Case Summary:
Bank moved for stay relief under § 362(d)(1) claiming a lack of adequate protection of its interest in the stock it held under a pledge by Debtor as collateral for a letter of credit, which it sought to liquidate. Bank argued lack of adequate protection principally because the stock may depreciate in value. Bank held a contingent secured claim as the DNR may demand an undetermined amount under the letter of credit. Once the DNR draw is made, Bank has the right to reimbursement from the proceeds of stocks pledged by debtor. Bank also sought relief under § 362(d)(2) and bears the initial burden of proving debtor has no equity in the stock. The presence of equity depends on the draw by the DNR under the letter of credit. It was found that because there is no part of the stock's value that is free from the contingent claim of Bank as of the date of the petition, debtor had no equity for purposes of § 362(d)(2)(A). It was also found that the maintenance of the stock was a benefit of the creditors as the cost of disposition to Debtor would include a potentially substantial tax liability that would have to be paid as post-petition indebtedness which would certainly jeopardize Debtor's ability to make payments on pre-petition debts. Although there may be a certain inevitability to that expense, to permit Bank to accelerate the crisis by selling the stock before it lacks adequate protection and before the DNR draws on the letter of credit would undermine the feasibility of the plan. Bank's relief from stay was denied.

Statute/Rule References:
11 U.S.C. § 361 -- Adequate Protection
11 U.S.C. § 362(d) -- Relief from stay
11 U.S.C. § 362(g)(1)
11 U.S.C. § 506(a) -- Determination of secured status
11 U.S.C. § 506(d) -- Lien valuation and strip down
11 U.S.C. § 1121(b)
11 U.S.C. § 1121(c)(2)
11 U.S.C. § 1322 -- Mortgage protection
11 U.S.C. § 1322(b)(2) -- Modification of rights of secured claimants
11 U.S.C. § 1325(a)(5)

Key Terms:
Adequate Protection
Letters of Credit
Relief from Stay
"Strip Down"