It is interesting for one who has practiced bankruptcy law for 35 years to observe that many issues adjudicated in 1983 continue to require judicial review in 2018. One is the interpretation of the requirement of good faith in bankruptcy cases. Recently, we reported on the requirement of good faith in commencing a bankruptcy case in a decision issued by Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for the District of Delaware in In re Rent-A-Wreck. In that case, the court examined an issue that has been the subject of dozens of decisions for decades: whether a bankruptcy case should be dismissed for lack of good faith when filed to gain a tactical litigation advantage in a two-party dispute.

Today we report on another one. In the 1980s and early 1990s, debtors filed single asset real estate cases and proposed plans that provided for payment of the defaulted mortgage loan over a period of years over the lenders’ objections. Hundreds of these cases were filed, including many that were essentially a two-party dispute between the lender and borrower, usually supplemented with a relatively insignificant number of unsecured claims in an aggregate amount of a small percentage of the mortgage debt. In many cases, the mortgage lenders purchased these trade claims to ensure the debtors could not obtain the vote of a class of creditors in favor of their Chapter 11 plans, which was required to confirm the plans over the lenders’ objections.