Attorney Liens: Possession of Cash Is Not Always the End of the Story

In re Venincasa, 601 B.R. 296 (Bankr. D. Mass 2019) –

A law firm sought relief from the automatic stay so that it could release funds held in its IOLTA account to pay itself fees owed by the debtor. The chapter 7 trustee and a title company creditor objected. The key issue was whether the firm had an attorney’s lien on the funds in its client trust account. Continue reading

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Drafting Errors: The Importance of Proofreading Cannot Be Overestimated

Scott v. U.S. Bank N.A. (In re Scott), 600 B.R. 506 (Bankr. W.D. Pa. 2019) –

A stipulation between the debtor and a mortgagee misstated the original principal amount of the mortgage debt. Eventually the debtor sought to enforce the stipulation, claiming that the parties agreed to the incorrectly stated amount. Continue reading

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Rents: What Happens to Unclaimed Rents Collected from Property That Is Abandoned?

In re Pena, 600 B.R. 415 (9th Cir. BAP 2019) –

Well over a year after a bankruptcy case was closed, the debtor filed an application with the bankruptcy court seeking to recover unclaimed rent from deed of trust property that had been abandoned by the chapter 7 trustee. Although none of the unsecured creditors who were served with notice of the application objected, the bankruptcy court denied the request, and the debtor appealed to the Ninth Circuit Bankruptcy Appellate Panel (BAP). Continue reading

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Marijuana: Should a Plan “Go up in Smoke” Because a Debtor’s Tenant Operates a Marijuana Establishment?

Garvin v. Cook Investments NW, SPNWY, LLC, 922 F.3d 1031 (9th Cir. 2019) –

The U.S. trustee objected to a chapter 11 plan of reorganization proposed by a group of real estate holding companies on the grounds that a tenant of one of the debtors was involved in a marijuana growing operation that was illegal under federal laws. The bankruptcy court overruled the objection and confirmed the plan; the district court affirmed on appeal; and the U.S. trustee further appealed to the Ninth Circuit. Continue reading

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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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