Chapter 13- Confirmation of plan- Treatment of secured claims- Valuation of collateral

Neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure allocates the burden of proof as to the value of secured claims under Code §506(a). Concluding that a burden-shifting approach was the most appropriate, the Third Circuit Court of Appeals explained that the initial burden should be on the party challenging a secured claim’s value, because Code §502(a) and Bankruptcy Rule 3001(f) granted prima facie effect to the validity and amount of a properly-filed claim. It was only fair, then, that the party seeking to negate the presumptively valid amount of a secured claim—and thereby affect the rights of a creditor—bear the initial burden. If the movant establishes with sufficient evidence that the proof of claim overvalues a creditor’s secured claim because the collateral is of insufficient value, the burden shifts. The creditor thereafter bears the ultimate burden of persuasion to demonstrate by a preponderance of the evidence in both the extent of its lien and the value of the collateral securing its claim. In re Heritage Highgate, Inc., 2012 WL 1664174.