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any greater payment on its secured claim over the life of the plan by making the election than if it did not make the election.280 In that case the only real benefit to making the election is to retain a larger lien and receive a greater payment if the debtor sells the property early during the term of the plan or if the debtor defaults on the plan and the value of the property has appreciated since confirmation.281
a. Length of Deferral.
The Code sets no limit on the length of time over which payments may be deferred in Chapter 11. The only limits are the principles of adequate protection of the secured creditor's interest and feasibility of the plan.
If the collateral is depreciable, the deferral should not exceed "the remaining useful life of the collateral."282 It may be possible to exceed this limitation by provisions for replacement liens, but demonstrating that future replacement liens would provide adequate protection for the claim may impose "a difficult if not impossible burden of proof for the debtor in a payout extended beyond the life of the collateral."283 If the collateral is not expected to depreciate, such as real estate, then the only limit may be the difficulty of proving feasibility to satisfy § 1129(a)(11),284 and some courts have approved payment terms as long as 15, 20 or even 40 years.285 For single asset cases, a twenty five year amortization with a
280 In fact, to the extent the plan promises payments on unsecured claims, the total payment to such an undersecured creditor may be greater if it does not make the § 1111(b) election, because the amounts paid on the secured debt may be identical regardless of whether the election is made, but without the election the creditor also receives the payments promised to unsecured creditors on its deficiency claim. 281 In re Weinstein, 227 B.R. 284, 294-95 (9th Cir. BAP 1998).
282
Appeal of California Gulf Partnership, 48 B.R. 959, 964 (E.D. La. 1984)(based on a 20-year useful life of a supply boat, the court approved a 17-year deferred payment schedule).
283
In re White, 36 B.R. 199, 204 (Bankr. D. Kan. 1983).
284 See, e.g., In re Manion, 127 B.R. 887 (Bankr. N.D. Fla. 1991)(finding a 20-year payout unreasonable, purportedly on the fair and equitable standard but actually on the basis of feasibility, but also noting that the term need not be limited to the bank's usual lending practices, concluding a seven year balloon would be reasonable); In re Macon Uplands Venture, 2 B.R. 429, 5 B.C.D. 1071 (M.D. Ga. 1979)(extension of mortgagee's debt over a period of 32 to 48 years, where economic life of the hotel was only 25 to 30 years and the debtor was unable to project financial condition for more than 10 years held "wholly speculative" and therefore not feasible); In re White, supra (30-year payout not proven feasible based on only six recent months of sufficient profitability).
285 In re Crystian, 195 B.R. 351 (Bankr. W.D. Pa. 1996)(extension of mortgage from 15 years to 40 years permissible); In re Patrician St. Joseph Partners, 169 B.R. 669 (D. Az. 1994)(ten year
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