Loan to Own: A Potpourri of Bankruptcy Attacks

Colony Beach & Tennis Club Ass’n, Inc. v. Colony Lender, LLC (In re Colony Beach & Tennis Club, Inc.), 508 B.R. 468 (Bankr. M.D. Fla. 2014) –

Three affiliated debtors (RMI, CBTC and CBI) proposed a plan of reorganization that, among other things, required transfer of the collateral (interests in a tennis resort) of an objecting undersecured lender (Colony Lender) free and clear of its liens in exchange for either an unspecified payment or return of the collateral after one year.  The convoluted ownership structure of the resort and treatment of the lender’s claims gave rise to a variety of related questions. Continue reading

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Loan to Own Variation: Bankruptcy May Not Provide The Answers

In re SR Real Estate Holdings, LLC, 506 B.R. 121 (Bankr. S.D. Cal. 2014) –

A group of lenders moved to dismiss the debtor’s bankruptcy case on the basis that it was filed in bad faith, or in the alternative asked the court to find that the debtor was a “single asset real estate” and then to grant the lenders relief from the automatic stay. Continue reading

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Strong Arm Powers: Mortgage Boo-Boo Strikes Again

Kellner v First Ohio Banc & Lending, Inc. (In re Geraci), 507 B.R. 224 (Bankr. S.D. Ohio 2014) –

A Chapter 13 trustee and the debtor sought to use the strong arm powers of a hypothetical bona fide purchaser of real estate to avoid a mortgage based on the fact that an incorrect legal description was attached to the mortgage and it was indexed in the land records using the incorrect description. Continue reading

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Cramdown Hurdles Round 2: Confirmation Can Be An Elusive Prize

In re NNN Parkway 400 26, LLC, 505 B.R. 277 (Bankr. C.D. Cal. 2014) –

The primary creditor (an undersecured lender) objected to the debtors’ proposed plan of reorganization on various grounds, including that the plan violated the “absolute priority rule,” its deficiency claim was improperly put in a separate class from other unsecured creditors, the plan was not feasible, and in essence the plan involved a sale of the property which meant that the lender had a right to submit a credit bid. Continue reading

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Cramdown Hurdles: How to Play the Classification Game (Or Not)

In re New Bride Missionary Baptist Church, 509 B.R. 85 (Bankr. E.D. Mich. 2014)

After the bankruptcy court denied confirmation of a debtor’s proposed chapter 11 plan of reorganization because there was no accepting impaired class, the debtor proposed an amended plan that placed a mortgagee’s large deficiency claim in one class and claims of other unsecured creditors in a separate “administrative convenience” class. Continue reading

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Automatic Stay: What Happens When a Case is Reopened?

U.S. Bank, N.A. v. Brumfiel (In re Brumfiel), 514 B.R. 637 (Bankr. D. Colo. 2014)

After a debtor reopened her chapter 7 bankruptcy case, a lender moved for relief from the automatic stay in order to continue with a foreclosure action. The debtor objected, arguing among other things that the lender did not have standing to request relief. Continue reading

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Medical Marijuana: What Happens in Bankruptcy (Not Much)

In re Arenas, 514 B.R. 887 (Bankr. D. Colo. 2014)

The U.S. trustee sought to dismiss “for cause” a chapter 7 case filed by a marijuana grower and his wife. The debtors countered by moving to convert to a chapter 13 case. The case turned on the impact of the federal Controlled Substances Act. Continue reading

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