Security National plan, asset sale draws objection from United States

By Kali Hays

New York, Sept. 25 – Security National Properties Funding III, LLC’s proposed sale, conveyance and refinancing of its 33 remaining properties pursuant to a debtor confirmation version of its Chapter 11 reorganization plan has drawn an objection from the United States and certain government agencies, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

Parties included in the objection are the Department of Veterans Affairs, the General Services Administration, the Army Corps of Engineers and the United Sated Postal Service.

As previously reported, the sale is required under a settlement agreement reached in August that resolved all remaining disputes with the Security National’s senior lenders.

The company said the plan resulting from the settlement provides two channels for the conclusion of the Chapter 11 cases, including a debtor confirmation option and a lender confirmation option.

Security National’s proposed sale and refinancing arrangements represent the debtor confirmation version of the plan.

The United States claims that the proposed sale fails to preserve the government agencies’ setoff and recoupment rights as the proposed plan “makes no provision for these rights.”

The United States also objected to Security National’s plan provision that the conventional 14-day stay of a confirmation order be waived.

“Under the debtors’ proposed scheme, the United States is unable to immediately obtain a hearing before the appropriate court to seek a stay, its appeal may be contended to be moot,” the objection stated.

The objecting parties asked that the court deny Security Nationals proposed sale and plan.

A hearing on confirmation of the plan is set for Sept. 30.

Security National Properties Funding III is a Baton Rouge, La., affiliate of real estate investment company Security National Master Holding Co. It filed for bankruptcy on Oct. 13, 2011 under Chapter 11 case number 11-13277.

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