Bankruptcy Sale: Maximizing Bankruptcy Estate Assets Trumps Contractual Obligations

Gluckstadt Holdings, L.L.C. v. VCR I, L.L.C. (In re VCR I, L.L.C.), 922 F.3d 323 (5th Cir. 2019) –

The bankruptcy court granted a Chapter 7 trustee’s motion to approve holding a public auction and selling property of the debtor free and clear of claims and interests to the highest and best bidder. A prior prospective buyer that objected appealed to the district court, which affirmed the bankruptcy court, and then to the Fifth Circuit. Continue reading

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Agricultural Liens: Better Figure out the Right i’s To Dot and t’s to Cross

Fishback Nursery, Inc. v. PNC Bank, N. A., 920 F.3d 932 (5th Cir. 2019) –

In this priority dispute two nurseries sold trees and shrubs to a commercial wholesale farm that went bankrupt. They claimed their agricultural liens in the debtor’s assets were senior to a third-party bank’s security interests. The district court found in favor of the bank, and the nurseries appealed to the Fifth Circuit. Continue reading

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Bankruptcy Sales: Highest Is Not Always Best

In re 160 Royal Palm, LLC, 600 B.R. 119 (S.D. Fla. 2019) –

A bankruptcy court granted the debtor’s motion to withdraw a public auction sale procedure that it had already approved and to instead to approve a private sale of the debtor’s property. A former owner that would no longer be allowed to bid appealed to the district court. Continue reading

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Sheriff’s Fees: Surprise, a Commission May Be Due for a Foreclosure Sale That Did Not Take Place

Dobin v. Golden (In re Smith), 599 B.R. 266 (Bankr. D. N.J.) –

A chapter 7 trustee brought an adversary proceeding objecting to (1) a claim filed by a sheriff for a commission based on a prebankruptcy foreclosure sale that does not take place and (2) a claim by the secured creditor for reimbursement to the extent it was liable for payment of the commission. The bankruptcy court treated the parties’ pleadings as cross-motions for summary judgment. Continue reading

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Reverse Mortgages: Can A Reverse Mortgage Loan Be Reinstated?

Reverse Mortgage Solutions, Inc. v. Nunez, 598 B.R. 876 (S.D. Fla. 2019) –

A debtor filed a chapter 13 plan that proposed to cure defaults under a reverse mortgage by paying unpaid taxes and insurance. The mortgagee objected, arguing that because the debtor was not a “Borrower,” it was entitled to accelerate the loan and the debtor was required to pay the loan in full in order to retain the property. The bankruptcy court ruled in favor of the debtor, and the mortgagee appealed to the district court. Continue reading

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Yield Maintenance Premiums: The Continuing Saga of Premiums Charged after Involuntary Acceleration

In re 1141 Realty Owner LLC, 598 B.R. 534 (Bankr. S.D. N.Y. 2019) –

A debtor objected to a proof of claim filed by a mortgagee that included a Yield Maintenance Default Premium. The debtor argued that the mortgagee had accelerated the loan so that any prepayment premium should be disallowed as unenforceable. The proof of claim totaled ~$32 million and included a “make whole” or yield maintenance premium of ~$3.1 million. Continue reading

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Exclusivity and Tenant Mix: The Case of the Missing Shopping Center

In re Toys “R” Us Prop. Co. I, LLC, 598 B.R. 233 (Bankr. E.D. Va. 2019) –

The debtor proposed to assume and assign a lease to a discount grocer. The landlord objected based on the fact that a discount grocery store was located on an adjacent parcel owned by the landlord. The bankruptcy court considered whether the tenant mix in the shopping area and an exclusivity clause in the lease for the adjacent grocery store were relevant to its ruling on the proposed assignment. Continue reading

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