Purchase Agreements: Say What You Mean … The More Precise the Better?

JJCC Real Estate LLC v. Brooklyn Renaissance, LLC (In re Brooklyn Renaissance, LLC), 556 B.R. 68 (Bankr. N.D. N.Y. 2016)

After a proposed sale of the debtor’s real estate failed to close, the debtor declared a default and retained the buyer’s deposit as liquidated damages. The buyer sued to recover its deposit. The complaint included claims for breach of contract, unjust enrichment and fraud. In response the debtor moved to dismiss. Continue reading

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Buyer Standing: No Leg to Stand On

Buyer Standing: No Leg to Stand On

Arlington Capital, LLC v. Bainton McCarthy LLC (In re GT Automation Group, Inc.), 828 F.3d 602 (7th Cir. 2016)

After a debtor’s assets were auctioned off, the bankruptcy trustee unsuccessfully sued the buyer and insiders of the debtor contending that they colluded to depress the purchase price. When the trustee sought court authorization to pay legal fees, the buyer objected. The bankruptcy court approved the fees over its objection and the district court affirmed. So the buyer appealed to the 7th Circuit. The 7th Circuit focused on the threshold issue of whether the buyer had standing. Continue reading

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Time-Barred Proof of Claim: To File or Not to File, That Is the Question

Johnson v. Midland Funding, LLC, 823 F.3d 1334 (11th Cir. 2016)

In two chapter 13 bankruptcy cases that were consolidated on appeal the debtors claimed that a creditor violated the Fair Debt Collection Practices Act (FDCPA) by filing a bankruptcy proof of claim for claims barred by a statute of limitations. The district court found for the creditors on the basis that there was an implied repeal of a portion of the FDCPA by the Bankruptcy Code. The debtors appealed to the 11th Circuit. Continue reading

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Cramdown Plan of Reorganization: Can A $2400 Tail Wag An $8.6 Million Dog?

Village Green I, GP v. Fed. Nat’l. Mortgage Ass’n. (In Re Village Green I, GP), 811 F.3d 816 (6th Cir. 2016)

The debtor sought confirmation of a plan of reorganization where the impaired accepting class consisted of two claims totaling less than $2400 which were to be paid over 60 days. The secured creditor objected that this did not satisfy the Bankruptcy Code confirmation requirements. The bankruptcy court initially confirmed the plan. After bouncing back and forth between the bankruptcy court and the district court, the case was dismissed and the automatic stay lifted. An appeal to the 6th Circuit followed. Continue reading

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Avoiding Mortgages: How Far Does a Bona Fide Purchaser Have To Go in Searching Records?

Wenzel v. Green Tree Servicing, LLC (In re Wenzel), 554 B.R. 861 (Bankr. W.D. Wis. 2016)

A chapter 7 trustee and a debtor sought to avoid as a preference a mortgage assignment that was recorded within 90 days prior to the bankruptcy filing. Underlying this claim was their contention that the original mortgage was void as against subsequent purchasers (thus allowing the trustee to avoid the lien) because no legal description was attached to the mortgage. Continue reading

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Bankruptcy Sales: Consider All of the Facts

In re Moreno, 554 B.R. 504 (Bankr. D. N.M. 2016)

A chapter 7 trustee sought authority to sell real property in which the debtor had an interest as a tenant in common. Although the sale was to a relative of the debtor for a price that was only a fraction of the original listing price and the co-tenant objected, the bankruptcy court approved the sale. Continue reading

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Guarantors Beware: Ignore Boilerplate at Your Peril

Edwards Family P’ship v Dickson, 821 F.3d 614 (5th Cir. 2016)

Prior to bankruptcy the debtor obtained loans from two lenders totaling $16 million that were guaranteed by its CEO. After the debtor defaulted and filed bankruptcy, the lenders sought to recover the outstanding debt from the guarantor. The district court granted summary judgment in favor of the lenders against the guarantor, finding him liable, and the guarantor appealed to the Fifth Circuit. Continue reading

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