A few weeks ago in In re S. White Transportation, the U.S. Court of Appeals for the Fifth Circuit permitted a secured creditor that had indisputably received notice of the debtor’s chapter 11 case, but took no steps to protect its interests until after the confirmation of the debtor’s plan, to continue to assert a lien against the debtor’s property post-confirmation.
In S. White Transportation, the debtor contested the lien of Acceptance Loan Co. It listed Acceptance’s lien as “disputed” in its schedules. The court noted that “Acceptance received effective notice of the pendency of SWT’s bankruptcy on at least several occasions”, but Acceptance never appeared in the case and never filed a proof of claim. Acceptance also failed to object to the debtor’s plan of reorganization, which provided no recovery for Acceptance. Shortly after the debtor’s plan was confirmed by the bankruptcy court, Acceptance filed a motion seeking a declaration that its lien had nevertheless survived.