The Comment argues in favor of the position taken by a majority of bankruptcy courts that strip-off does not require an adversary proceeding. To strip off, a debtor must file a motion separate from the plan confirmation pursuant to Rule 3012. The United States Supreme Court recently ruled on the issue of adversary proceeding requirements in bankruptcy. In United Student Aid Funds, Inc. v. Espinosa, the Court decided two important issues applicable to whether strip-off requires an adversary proceeding: (1) the Supreme Court's decision in Mullane v. Central Hanover Bank & Trust Co. sets the constitutional requirement for due process in bankruptcy; and (2) res judicata can bar the appeal of a confirmed plan even though an adversary proceeding was not initiated as required by the Bankruptcy Rules. The Supreme Court's decision in Espinosa reinforces the Comment's interpretation that a motion is required for a strip-off.
Strip-Off: What is the Correct Procedure to Avoid a Wholly Unsecured Junior Mortgage?,
Emory Bankr. Devs. J.
Available at: https://scholarlycommons.law.emory.edu/ebdj/vol28/iss2/9