Redemption Or Repurchase Of Charged Interest

Topic Redemption TopicsRepurchaseRedemption

Because under § 503(e) the predicate of repurchase or redemption rights is the initiation of proceedings to foreclose the charged interest, and foreclosures are very rare as it is, instances of such repurchase or redemption of the D/M's interest are almost non-existent. They are then pushed to the very brink of extinction by the requirement that the creditor then be paid the full amount of the judgment to effectuate such repurchase or redemption.

Nonetheless, there are two issues that could be addressed:

1. Whether such repurchase or redemption should be allowed to occur if the creditor and the LLC or non-debtor members agree to a price.

2. What happens if there are competing attempts to repurchase or redeem the D/M's interest.

Note that if there is a power-struggle going on with the entity. Currently this seems to be addressed by the language of § 503(f) which gives the repurchasing or redeeming party only the rights as to the extent of the D/M's former interest only the rights that the creditor would have had, being that of an involuntary assignee.