Chapter 13 Debtors: Do Not Take It For Granted That a Chapter 13 Debtor Can Exercise Trustee Powers

Andrade v. Essenfeld (In re Andrade), 570 B.R. 121 (Bankr. D. Mass. 2017) –

The debtor owned real estate with her brother and sister as tenants-in-common. After she filed bankruptcy, she sought authority to sell both her interests and the interests of her co-owners in the property under section 363(h) of the Bankruptcy Code. Although the brother and sister did not respond, the court sua sponte dismissed the claim. Continue reading

Posted in Real Estate | Tagged , | Leave a comment

Assignment of Rents: Who Has What Interests?

Town Center Flats, LLC v. ECP Commercial II LLC (In re Town Center Flats, LLC), 855 F.3d 721 (6th Cir. 2017) –

A commercial mortgagee exercised its assignment of rents prior to bankruptcy. After it then commenced a foreclosure action, the debtor filed bankruptcy. The mortgagee filed a motion to prohibit the debtor from using rents. The bankruptcy court determined that the rents qualified as cash collateral of the bankruptcy estate and denied the motion. The district court reversed, and the debtor appealed to the 6th Circuit. Continue reading

Posted in Financing, Real Estate | Tagged , , | Leave a comment

Asset Protection: Legitimate Planning or Fraudulent Transfer Based on Actual Intent to Hinder or Delay Creditors (Who Knows)?

Wiggains v. Reed (In re Wiggains), 848 F.3d 655 (5th Cir. 2017) –

A chapter 7 trustee sought to avoid a pre-petition partition of community property as a fraudulent transfer. The bankruptcy court ruled in favor of the trustee. After sale of the property the non-debtor’s wife moved for an award of a portion of the sale proceeds based on her homestead interest. The bankruptcy court determined that she would be limited by her debtor-husband’s capped exemption. Both decisions were appealed directly to the 5th Circuit. Continue reading

Posted in Real Estate | Tagged , | Leave a comment

Discharge of Securities Law Violations: Nothing Is Ever Straightforward

Lunsford v. Process Technology Services, LLC (In re Lunsford), 848 F.3d 963 (11th Cir. 2017)

An investor obtained a state court judgment against the debtor relating to securities law violations. After the debtor filed bankruptcy, the investor sought a determination that the debt could not be discharged because it was “for the violation” of securities laws. The bankruptcy court ruled in favor of the investor, the district court affirmed, and the debtor appealed to the 11th Circuit. Continue reading

Posted in Uncategorized | Tagged | Leave a comment

Married Individual Guarantor: Collecting from Property Subject to a Spouse’s Interest Can Be “Iffy”

First Community Bank v. Gaughan (In re Miller), 853 F.3d 508 (9th Cir. 2017)

A creditor obtained an Arizona judgment against the debtor arising from the guarantee which it recorded and registered in California. After the debtor filed bankruptcy the bank sought a determination that the judgment was enforceable against California property owned by the debtor and his spouse. Applying California law, the bankruptcy court found in favor of the creditor. On appeal the district court reversed based on Arizona law. The creditor appealed to the Ninth Circuit. Continue reading

Posted in Financing | Tagged , , | Leave a comment

Serial Filings That Block a Creditor: Better Not to Obtain More Relief Than You Need

In re Ross, 838 F.3d 779 (3rd Cir. 2017)

A debtor filed bankruptcy to block a foreclosure. When he sought to voluntarily dismiss the case, the bankruptcy court granted the request but also enjoined him from filing at any time in the indefinite future. The order was appealed first to the district court and then to the Third Circuit. Continue reading

Posted in Financing | Tagged , | Leave a comment

Sale Appeals: No Stay, No Appeal – Or Maybe Not

Brown v. Ellmann (In re Brown), 851 F.3d 619 (6th Cir. 2017)

After a chapter 7 trustee sold mortgaged residential property that had been surrendered by the debtor, the debtor claimed an exemption in the sale proceeds based on her state law redemption rights. The bankruptcy court denied the exemption claim, and the debtor appealed – first to the district court and then to the Sixth Circuit. There was no stay pending appeal and the debtor had no equity in the property, so as a threshold mater the court addressed mootness and standing before considering the merits of the exemption claim. Continue reading

Posted in Bankruptcy Sales | Tagged , | Leave a comment