“Prime-plus” rate affirmed in cram-down plan

The secured lender held a $39 million claim in the bankruptcy of a hotel development; a reorganization plan was approved over its objection in a “cram-down” that called for repayment of the debt over ten years at 5.5 percent interest (1.75 percent above prime on the date of confirmation).  Wells Fargo v. Texas Grand Prairie Hotel Realty LLC (No. 11-11109, March 1, 2013).  The parties agreed that this “prime-plus” approach was appropriate under the plurality in Till v. SCS Credit Corp., 541 U.S. 465 (2004), but disputed the proper rate.  The Court rejected a threshold challenge based upon “equitable mootness” because it reasoned that the appeal could be resolved with “fractional relief” rather than rejection of the plan.  On the merits, the Court reaffirmed that it would review the choice of a cramdown rate for clear error rather than de novo, citing In re: T-H New Orleans Limited Partnership, 116 F.3d 790 (5th Cir. 1997)).  After a thorough review of Till and subsequent cases, the court found no clear error in this prime-plus rate in this factual context.