fixtures covered by the term lenders’ fixture filings?
2. Under 11 U.S.C. § 506(a), how should collateral subject to a valid perfected lien be valued for the secured claim in light of the completed § 363 going-concern sale: replacement/going-concern value, liquidation value, or another measure?

## Decision

- The court held that many large, integrated, plant-specific assets (including major presses and certain conveyor systems) were fixtures under Michigan and Ohio law and thus within the scope of perfected fixture filings.
- The court held that smaller, readily movable, less structurally integrated items (including certain robotic equipment) were not fixtures and remained personal property.
- For § 506(a) valuation, the court rejected both a purely hypothetical replacement-value approach and a purely hypothetical liquidation-value approach.
- The court ruled that valuation must be anchored in the actual disposition and use reflected by the consummated government-backed § 363 going-concern sale, while separating market value attributable to the collateral from any non-market, policy-driven components of the transaction.

## Legal Principles

- Fixture status under Michigan and Ohio law turns on a three-factor test: annexation to the realty, adaptation to the realty’s use, and objective intent that the item be a permanent accession; removability is relevant but not controlling.
- For complex industrial settings, fixture classification is fact-intensive and may vary asset-by-asset; physical integration, customization, removal cost/disruption, and in-place “highest and best use” are key indicators of intent.
- Accounting labels, internal asset records, lease terms, and tax treatment may inform intent but do not override strong objective evidence of permanence and integration.
- Under 11 U.S.C. § 506(a), collateral value is determined in light of the purpose of valuation and the proposed (or actual) disposition or use; the valuation should not be based on counterfactual scenarios divorced from the transaction that occurred.
- Where a going-concern sale involves government support, the secured-claim valuation should distinguish market value of the collateral from value attributable to external policy considerations to avoid windfalls to either the secured creditor or the estate.

## Conclusion

The court classified representative GM manufacturing assets along a spectrum of fixture versus personal property, finding many large integrated items to be fixtures covered by fixture filings, and directed that § 506(a) secured-claim valuation track the real-world § 363 going-concern sale while excluding non-market, subsidy-driven value.


In re Motors Liquidation Co., 576 B.R. 325 (Bankr. S.D.N.Y. 2017)