Single Asset Real Estate Cases in Chapter 11
- Melissa A. Youngman
- 7 days ago
- 4 min read
By Winter Park Estate Plans & ReOrgs Admin
Florida Bankruptcy Attorney – Winter Park, FL
When a real estate investment or development project runs into financial trouble, Chapter 11 bankruptcy can provide a powerful tool for restructuring debt and protecting the property. But when that case involves just one piece of real property, such as an apartment complex, hotel, or commercial building, it’s classified as a Single Asset Real Estate (SARE) case by the Bankruptcy Code.
SARE cases move quickly, face stricter deadlines, and come with unique requirements. Understanding how they work is essential for real estate owners and investors who want to preserve equity and control.
1. What Is a Single Asset Real Estate Case?
Under the Bankruptcy Code (11 U.S.C. §101(51B)), a Single Asset Real Estate case refers to a debtor whose primary income is derived from owning or operating a single real property, typically one that generates rent or lease revenue.
Examples include:
Apartment complexes
Retail centers or strip malls
Office buildings
Hotels, motels, or storage facilities
Vacant land intended for development
A business is considered “single asset” if:
The debtor’s income comes primarily from the property itself, not from operating a broader business; and
The property is not part of an active business other than operating the real estate (like manufacturing or retail).
This classification matters because it triggers special rules under Chapter 11 designed to prevent owners from using bankruptcy simply to delay foreclosure.
2. The Purpose Behind SARE Rules
Congress created the SARE provisions to strike a balance between debtor protection and creditor fairness.
Before these rules existed, some real estate owners would file Chapter 11 to halt foreclosure without any intention or ability to reorganize. To curb abuse, the Bankruptcy Code now imposes strict deadlines and limited extensions in SARE cases.
The goal is to ensure that only debtors with a genuine, feasible plan for reorganization seek and obtain bankruptcy protection.
3. The 90-Day Rule
Perhaps the most important feature of a SARE case is the 90-day rule.
Within 90 days of filing, the SARE debtor must either:
File a feasible plan of reorganization that demonstrates how secured creditors will be paid, or
Begin making monthly payments to the secured lender equal to the interest at the (non-default) contract rate based on the property’s value.
If neither of these actions occurs, the lender can request relief from the automatic stay to obtain an order from the Bankruptcy Court allowing foreclosure to proceed.
This means time is critical. Real estate owners must work with an experienced Chapter 11 attorney early in the process to meet these deadlines and prepare a realistic and confirmable plan.
4. Crafting a Feasible Reorganization Plan
Even though SARE cases are fast-paced, success depends on the same core elements as any other Chapter 11 filing: feasibility, fairness, and evidence.
A SARE reorganization plan typically includes:
An updated property valuation/appraisal
Projections of rental income or sale proceeds
A proposal for modifying loan terms or interest rates
Payment terms for arrears and ongoing debt service
A strategy for refinancing or selling if necessary
For many debtors, reorganization means negotiating a longer repayment term, a lower interest rate, or new funding based on future appreciation or sale.
In the Florida real estate market, where property values and lease rates fluctuate, a strong feasibility analysis can make the difference between confirmation and dismissal.
5. The Role of the Court and Creditors
SARE cases often involve close oversight by both the court and secured creditors. The lender will typically move for relief from stay early in the case, citing the 90-day rule.
An experienced Chapter 11 attorney will work to demonstrate that the debtor has a credible reorganization path, backed by solid financial data and good-faith negotiations.
The goal isn’t just to delay foreclosure, it’s to protect the property while creating a sustainable repayment plan that benefits both debtor and lender.
6. Why Subchapter V Usually Doesn’t Apply
Subchapter V was designed for small business debtors, not single asset entities. Because most SARE debtors hold a single property and don’t operate an active business, they typically don’t qualify for Subchapter V.
However, where a real estate entity has multiple properties and/or related business operations, Subchapter V may be available.
Your attorney can help evaluate eligibility and recommend the best filing strategy based on the size, debt structure, and income profile of the property.
7. Strategic Advantages of Chapter 11 for Real Estate Owners
Despite the challenges, Chapter 11 remains one of the most effective tools for real estate debtors in distress. It can:
Halt foreclosure immediately through the automatic stay
Allow time to refinance or sell under better market conditions
Preserve equity for the owner rather than losing it in a quick foreclosure sale
Provide leverage in negotiations with lenders and investors
Many Florida investors use Chapter 11 strategically,
not as a last resort, but as part of a structured business recovery plan.
The Bottom Line
Single Asset Real Estate cases move quickly and require careful planning, but with the right legal guidance, they can give property owners the breathing room needed to restructure debt and protect valuable assets.
At Winter Park Estate Plans & ReOrgs, our team has decades of experience guiding Florida investors, developers, and property owners through the complex world of Chapter 11 real estate reorganizations.
If you own a property facing foreclosure or want to explore whether a SARE Chapter 11 filing could preserve your investment, we’re here to help you make a confident, informed decision.
📥 Download Our Chapter 11 Readiness Checklist
Learn what financial documents and timelines apply in SARE and traditional Chapter 11 cases. Download the Checklist (PDF)
To schedule a free online/phone consultation with our experienced Chapter 11 attorney, Melissa A. Youngman, call 📞 (407) 765-3427 or use the "Book Now" button below.
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