Settlement Proceeds: When Does Cash Become Quasi Real Estate?

Farmer v. Citizens Nat’l Bank of Athens (In re Davis), 528 B.R. 757 (Bankr. E.D. Tenn. 2015) –

A chapter 7 trustee sought a court determination that the trustee had a superior claim to settlement proceeds arising from damage to real property.  His argument was that they constituted general intangibles under the Uniform Commercial Code (UCC), and the claim of the mortgagee of the real property was junior because it did not perfect its interest by filing a UCC financing statement. Continue reading

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Title Insurance: When Does a Construction Lender “Create” or “Suffer” a Mechanics Lien?

BB Syndication Services, Inc. v. First American Title Ins. Co., 785 F.3d 825 (7th Cir. 2015) –

A construction lender sued a title insurance company seeking defense and indemnification in connection with claims in a developer’s bankruptcy.  The district court found that the title company had a duty to defend but no duty to indemnify.  The lender appealed the ruling on the duty to indemnify to the 7th Circuit. Continue reading

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Nonresidential Leases: What Does It Take To Avoid Deemed Rejection?

In re Simbaki, Ltd., 520 B.R. 241 (Bankr. S.D. Tex. 2014) –

A chapter 11 debtor sought to assume a restaurant lease.  The landlord objected, arguing among other things that the lease was not timely assumed and so was deemed rejected. Continue reading

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Chapter 11 Sales: Believe It Or Not, There Really Are Limits

In re P.D.M. Co., 523 B.R. 558 (Bankr. W.D. Mich. 2015) –

Two affiliated chapter 11 debtors sought court approval of a sale of all of their assets out of the ordinary course of business free and clear of claims.  The bankruptcy court questioned various aspects of the proposed transaction and declined to approve the sale. Continue reading

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Officer/Director Breach of Duty: If Things Get Bad Enough, There May Be Recourse

Official Comm. of Unsecured Creditors v. Baldwin (In re Lemington Home for the Aged), 777 F.3d 620 (3rd Cir. 2015) –

The debtor was a nonprofit corporation that operated a nursing home.  The chapter 11 unsecured creditors committee brought proceedings against former officers and directors.  Eventually a judgment was entered finding the defendants liable for breach of fiduciary duties and deepening insolvency, and imposing punitive damages against the officers and some of the directors.  The defendants appealed to the 3rd Circuit. Continue reading

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Credit Bidding: Not An Absolute Right (And What Does That Mean?)

In re RML Dev., Inc., 528 B.R. 150 (Bankr. W.D. Tenn. 2014) –

A mortgagee sought to modify a sale order to (1) modify the bid procedures and (2) confirm that it had a right to credit bid. Continue reading

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Claim Amount: It Pays To Pay Attention

In re Walker, 526 B.R. 187 (E.D. La. 2015) –

The bankruptcy court (1) denied a mortgage lender’s request to file a late amendment to a proof of claim that had been filed on its behalf by the debtor and (2) confirmed the debtor’s proposed plan over the mortgagee’s objection that the plan payments were not sufficient to cure the actual arrearage. The lender appealed to the district court. Continue reading

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