Wisconsin & Milwaukee Hotel LLC

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF WISCONSIN
In re:
Wisconsin & Milwaukee Hotel LLC, 	Case No. 24-21743-gmh
Chapter 11
Debtor.
OPINION AND ORDER
ON DEBTOR’S MOTION TO MODIFY CASH COLLATERAL ORDER
The debtor moves to modify a May 2024 order that requires monthly payments
to its principal secured creditor as a condition on its use of cash collateral.
I
Debtor Wisconsin & Milwaukee Hotel LLC owns the Milwaukee Marriott
Downtown, a full-service hotel in Milwaukee. Creditors Computershare Trust
Company, N.A. (Computershare) and Wisconsin & Milwaukee Hotel Funding LLC
(collectively, Lenders) hold debt secured by the debtor’s assets, including the hotel. ECF
No. 632, at 1–5. The debtor was unable to pay its obligations to Computershare when it
demanded full payment on April 1, 2024, resulting in the debtor commencing this
bankruptcy case by filing a chapter 11 petition on April 9, 2024. ECF No. 632, at 5.
G. Michael Halfenger
United States Bankruptcy Judge
So Ordered.
Dated: May 12, 2026
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A few days after filing its bankruptcy petition the debtor requested that the court
authorize its operational use of cash in which Computershare held a security interest
and grant Computershare adequate protection limited to “the granting of replacement
liens to the extent of any completely unanticipated decline in the Cash Collateral”.1 ECF
No. 19, at 9. The court held a preliminary hearing on the motion, at which
Computershare appeared through counsel. ECF No. 46. The parties reported that
Computershare consented to the debtor’s use of Computershare’s cash collateral on an
interim basis subject to certain conditions, including that it would be granted
replacement liens, allowed a superpriority administrative expense claim, and receive a
payment “equal to 25% of the ‘cash available for administrative expenses,’ as indicated
on the [debtor’s] budget, after accounting for bankruptcy professional fees for the
Interim Period, in accordance with the budget.” ECF No. 38, at 3–4; see also ECF No. 46.
The court entered an order giving effect to the interim agreement, setting a deadline to
object to the motion, and scheduling a final hearing on the debtor’s motion. ECF No. 38,
at 4.
No one timely objected, but a few hours before the final hearing was scheduled
to commence, debtor’s counsel filed correspondence requesting that the court postpone
the hearing because debtor’s counsel and Computershare’s counsel had “been engaged
in negotiations of a final cash collateral agreement and proposed order, which [they]
believe[d] w[ould] result in an agreement shortly.” ECF No. 79, at 1. Based on that
report the court postponed the hearing for four days and reset the objection deadline to
1. The debtor’s cash collateral motion identified Wisconsin Housing and Economic Development
Authority as the secured creditor; later proceedings clarified that Computershare has succeeded WHEDA
as the holder of principal secured claims against the debtor. See ECF No. 632, at 8 (“WHEDA’s rights
under the Notes, Mortgages and other Loan Documents were assigned to Computershare pursuant to the
Indenture”); see also id. (“Computershare is the successor-in-interest to Wells Fargo Bank, National
Association, as assignee of WHEDA, in regards to title to and possession of the Indenture and all of the
Loan Documents, and is the owner and holder in due course of the Indenture and all such Loan
Documents and all obligations of Debtor evidenced by the Loan Documents.”).
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the day preceding the rescheduled hearing. ECF No. 80. Three days later debtor’s
counsel reported that the debtor and Computershare “reached agreement on the terms
of a proposed Final Order,” promising that the debtor would file a proposed order
giving effect to that agreement later that day. ECF No. 88, at 1. Based principally on the
parties’ agreement as memorialized in the proposed order, the court entered an order
authorizing the debtor to use cash collateral and requiring, among other things, that the
debtor make monthly payments to Computershare, capped at $50,000 per month, as
follows:
As additional adequate protection for the Lender’s security interests
in Cash Collateral, the Debtor shall make a payment to the Lender
on or before the first day of each calendar month, beginning on July
1, 2024 for the month ended May 31, 2024, equal to 25% of the
remainder of (a) the “cash available for administrative expenses,” as
indicated in the Budget for the applicable prior month minus (b) the
paid or accrued, as applicable, bankruptcy professional fees for such
month as provided for in the Budget (without double-counting the
same fees as “accrued” in one month and “paid” in another);
provided in no event shall such payment amount exceed $50,000 for
any calendar month (the “Adequate Protection Payment”). The
Adequate Protection Payment shall be applied by the Lender first to
accrued but unpaid interest, if any, and second to principal.
ECF No. 93, at 9–10 (the Order). The Order has no termination date, though it entitles
Computershare to terminate the debtor’s right to use cash collateral upon notice of an
event of default, which includes, among other things, a confirmed plan taking effect.
ECF No. 93, at 12.
By December 2025 the debtor had paid Computershare more than $957 thousand
during the bankruptcy case and the debtor’s cash accounts had increased from about
$368 thousand when it filed for bankruptcy protection to more than $2 million. ECF No.
830, at 2. The debtor now proposes that under these changed financial circumstances
continued monthly adequate protection payments are unnecessary: There is no
significant risk that Computershare’s collateral—debtor’s cash accounts and the hotel—
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will decline in value before a final hearing on plan confirmation. Cash on hand now
vastly exceeds the amount available on the petition date and there is no evidence that
the hotel is decreasing in value (indeed, both sides’ experts have presumed it is
increasing in value). As a result, the debtor contends, Computershare’s secured position
is adequately protected and there’s no adequate-protection need for additional
payments. ECF No. 829, at 5–6. On that basis, the debtor moves under Federal Rule of
Civil Procedure 60(b)(5) and (6) (made applicable here by Federal Rule of Bankruptcy
Procedure 9024) for prospective relief from the Order’s requirement that the debtor
must continue paying Computershare up to $50 thousand a month. See §361(1); see also
People’s Cap. & Leasing Corp. v. Big3D, Inc. (In re BIG3D, Inc.), 438 B.R. 214, 220–21 (B.A.P.
9th Cir. 2010) (“Adequate protection is in turn defined in § 361, and is intended to
compensate a secured creditor whose collateral declines in value while it is in the
possession of, and being used by, a chapter 11 debtor.”) (footnote omitted).
Computershare objects to the debtor’s motion, arguing that it is untimely under
Rule 60(c) and that no change in circumstances warrants altering the Order’s
requirement that the debtor make monthly payments to Computershare. ECF Nos. 864
& 910.
II
A
Rule 60(b)(5) provides, “On motion and just terms, the court may relieve a party
or its legal representative from a final judgment, order, or proceeding for the following
reasons: . . . (5) the judgment has been satisfied, released, or discharged; it is based on
an earlier judgment that has been reversed or vacated; or applying it prospectively is no
longer equitable”.
A “judgment” for Rule 9024 purposes “includes any appealable order.” Fed. R.
Bankr. P. 9002(e). And, at least in the context of Rule 60(b), which governs “final
judgment[s],” whether an order for purposes of that rule is a “judgment” depends on
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whether it is a final appealable order. Whether the Order, which affords Computershare
contingent rights to terminate it, is a “final appealable order” within the meaning of
Rule 9002(e), is not entirely clear. See Wolf v. FirstMerit Bank, N.A., 535 B.R. 772, 776
(N.D. Ill. 2015) (concluding that even if bankruptcy court’s cash collateral and adequate
protection order were not a final order appealable under §158(a)(1), it would exercise
jurisdiction under §158(a)(3)); see also Wilmington Tr. Co. v. AMR Corp. (In re AMR
Corp.), 490 B.R. 470, 475–76 (S.D.N.Y. 2013) (citing conflicting decisions on the issue of
whether denial of a motion for adequate protection is a final order), and Aurelius Cap.
Master, Ltd. v. Tousa Inc., Nos. 08-61317 & 08-61335, 2009 WL 6453077, at *13 (S.D. Fla.
Feb. 6, 2009) (“Here, the Cash Collateral Order preserves Wells Fargo’s ability to seek
additional adequate protection for the use of its cash collateral for the Creditors’
Committee’s professional fees, which reflects the Bankruptcy Court’s intent to
‘reexamine’ such use of the cash collateral on an ongoing basis. Because the fee awards
are interim in nature and the Cash Collateral Order is structured to permit further
reexamination by the Bankruptcy Court, the Order is not final with respect to Wells
Fargo’s appeal.”).
This uncertainty is immaterial for purposes of this opinion, however, because the
principles governing the circumstances under which a court may conclude that the
prospective application of a judgment is no longer equitable under Rule 60(b)(5)
similarly govern a court’s ability to modify interlocutory orders granting equitable
relief. Compare Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367, 378–84 (1992), with
Hendrix v. Page (In re Hendrix), 986 F.2d 195, 198 (7th Cir. 1993), and In re Martin, 92 B.R.
364, 366 (Bankr. N.D. Ind. 1988) (“Because adequate protection in the form of lost
economic opportunity compensation is a flexible concept, it is more analogous to an
injunction than a final judgment and thereby susceptible to modification as the result of
a change in circumstances warranting the initial order.” (citing In re All–Way Servs., Inc.,
73 B.R. 556, 565 (Bankr. E.D. Wis. 1987))). Under the circumstances here, nothing of
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moment depends on whether the Order is a “final” “order appealable to an appellate
court” to which Rule 60(b)(5) applies or is an interlocutory order that this court may
modify if there is a justifying change in circumstances. The parties’ presentations
presume that Rule 60(b)(5) applies to the debtor’s request to modify the Order; this
opinion follows suit and construes the debtor’s request in the same context.2
The Order was entered into with the parties’ agreement, and in relevant part it
imposes an affirmative injunction—it requires the debtor to make monthly payments to
Computershare of twenty-five percent of its funds available after paying budgeted
professional fees, with each monthly payment capped at $50 thousand. In practice this
has meant that the debtor has paid Computershare $50 thousand per month, totaling
about $1 million through December 2025. The debtor contends that additional payments
serve no legitimate purpose, since the value of Computershare’s collateral has not
diminished and will not diminish in the short time remaining before a final hearing on
confirmation or a grant of stay relief.
“‘[S]ound judicial discretion may call for the modification of the terms of an
injunctive decree if the circumstances, whether of law or fact, obtaining at the time of its
issuance have changed, or new ones have since arisen.’” Rufo, 502 U.S. at 378–80
(quoting Sys. Fed’n No. 91, Ry. Emps. Dep’t, AFL-CIO v. Wright, 364 U.S. 642, 647 (1961)).
Similarly, a party who demonstrates that an order’s prospective application is no longer
equitable is entitled to relief under Rule 60(b)(5). The party must show, however, “that a
significant change in circumstances warrants revision of the decree.” Id. at 383. The
2. The debtor also invokes (in passing) Rule 60(b)(6)’s catchall provision. Even presuming (as do
the parties) that the Order is a final order for purposes of Rule 60(b), Rule 60(b)(6) is not applicable here
because “relief under Rule 60(b)(6) is available ‘only when Rules 60(b)(1) through (b)(5) are
inapplicable.’” BLOM Bank SAL v. Honickman, 605 U.S. 204, 211 (2025) (quoting Kemp v. United States, 596
U.S. 528, 533 (2022)). “Rule 60(b)(6) is a catchall that follows paragraphs (1) through (5). It covers ‘any
other reason’ that justifies relief; that is, Rule 60(b)(6) provides only grounds for relief not already covered
by the preceding five paragraphs.” Id. As presented, the debtor’s motion rises or falls on the application
of Rule 60(b)(5).
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party may meet this burden by “showing a significant change either in factual
conditions or in law”, but, ordinarily, the court should not grant a modification “where
a party relies upon events that actually were anticipated at the time it entered the
decree.” Id. at 384-85. The Seventh Circuit has read Rufo to allow a bankruptcy “court
[to] modify an injunction that it has entered whenever the principles of equity require it
do so.” Hendrix, 986 F.2d at 198.
The debtor points to three changes in circumstances as justifying a modification
of the Order to remove the requirement that the debtor make monthly cash payments to
Computershare: (1) the debtor’s cash on hand when it commenced the case was about
$370 thousand but now exceeds $2 million (ECF No. 829, at 3–7), (2) the case has
remained pending without a confirmed plan for longer than originally anticipated (ECF
No. 891, at 2), and (3) the monthly payments to Computershare are no longer reducing
the value of Computershare’s secured claim—a claim that the debtor’s chapter 11 plan
must pay with interest (ECF No. 891, at 3–6).
Computershare sees these developments as the foreseeable consequences of the
deal the debtor struck to use cash collateral on a consensual basis, the debtor’s own
failure to quickly confirm a plan, and a later deal struck to avoid further litigation over
the value of the secured claim for purposes of plan confirmation. None of this,
Computershare says, constitutes a change in circumstances sufficient to terminate the
required monthly payments. Computershare adds that the debtor’s accumulation of
cash has been so long in the making that the request to modify the order on that basis is
untimely under Rule 60(c).
B
1
Rule 60(c)(1) provides, “A motion under Rule 60(b) must be made within a
reasonable time”. The debtor’s reply brief acknowledges Computershare’s observation
that the buildup of cash is not a new development. The debtor responds, however, that
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its motion to eliminate future monthly payments was made within a reasonable time
because the debtor filed it soon after (a) the debtor and Computershare agreed on the
value of Computershare’s secured claim for confirmation purposes—an agreement that
resulted in the monthly adequate protection payments no longer reducing the amount
of the secured claim (in the §506(a) sense) to be paid through a reorganization plan, as
those payments had previously—and (b) Computershare made clear that it would
accept no achievable plan of reorganization. Based on Computershare’s declaration that
mediation is pointless and the Lenders’ pending appeal of the order denying them
immediate relief from the automatic stay, the debtor paints continued payments as
simply funding its opponents’ “litigation war chest”. ECF No. 891, at 6.
Computershare first responds that the debtor cannot contest the timeliness of its
Rule 60(b)(5) motion, stating, “Because Debtor chose to ignore Rule 60(c), Debtor should
not be permitted to argue it for the first time in a reply brief.” ECF No. 864, at 2 n.1. But
“the time limits in Rule 60(c) are subject to waiver and forfeiture”. In re Terrell, 39 F.4th
888, 892 (7th Cir. 2022). And, although the moving party bears the ultimate burden to
show that a Rule 60(b) motion was timely filed, Rule 60(c) imposes a limitations period,
which, in the absence of language directing otherwise, is typically understood as an
affirmative defense. As so understood, the movant need not address Rule 60(c) until it is
raised. See NewSpin Sports, LLC v. Arrow Electronics, Inc., 910 F.3d 293, 299 (7th Cir. 2018)
(“A plaintiff is not required to plead elements in his or her complaint that overcome
affirmative defenses, such as statute-of-limitations defenses.”); Smith v. SEC, No. 24-
3907, 2026 WL 850806, at *4 (6th Cir. Mar. 27, 2026) (“[A] party is not required to
anticipate affirmative defenses in its opening [summary judgment] brief; so long as it
responds to those defenses in its reply brief, it preserves its arguments on the issue.”);
United Cent. Bank v. Wells St. Apartments, LLC, 957 F. Supp. 2d 978, 988 (E.D. Wis. 2013),
aff’d sub nom. United Cent. Bank v. KMWC 845, LLC, 800 F.3d 307 (7th Cir. 2015) (“Thus,
the most efficient way to handle affirmative defenses at the summary-judgment stage is
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to require the defendant to raise the defenses it intends to pursue at trial in response to
the plaintiff’s motion for summary judgment on a claim.”); Freeland v. Lorenzini &
Assocs., Ltd., No. 19 CV 07888, 2024 WL 3251584, at *3–4 (N.D. Ill. July 1, 2024)
(following same approach as United Central Bank v. Wells Street Apartments, LLC).
The debtor’s failure to address Rule 60(c) in its motion, therefore, does not
amount to a forfeiture of its right to demonstrate that it timely filed its motion to modify
the Order. Allowing the debtor to address Computershare’s Rule 60(c) argument in
their reply brief worked no procedural unfairness, since the court afforded
Computershare an opportunity to address the debtor’s response in a sur-reply. Under
the circumstances, the debtor’s failure to address Rule 60(c) does not require a ruling
that the motion is untimely.
2
Computershare argues that the debtor did not file its Rule 60(b)(5) motion in a
“reasonable time” because the debtor knew (or should have known) that the balance of
its cash accounts would increase during the bankruptcy. Indeed, one of the principals of
the debtor’s managing member predicted that outcome in a declaration the debtor filed
in support of its “first-day” motion seeking permission to use cash collateral. See ECF
No. 21, at 7 (“In my opinion, the Operating and Bankruptcy Budgets show that the net
cash of the Debtor is projected to increase substantially over the next four months, after
accounting for all ordinary and necessary business expenses, and the anticipated
bankruptcy expenses.”).
But to decide whether the debtor filed the motion in a reasonable time, the court
must consider all of the relevant factual circumstances: “Although ‘[t]here is no hard
and fast rule as to how much time is reasonable for the filing of a Rule 60(b)(6) motion,’
we look at ‘the interest in finality, the reasons for the delay, the practical ability of the
litigant to learn earlier of the grounds relied upon, and the consideration of prejudice, if
any, to other parties.’” Ingram v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 371 F.3d 950,
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952 (7th Cir. 2004) (quoting Kagan v. Caterpillar Tractor Co., 795 F.2d 601, 610 (7th Cir.
1986)). “[E]ven with respect to purely private litigation, the litigants’ knowledge of the
grounds for relief is only one factor for the [trial] court to weigh. Other factors include
‘“the interest in finality, the reason for delay, the practical ability of the litigant to learn
earlier of the grounds relied upon, and [the consideration of] prejudice [if any] to other
parties.’” Shakman v. City of Chi., 426 F.3d 925, 933–34 (7th Cir. 2005) (quoting Kagan, 795
F.2d at 610 (alteration in original)). And, in determining whether a Rule 60(b) motion
was brought in a reasonable time, a court must also consider “the nature of th[e]
litigation”. Id. at 934.
In the context of this chapter 11 case, the debtor filed its Rule 60(b) motion within
a reasonable time for purposes of Rule 60(c). At the time the debtor filed its motion, it
was clear that continuing to make monthly payments to Computershare was not
required as adequate protection—that is, those payments were not then (and are not
now) required to preserve the value of Computershare’s collateral—instead, they are
required only by the terms of the Order. See In re Wilson, 70 B.R. 46, 48 (Bankr. N.D. Ind.
1987). Following evidentiary hearings on the Lenders’ motion for stay relief, which
included valuation of the debtor’s hotel as of July 2025, and determination of a fair and
equitable cramdown rate, the court denied the Lenders’ request for immediate relief
from the automatic stay and directed that it would afford the debtor only one last
chance to confirm a plan of reorganization. The parties agreed on—and the court
adopted—a six-month schedule projected to conclude the reorganization effort, either
in plan confirmation or relief from the stay in favor of the Lenders. The parties also
agreed that if matters proceeded as proposed (and ordered), they would not relitigate
the hotel’s value but would use the 2025 hotel value as the value of the secured claim for
purposes of the debtor’s need to show that its reorganization plan pays the value of that
claim as of the plan’s effective date, as required by §1129(b)(2)(A)(i)(II). Given that
agreement, the debtor’s monthly payments will no longer decrease the value of the
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secured claim for confirmation purposes. Going forward those payments would only
decrease the amount of Computershare’s total claim (having exercised its §1111(b)
election) that exceeds the hotel value—an excess amount the plan proposes to pay
several years in the future without interest. Beyond all that, the Lenders appealed the
court’s denial of immediate stay relief to the district court, which, when the debtor
moved for relief from the Order, had at least some potential to disrupt the planned final
litigation of plan confirmation and stay relief as proposed by the parties and adopted by
the court.
Notably, Computershare does not argue that the debtor’s failure to file the
motion earlier somehow prejudices it; it makes no mention of anything that it would
have done differently had the debtor filed its motion sooner. See ECF Nos. 864 & 910, at
1–3. And, even presuming the Order is final for purposes of 28 U.S.C. §158(a), that is, it
finally resolved the contested matter of the debtor’s use of cash collateral and imposed
conditions in favor of Computershare, the Order is unquestionably interlocutory as
viewed from the perspective of the overall chapter 11 reorganization case. See In re
Lafayette Dial, Inc., 92 B.R. 798, 799–800 (Bankr. N.D. Ind. 1988) (“While an order of
adequate protection is final, in the sense that it is capable of being appealed, it is not
final in the sense that it is immutable.”). From that perspective, the Order’s command to
make monthly adequate-protection payments is akin to a preliminary injunction,
conditions imposed on the debtor to maintain the status quo as to Computershare’s
interest in the debtor’s property while affording the debtor the right to use that
property while it attempts to confirm a plan of reorganization. This status quo will be
overtaken either by confirmation of a plan that modifies Computershare’s rights to
relief from the debtor and its property or an order denying confirmation of that plan
and granting Computershare relief from the automatic stay so that it can immediately
exercise its foreclosure and other rights under nonbankruptcy law. Considering all this,
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the debtor moved for relief from the Order within a reasonable time for Rule 60(c)
purposes.
C
1
Whether the debtor is entitled to that relief is a different matter. The Order
incorporated the terms of an agreement between the debtor and Computershare, one
that preempted litigation over the debtor’s request for court authorization to use cash in
which Computershare had a lien. As noted above, in the analogous context of consent
decrees, “relief under Rule 60(b)(5) . . . requires a substantial change in circumstances”.
United States v. Sherard, No. 05-CV-486, 2015 WL 1840050, at *6 (E.D. Wis. Apr. 22, 2015)
(citing Rufo, 502 U.S. at 383). But the “standard for modification . . . [as] set forth in
Federal Rule of Civil Procedure 60(b)[] is a ‘flexible’ one.” O’Sullivan v. City of Chi., 396
F.3d 843, 861 (7th Cir. 2005) (citing Rufo, 502 U.S. at 380). As the Supreme Court has
instructed, Rule 60(b)(5) affords a potential avenue for relief when changes in fact or
law make a final order’s continuing effect inequitable:
Federal Rule of Civil Procedure 60(b)(5) permits a party to obtain relief from
a judgment or order if, among other things, applying the judgment or order
prospectively is no longer equitable. Rule 60(b)(5) may not be used to
challenge the legal conclusions on which a prior judgment or order rests,
but the Rule provides a means by which a party can ask a court to modify
or vacate a judgment or order if a significant change either in factual
conditions or in law renders continued enforcement detrimental to the
public interest. The party seeking relief bears the burden of establishing that
changed circumstances warrant relief, but once a party carries this burden,
a court abuses its discretion when it refuses to modify an injunction or
consent decree in light of such changes.
Horne v. Flores, 557 U.S. 433, 447 (2009) (cleaned up, quotations and citations removed);
see also United States v. City of Chi., 663 F.2d 1354, 1360 (7th Cir. 1981) (“The standard
also incorporates consideration of whether there remains any need to continue the
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injunction, that is, whether ‘the purposes of the litigation as incorporated in the decree’
have been achieved.”). Still, courts have cautioned against modifying orders to relieve a
party of known consequences or where the change of circumstances should have been
foreseen. See, e.g., Bigelow v. Balaban & Katz Corp., 199 F.2d 794, 796 (7th Cir. 1952)
(“[U]nder the doctrine of United States v. Swift & Co., 286 U.S. 106, [(1932), the] power to
modify an injunction turns upon the issue whether such modification is in adaptation to
changed conditions not readily foreseeable at the time the decree was entered.”); In re
Lafayette Dial, Inc., 92 B.R. at 800 (“Consequently, having once settled the dispute
through the entry of an agreed order, a debtor is not permitted to change its mind and
repudiate that agreement.”). And although the origins of these cautions might trace
back to “the ‘grievous wrong’ language of Swift . . . [which] ward[ed] off virtually all
efforts to modify consent decrees,” more recent precedent makes clear that modification
of injunctive relief entered by consent continues to be generally limited to “changes in
circumstances that were beyond the [moving party’s] control and were not
contemplated by the court or the parties when the [order] was entered,” Rufo, 502 U.S.
at 380–81.
While the debtor correctly observes that its substantially increased cash position
makes adequate protection payments unnecessary to preserve the collateral value, the
debtor appears to have anticipated that development from the onset. See ECF No. 19, at
6 (“The Operating Budget shows estimated substantial and material increases in net
cash during this initial four-month period [of the bankruptcy case], and demonstrates
that substantial and material net cash will remain and increase during this time after the
payment of all ordinary and necessary expenditures”.). The debtor nonetheless agreed
with Computershare on the current terms of the cash collateral order, including the
monthly payments of up to $50 thousand.
The debtor argues that the Lenders’ refusal to negotiate has unexpectedly
extended the case beyond what it reasonably expected and that the continued cash
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payments are now unfairly “financing the Lenders’ appellate litigation and efforts to
suspend and extend this case.” ECF No. 891, at 11. But while the Lenders’ apparent lack
of interest in negotiating terms of an acceptable reorganization plan no doubt
disappoints the debtor, it cannot be deemed so outside the range of foreseeable
outcomes to justify modification of the stipulated cash collateral order.
Additionally, the debtor’s agreement that the value of Computershare’s secured
claim will be set for confirmation purposes at the hotel’s adjudicated value of $26
million is not a change of circumstance that makes the continued payments inequitable.
And while the Lenders’ decision to appeal the court’s denial of immediate stay relief
may impose additional costs on the debtor, those additional costs alone are insufficient
to find continued application of the Order inequitable.
2
Still, as noted above, the cash collateral order is inherently interlocutory in the
context of the overall chapter 11 case—the Order’s purpose and effect terminate upon
plan confirmation, dismissal, or conversion. Therefore, this court retains the authority to
modify the cash collateral order “to take into account any change in circumstances”.
Chi. Hous. Tenants Org., Inc. v. Chi. Hous. Auth., 512 F.2d 19, 22 (7th Cir. 1975); see also
Dore & Associates Contracting, Inc. v. Am. Druggists' Ins. Co., 54 B.R. 353, 360 (Bankr. W.D.
Wis. 1985) (“The [bankruptcy] court has inherent power to modify preliminary
injunctions if warranted by the facts and circumstances of the case.” (citing 19 Fed. Proc.
L. Ed. §§ 47:138, 47:139 at 527–528 (1983))); Coggin v. Coggin (In re Coggin), 30 F.3d 1443,
1451 (11th Cir. 1994) (“The bankruptcy court has the equitable power to correct, modify,
or vacate its own interlocutory orders.”), abrogated on other grounds by Kontrick v.
Ryan, 540 U.S. 443 (2004).
This case now stands in a substantially different posture than it did when the
court entered the Order. The court has ordered that a final hearing on confirmation will
commence shortly, a schedule the debtor and the Lenders participated in setting. Unlike
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previously, the outcome of that hearing will definitively resolve the parties’ bankruptcy
dispute. The court will either confirm the debtor’s plan of reorganization or, if the
debtor is unsuccessful in confirming its plan, the court will grant Lenders relief from the
§362(a) stay to enforce their rights in the debtor’s property under nonbankruptcy law.
Given this and the fact that Computershare does not contend that it currently
faces any risk that its collateral position is not adequately protected, continuation of the
Order’s monthly payment term has no ongoing equitable purpose or function beyond
the commencement of the May 26 confirmation hearing. The only delay, if any, will be
one of adjudication, which the court anticipates will be short, and, in all events, any
such delay is not one that should be charged to the debtor in the form of payments that
can no longer be justified as adequate protection—that is, as payments calculated to
preserve value of Computershare’s collateral value through plan confirmation. The
court will therefore modify the Order to discontinue all monthly payments after the
May 2026 payment.3
3. 	The court takes judicial notice that the Lenders have requested that the District Court stay the
confirmation proceedings until their appeal of the December 5, 2025 order is complete. As the April 2,
2026 order (ECF No. 957) explains, however, this court has determined that a stay of these proceedings is
not justified. If the District Court nonetheless stays the proceedings in a manner that delays the scheduled
final hearing on confirmation, that delay will constitute an unforeseen event that, in the context of this
case’s other circumstances, will independently make continued monthly payments under the cash
collateral order inequitable. In the absence of the modification provided by this order, the resulting delay
would require in the debtor to make payments that are unnecessary as an adequate protection (or any
other) matter because the Lenders elect to eschew the most expeditious resolution of this case—
adjudication of plan confirmation at a final confirmation hearing commencing on May 26, which will
entitle them to stay relief should the debtor fail to prove that its amended plan of reorganization is
confirmable under §1129 of the Bankruptcy Code.
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III
For the reasons stated above, IT IS ORDERED:
1. The monthly payments required by the May 2, 2024 cash collateral order
terminate upon the debtor’s tendering of all such payments through and
including the May 2026 payment.
2. The debtor’s motion for relief from the May 2, 2024 cash collateral order (ECF
No. 829) is granted to the extent provided by this order and is otherwise
denied.
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