Sale Orders: Ignore at Your Peril, Even After the Bankruptcy Case is Closed

Bombart v. The Family Center at Sunrise, LLC, 520 B.R. 300 (S.D. Fla. 2014) –

The owner of assets purchased in a bankruptcy sale sought to reopen a closed bankruptcy case to obtain an order enjoining the owner of the debtor entities from pursuing state litigation requesting relief in contravention of the sale order.  The bankruptcy court agreed and ordered the owner of the debtors to withdraw the state court claims.  The debtors’ owner appealed. Continue reading

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Substantive Consolidation: When Abuse Goes Too Far An LLC Will Not Shield Assets

In re Carroll, 520 B.R. 491 (Bankr. M.D. La. 2014) –

A chapter 7 trustee sought to substantively consolidate the bankruptcy estates of individual chapter 7 debtors with the separate bankruptcy estate of their wholly owned limited liability company (LLC).  Only the debtors, and none of the creditors, objected to substantive consolidation. Continue reading

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Land Contracts: Mortgage Priority and Other Complications

Liebzeit v. Intercity State Bank (In re Blanchard), 520 B.R. 740 (Bankr. E.D. Wis. 2014) –

A Chapter 7 trustee sought to avoid a mortgage on the debtors’ property using the “strong arm” powers of a hypothetical bona fide purchaser of real estate.  The complication was that the debtors sold the real estate on land contract before they granted the mortgage. Continue reading

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Surety Bonds: Direct Claims v Derivative Claims – Who Knew?

New Bern Riverfront Dev., LLC v Weaver Cooke Constr., LLC (In re New Bern Riverfront Dev. LLC), 521 B.R. 718 (Bankr. E.D.N.C. 2014) –

The debtor made claims against a surety that issued a performance bond in connection with a construction contract.  The surety contended that it was not liable for the consequential damage claims. Continue reading

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Attorney Fees: Following Local Law Can Mean the Difference Between Collecting or Not

Southside, LLC v SunTrust Bank (In re Southside, LLC), 520 B.R. 914 (Bankr. N.D. Ga. 2014) –

A debtor objected to attorney fees included in the proof of claim filed by a mortgagee, and the mortgagee moved for relief from the automatic stay to exercise its rights under a security deed securing the debtor’s guaranty based in part on the debtor’s lack of equity in the property. Continue reading

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Lease Damage Claim: Federal or State Law – Flip A Coin?

Broadfoot v. Jamestown Mgmt. Corp. (In re Int’l BioChemical Indus., Inc.), 521 B.R. 395 (Bankr. N.D. Ga. 2014) –

A chapter 7 trustee objected to the claim of a creditor/lessor on the basis that it should be disallowed because the lessor failed to turn over property recoverable using the trustee’s voiding powers, or alternatively, that it constituted a claim for lease termination damages that was subject to a cap. Continue reading

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Real Estate Sales: Fixtures Can Be In the Eye of the Beholder (a/k/a Boilerplate Matters)

In re Trackwell, 520 B.R. 788 (Bankr. W.D. Mo. 2014) –

The successful bidder at a bankruptcy auction of a ranch claimed that a cattle chute was included in the sold assets.  The debtors disagreed.  Resolution of the dispute turned on whether the cattle chute constituted a fixture that was part of the real estate.

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