Bressler Discusses the THP Bankruptcy Case

Barry Bressler, a partner in the Firm’s Philadelphia office, was quoted in a July 21 Philadelphia Inquirer article titled “THP Bid to Borrow to Complete Houses is Rejected.” A motion by T.H. Properties (THP) to borrow $3 million to complete and sell 39 houses in six of its suburban developments was denied on July 20 after a six-hour debate in U.S. Bankruptcy Court in Philadelphia. In denying the THP’s debtor-in-possession plan, Chief Judge Stephen Raslavich said “his hands were tied” by precedent establishing that the goal of the Chapter 11 proceeding was “to protect the primed secured creditor’s interest” from being reduced, in this case, by the financing being offered by Continental Bank to THP.

Under the THP plan, Continental would have emerged as the creditor to be repaid first if something went wrong, and all the other creditors would have to help pay. Mr. Bressler, representing Harleysville Bank, argued that his client was being promised payment in five or six months, after everyone else was paid, at closing of sales of the houses in the developments they financed. “The debtors would have us believe that the Continental loan was more favorable to them than any other lenders’ offers,” he said. “I consider Continental’s 10 percent commitment fee onerous.”