## Facts

- Darnell Lamart Radden filed a Chapter 13 petition on August 10, 1983.
- Before the filing, General Motors Acceptance Corp. (GMAC) repossessed Radden’s 1979 Ford Mustang after missed June and July 1983 payments and noticed a sale for August 12, 1983.
- The Mustang had been purchased in October 1981 under a retail installment sales contract; title was in Radden’s name, and the contract was assigned to GMAC.
- GMAC had a separate recourse agreement with the dealer, requiring the dealer to pay GMAC the remaining contract balance if GMAC returned the collateral within 90 days of an uncured default; the period was tolled when GMAC was legally prevented from repossession or return.
- Radden scheduled the Mustang’s value at $2,700 and the contract balance at $4,400.30.
- The proposed Chapter 13 plan treated GMAC as secured only up to the vehicle’s value and proposed deferred plan payments on that secured amount, with the remainder treated as unsecured.
- GMAC moved for relief from the automatic stay to dispose of the vehicle; Radden filed an adversary complaint seeking turnover, asserting the car was needed for transportation to maintain employment and fund the plan.

## Issues

1. Whether GMAC was entitled to relief from the automatic stay under 11 U.S.C. § 362(d) based on lack of adequate protection and/or because the debtor had no equity and the car was not necessary to an effective reorganization.
2. Whether the debtor was entitled to turnover of the repossessed vehicle as property of the estate in a Chapter 13 case.

## Decision

- The court denied GMAC’s motion for relief from the automatic stay.
- The court granted the debtor’s request for turnover of the Mustang, subject to conditions providing adequate protection (including maintaining insurance and making payments).
- The court found GMAC’s secured interest in the vehicle was adequately protected by the plan’s proposed treatment (secured to the extent of the car’s value) and related safeguards.
- The court found the vehicle was necessary to an effective reorganization because it enabled the debtor to commute to work and perform the plan.
- The court rejected GMAC’s argument that impairment of its dealer-recourse agreement warranted stay relief, concluding the recourse right was separate from GMAC’s secured interest in the collateral.

## Legal Principles

- Adequate protection under the Bankruptcy Code protects a secured creditor against decline in the value of its collateral securing the claim, not against loss of separate contractual benefits unrelated to the collateral’s value.
- A creditor’s “interest in property” for adequate protection purposes is limited to its secured interest in the collateral; third-party recourse rights do not enlarge the secured interest required to be protected.
- A Chapter 13 plan may treat a creditor as secured only up to the collateral’s value, with any deficiency treated as unsecured, consistent with valuation principles under § 506(a).
- Relief from stay under § 362(d)(2) may be denied when the property is necessary to an effective reorganization, including when needed to maintain employment that funds the plan.
- Turnover may be ordered for repossessed collateral treated as property of the estate when the secured creditor’s collateral interest can be adequately protected during the case.

## Conclusion

The court required GMAC to return the repossessed vehicle and barred liquidation during the Chapter 13 case because the debtor’s plan and safeguards adequately protected GMAC’s collateral interest, the car was necessary for the debtor’s reorganization, and GMAC’s separate dealer-recourse rights did not expand the protectable “interest in property” beyond the vehicle’s value.


In re Radden, 35 B.R. 821 (Bankr. E.D. Va. 1983)