Landlord Debtor: The Cost of Rejection

In re Lake Dearborn, LLC, 534 B. R. 747 (Bankr. N.D. Ill. 2015) –

A landlord debtor sought to reject unexpired food court leases, giving rise to tenant claims for rejection damages. The court was asked to determine the amount of damages for a number of the tenants. Continue reading

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Loan Assignment: Surprise – A Successor Lender May Step into Only One Shoe

New Products Corp. v. Tibble (In Re Modern Plastics Corp.), 534 B.R. 723 (Bankr. W.D. Mich. 2015) –

The assignee of a mortgage lender sued a former Chapter 7 trustee and his surety for claims based on breach of fiduciary duty. After some nudging from the court, the defendants brought a motion for summary judgment that was characterized as a challenge to plaintiff’s standing to bring the claims. Continue reading

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Discharge Injunction: Secured Claims Can Ride through Bankruptcy Without Regard to a Discharge

Fonseca v. Gov’t. Employees Ass’n. (In re Fonseca), 534 B.R. 261 (Bankr. D. P.R. 2015) –

An individual Chapter 7 debtor sued the Puerto Rico Government Employees Association (AEELA) alleging that it violated the discharge injunction. AEELA made a prepetition loan to the debtor, and after the discharge order was entered sought to recover money owed to the debtor for accumulated vacation and sick leave to apply to repayment of the loan. Continue reading

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UCC Financing Statements: The Ins and Outs of “Authorization”

Official Committee of Unsecured Creditors of the Adoni Group, Inc. v. Capital Business Credit, LLC (In re The Adoni Group, Inc.), 530 B.R. 592 (Bankr. S.D.N.Y. 2015) –

A creditors’ committee claimed that a financing statement was void, so that the related security interests were not perfected, and consequently could be avoided using the trustee’s “strong arm” powers. The argument turned on whether a financing statement filed one day before the security agreement was executed was authorized. Continue reading

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Discharge Injunction: There May Be More Nuances Than You Think

Botson v. Citizens Banking Co. (In re Botson), 531 B.R. 719 (Bankr. N.D. Ohio 2015) –

After a secured creditor refused to terminate a UCC‑1 financing statement and filed a UCC‑3 continuation statement instead, individual Chapter 7 debtors sued the creditor alleging violations of their discharge injunction. Continue reading

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Protecting Liens: “Allowing A Credit Bid” May Be More Complicated Than It Appears At First Glance

Baker Hughes Oilfield Operations, Inc. v. Morton (In re R.L. Adkins Corp.), 784 F.3d 978 (5th Cir. 2015) –

An undersecured mechanic’s lien claimant contended that it was entitled to elect to treat its claim as fully secured under Section 1111(b) of the Bankruptcy Code. Both the bankruptcy court and the district court rejected the election as invalid, and the creditor appealed to the 5th Circuit. Continue reading

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Partner Liability: Choice of Law Could Make More of a Difference Than You Might Expect

Residential Liquidating Trust v. Mortgage Investors Group, Inc. (In re Residential Capital, LLC), 527 B.R. 590 (Bankr. S.D.N.Y. 2015) –

A liquidating trust sued the general partners of a partnership for claims of contractual breach by the partnership.  The partners argued that Federal Rule of Civil Procedure 17 required the court to apply New York law, and under New York law the complaint should be dismissed.  The trust argued that Tennessee or Minnesota law applied so that the general partners were jointly and severally liable with the partnership. Continue reading

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