Opinion
No. 76-2216EG
November 2, 1978
Arrangements — Bankruptcy Rules — Automatic Stay of Actions — Relief from Stay
A creditor seeking relief from the automatic stay imposed by Bankruptcy Rule 11-44 was entitled to a modification of the stay since the debtor offered no proof of its right to a continuation of the stay. The creditor was the owner, by assignment, of a mortgage on the premises owned by the debtor. No payment was made on either principal or interest for five months before the petition was filed. Prior to the debtor's petition for an arrangement, the creditor began operating the premises (an apartment house) as a mortgagee-in-possession. As a result of the default, the debtor owes the creditor over $150,000. Two witnesses for the creditor appraised the property at between $100,000 and $105,000. The only testimony regarding value offered by the debtor came from an officer of the debtor who had no real estate appraisal experience. He testified that if asked to sell the property he "would have asked $350,000 minimum." The fair market value is $105,000 and the debtor has no equity in the real estate. Under Bankruptcy Rule 11-44, the defendant (who is usually the debtor), who seeks a continuation of the stay, has the burden of showing that he is entitled to a continuation. The debtor has failed to carry this burden. In this case, the creditor, who has no burden of establishing his right to foreclose, has produced overwhelming testimony that the fair market value of the real estate is substantially less than the secured debt. Consequently, the stay is modified to permit the creditor to foreclose on the property. See Bankruptcy Rule 11-44 at ¶ 20,744.