Trespass And Other Claims: Ever Wonder If Litigation Is Worth It?

Flyboy Aviation Properties, LLC v. Franck (In re Flyboy Aviation Properties, LLC), 525 B.R. 510 (Bankr. N.D. Ga. 2015) –

A chapter 11 debtor operated a small private airport.  The debtor and an adjacent landowner had a long running dispute that led to the debtor suing the landowner pre-bankruptcy for trespass.  After the bankruptcy petition was filed, the case was removed to the bankruptcy court.  The court’s decision provided an extensive discussion of the back and forth between the parties. Continue reading

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Foreclosures: Beware Unexpected Violations

Field v. Bank of America, N.A. (In re Gibbs), 522 B.R. 282 (Bankr. D. Hawaii 2014) –

A bankruptcy trustee sued a mortgage lender to recover for defects in a prepetition non-judicial foreclosure sale. The lender brought a motion to dismiss for failure to state a claim.  The primary focus of the court was on claims under the state Unfair and Deceptive Acts or Trade Practices (UDAP) law. Continue reading

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Plan Confirmation Feasibility: “I Know It When I See It”?

In re Brandywine Towhouses, Inc., 524 B.R. 889 (Bankr. N.D. Ga. 2014) –

The debtor was a nonprofit that owned a low and moderate income housing cooperative.  It proposed a plan of reorganization that contemplated deferring payments to its mortgage lender for six months, using the available cash during that period for renovation of 29 vacant apartments instead.  The mortgagee, which was the debtor’s largest creditor, objected. Continue reading

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Foreclosure Sales: When Is the “Deed” Done?

In re Betchan, 524 B.R. 830 (Bankr. E.D. Wash. 2015) –

A mortgagee was the highest bidder at a foreclosure sale that took place shortly before the debtor filed bankruptcy.  The lender requested relief from the automatic stay in order to evict the debtor on the basis that transfer of the property was completed prepetition so that it was not part of the debtor’s bankruptcy estate. Continue reading

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Limited Liability Companies: Handle Bankrupt LLC Members With Care

Walro v. The Lee Group Holding Co., LLC (In re Lee), 524 B.R. 798 (Bankr. S.D. Ind. 2014) –

A chapter 7 trustee sought a court determination that (1) a debtor’s voting rights in a limited liability company (LLC) were property of the bankruptcy estate, and (2) other members of the LLC violated the automatic stay by taking action to remove the debtor as a member and terminating his voting rights. Continue reading

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Transferee Liability: The Lottery Ticket/Uranium Contract Rule

Mano-Y&M Ltd. v. Field (In re Mortgage Store, Inc.), 773 F.3d 990 (9th Cir. 2014) –

A chapter 7 trustee sought to avoid a transfer by the debtor as a fraudulent conveyance and then to recover funds disbursed by the debtor to the seller of a shopping plaza. The trustee contended that the seller, and not the purchaser, was the “initial transferee” and consequently was absolutely liable.  The bankruptcy court and district court agreed, and the seller appealed to the 9th Circuit. Continue reading

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Mortgage Claims: Sometimes the Debtor Wins, and Sometimes the Lender Wins

Brandywine Townhouses, Inc. v. Fed. Nat’l Mortgage Ass’n (In re Brandywine Townhouses, Inc.), 518 B.R. 671 (Bankr. N.D. Ga. 2014) –

The debtor objected to a secured creditor’s claim on a number of grounds: it did not default, if it defaulted it was entitled to an opportunity to cure, the prepayment penalty was unreasonable, default interest was calculated incorrectly, and a lender cannot recover both default interest and late charges.  The debtor actually won one of these arguments. Continue reading

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