Bank of America v. 203 North LaSalle Street Partnership
United States Supreme Court
526 U.S. 434 (1999)
Bank of America (plaintiff) loaned about $93 million to 203 North LaSalle Street Partnership (LaSalle) (defendant), secured by floors of a Chicago office building then worth only $54.5 million, leaving Bank of America an unsecured deficiency of $38.5 million after LaSalle defaulted and filed Chapter 11. LaSalle's reorganization plan proposed paying the secured claim in full over years, discharging the unsecured deficiency for 16% of its value, and letting LaSalle's former partners alone invest $6.125 million in new capital in exchange for total ownership of the reorganized entity, without offering that opportunity to the market. The bankruptcy court confirmed the plan over Bank of America's objection through cramdown, and the district court and Seventh Circuit affirmed; the Supreme Court granted certiorari.
Whether a Chapter 11 reorganization plan may be confirmed over an impaired creditor class's objection when it gives existing equity holders an exclusive, market-untested opportunity to invest new capital in exchange for ownership of the reorganized entity.