In re Jaussi, 488 B.R. 456 (Bankr. D. Colo. 2013) –
A chapter 7 bankruptcy trustee requested court approval of a sale of vacant land to a bank that held a first lien on the property, with the sale to be “free and clear” of the junior liens of two judgment creditors. Sounds reasonable, right? The bankruptcy court did not agree. It denied the request on the basis that the sale was not authorized under the Bankruptcy Code. (more…)
Bullock v. BankChampaign, N.A., 569 U.S. ___ (2013) –
Although an individual debtor can generally obtain a discharge of debts in bankruptcy as part of a “fresh start,” there are certain exceptions. In particular, Section 523(a)(4) of the Bankruptcy Code provides that a debtor is not discharged from a debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” In Bullock the Supreme Court resolved a long standing issue about the proper standard for establishing defalcation. (more…)
Filed under: Financing, Real Estate | Tags: discharge of debts, financing, foreclosure
Canning v. Beneficial Maine, Inc. (In re Canning), 706 F.3d 64 (1st Cir. 2013) –
After filing a chapter 7 bankruptcy, the debtors tried to surrender their residence to the mortgage lender. After the bankruptcy the lender refused to accept a surrender, refused to foreclose and refused to release its lien. The debtors brought an adversary proceeding claiming that, among other things, this refusal constituted a violation of the discharge injunction they received in bankruptcy. The bankruptcy court found no violation; the Bankruptcy Appellate Panel agreed; and on appeal the 1st Circuit affirmed – but with some cautionary comments. (more…)
In re Jimenez, 487 B.R. 543 (Bankr. D. Colo. 2013) –
A mortgage lender filed a proof of claim in a chapter 13 bankruptcy claiming total secured debt of $132,945.08, including $14,327.60 in prepetition expenses that were identified as $2,231.93 in late charges and $12,095.67 in attorney fees. The debtors objected, claiming that (1) the lender failed to properly itemize prepetition expenses, and (2) the attorney fees were unreasonable. (more…)
A stalking horse (BMC) was the winning bidder in a section 363 bankruptcy sale. After the sale to BMC failed to close and the debtors’ assets were instead sold to a back-up bidder, BMC claimed that it was entitled to a refund of its 5% good faith deposit, while the debtors’ successor (a liquidating trust) claimed BMC defaulted and sought to retain the good faith deposit. (more…)
Route 21 Associates of Belleville, Inc. v. MHC, Inc., 46 B.R. 75 (S.D.N.Y. 2012 –
A company (Route 21) bought property from the debtor (MHC) in the mid-1980s that turned out to be contaminated. After the debtor filed bankruptcy in 2009, Route 21 attempted to protect its rights against MHC by moving for specific performance of the debtor’s environmental obligations under a settlement agreement and seeking to have the costs of cleanup treated as an administrative expense.
Route 21’s claim for costs already incurred was over $1 million, and it estimated additional costs of $6.6 million, with MHC responsible for $1.65 million. The bankruptcy court denied the motion for specific performance, denied administrative expense status, and disallowed future cleanup costs entirely. Route 21 appealed to the district court. (more…)
Quinlan v. AFI Services, LLC (In re AFI Services, LLC), 486 B.R. 827 (Bankr. S.D. Tex. 2013) –
The debtor (AFIS) entered into a joint venture agreement with a third party (Quinlan) to acquire an apartment complex pursuant to a purchase agreement between the debtor and the seller. Under the JV agreement, the debtor was supposed to form a new single purpose entity to acquire the property on behalf of the joint venture, and in return Quinlan deposited $1 million with the title company, as contemplated by a proposed amendment to the purchase agreement that would extend the closing deadline of April 30, 2012 for an additional 60 days. Although Quinlan wired the money, the amendment was not signed, the deal fell through, and the debtor filed bankruptcy. Not surprisingly, Quinlan wanted his money back. (more…)
