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The story of 203 North LaSalle Street is archetypical of real estate investments. A real estate investment partnership that had no other significant assets owned a substantial part of the 203 North LaSalle Street building, just as thousands of other real estate partnerships own thousands of other downtown office buildings across the United States. Like hundreds of other single asset real estate partnerships, the 203 North LaSalle Street Partnership fell upon financial hard times and filed a chapter 11 reorganization case to prevent the mortgagee from foreclosing on the building. As in many such cases, the financially decimated partners sought to retain their interests in the partnership in order to avoid breathtakingly large personal tax liabilities. The LaSalle partners expected to incur approximately twenty million dollars of personal tax obligations in the event of liquidation. The bankruptcy court, district court, and court of appeals allowed the partnership to retain ownership of the reorganized debtor under a “new value,” cramdown plan. The mortgagee, Bank of America, vigorously objected at every stage and asked the Supreme Court to grant certiorari to determine whether new value, cramdown plans of reorganization are permissible under the Bankruptcy Code.


Originally published in the Journal of Bankruptcy Law and Practice. Posted with permission of Thomson Reuters.