REAL-ESTATE LENDERS AND THE BATTLE OVER NEW VALUE

Lenders seeking to foreclose on troubled properties are often frustrat ed by the borrowers' use of the Chapter 11 process and the alleged ''n ew value exception'' to force a restructuring of the debt. The ''new v alue'' issue is perhaps the single most important bankruptcy law issue facing lenders today. Unfortunately, the number of appellate level co urts that have rendered diametrically opposing holdings on the ''new v alue'' issue is truly astonishing. The author argues that the ''new va lue exception'' did not survive the enactment of the Bankruptcy Code o f 1978. He focuses on a string of recent decisions that have shifted t he focus of the new value debate and actually managed to widen the spl it in the courts.