Chapter 7 Sale: Debtor Out of Luck Unless Property Is Abandoned

In re Mejia, 576 B.R. 464 (Bankr. S.D.N.Y. 2017) –

A chapter 7 debtor sought bankruptcy court approval to sell property in a section 363 sale. The trustee filed an untimely objection on the grounds that a chapter 7 debtor must sell abandon property outside of bankruptcy and cannot use section 363 of the Bankruptcy Code. Continue reading

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Disallowed Claims and Lien Stripping: Plain English May Not Be Sufficient to Win the Day

Kohout v. Nationstar Mortgage, LLC, 576 B.R. 290 (N.D.N.Y. 2017) –

Chapter 13 debtors sought to avoid a mortgage lien after the claim was disallowed on procedural grounds. The bankruptcy court found in favor of the mortgagee and the debtors appealed to the district court. The matter turned on interpretation of section 506(d) of the Bankruptcy Code regarding liens securing claims that are not allowed secured claims. Continue reading

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Delinquent Property Tax Sales: What Rights Does a Tax Sale Purchaser Have?

Encore Assets, LLC v. Woodley (In re Woodley), 579 B.R. 630 (Bankr. N.D. Ga. 2017) –

A chapter 13 debtor proposed to pay a prepetition property tax sale purchaser the statutory redemption amount over time. The purchaser objected, contending that the debtor could not modify the statutory payment terms. Continue reading

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Springing Liability: Full Recourse Means Full Recourse

Oak Creek Plaza, LLC v. Thrivent Financial for Lutherans, 579 B.R. 460 (N.D. Ill. 2017) –

The key issue in this case turned on interpretation of the recourse provisions of a mortgage note. The bankruptcy court held that the debtor’s bankruptcy filing triggered full recourse, which led to a series of orders ending with dismissal of the bankruptcy case. The debtor appealed to the district court. Continue reading

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Bankruptcy Sale Appeal: You Better Obtain a Stay Pending Appeal or You May Be Out of Luck

Mission Product Holdings, Inc. v. Old Cold LLC (In re Old Cold LLC), 879 F.3d 376 (1st Cir. 2018) –

A chapter 11 debtor sold substantially all of its assets to the successful bidder at an auction. The bankruptcy court order approving the sale was immediately effective. A losing bidder appealed, challenging the sale on a variety of grounds. The losing bidder did not obtain a stay of the sale pending appeal. Continue reading

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Landlord Liens: When Is Waiver and Subordination Not Waiver and Subordination?

Franklin County Area Dev. Corp. v. Edge Pennsylvania, LLC (In re Edge Pennsylvania, LLC), 580 B.R. 120 (Bankr. M.D. Pa. 2017) –

A commercial landlord brought a state court action to determine the priority of its landlord lien versus a lender’s security interest in equipment located on the leased premises. Alternatively, the landlord sought rent payments from the lender. The case was removed to federal court due to the tenant’s bankruptcy filing, and the lender moved for summary judgment. Continue reading

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Setoff: When Is a Deficiency an Insufficiency?

Hurt v. HUD (In re Hurt), 579 B.R. 765 (Bankr. W.D. Va. 2017) –

The debtors sought to recover a federal tax refund that the United States Department of Treasury set off prebankruptcy in partial satisfaction of a foreclosure deficiency the debtors owed to HUD. The debtors argued that the refund should be turned over to the bankruptcy estate under section 542 of the Code since the setoff was a preference under section 547. Continue reading

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