Plan Discharge and Injunction Provisions: Creditors Beware

In re Orleans Homebuilders, Inc., 561 B.R. 46 (Bankr. D. Del. 2016)

A reorganized debtor brought a motion in bankruptcy court to enforce a chapter 11 plan of reorganization injunction: It sought a court order directing a residential condominium association to discontinue litigation it brought in state court against the reorganized debtor and others relating to alleged construction defects. Continue reading

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What It Means to Cure a Default: Never Take Anything for Granted, the Rules Can Always Change

Pacifica L 51 LLC v. New Investments Inc. (In re New Investments Inc.), 840 F.3d 1137 (9th Cir. 2016)

The debtor proposed a chapter 11 plan that included curing defaults under a mortgage loan. The lender objected because the cure payments were calculated using the pre-default interest rate as opposed to the higher default rate. Continue reading

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Bankruptcy Estate: Would the Automatic Stay Protect a Squatter?

In re Castle Service, 560 B.R. 587 (Bankr. D. Utah 2016)

The debtor occupied but did not hold title to the real property where its business was located. A mortgagee seeking to foreclose on the property moved for a determination that the property was not an asset of the bankruptcy estate, and thus was not subject to the automatic stay. Continue reading

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Property Surrender: Surrender Means Surrender – No If’s, And’s or But’s

Failla v. Citibank, N.A. (In re Failla), 838 F.3d 1170 (11th Cir. 2016)

After chapter 7 debtors filed a statement of intention to surrender their house to their mortgagee, they continued to oppose the lender in a state court foreclosure action. The mortgagee argued that this breached their duty to surrender. Continue reading

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Deeds: Not All “Freebies” Are Fraudulent

Rodriguez v. Nelabovige (In re Kirst), 559 B.R. 757 (Bankr. D. Colo. 2016)

About a year before filing bankruptcy, a debtor conveyed his interest as a joint tenant in a residential property to his mother-in-law in consideration for $10. The chapter 7 trustee sought to avoid the conveyance as a fraudulent transfer. Continue reading

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Broker Commissions: So You Want To Be Paid

Harris v. Scarcelli (In re Oak Knoll Assoc., L.P.), 835 F.3d 24 (1st Cir. 2016)

A real estate broker asserted a claim for a commission in connection with a post-petition sale of property by the debtor. The bankruptcy court denied the claim, the district court affirmed, and the broker appealed to the First Circuit. Continue reading

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Disposition of UCC Collateral: “Everybody Does It”

Morgantown Excavators, Inc. v The Huntington Nat’l Bank (In re Morgantown Excavators, Inc.), 557 B.R. 469 (Bankr. N.D. W.Va. 2016)

Chapter 7 debtors sued a lender alleging violations of the Uniform Commercial Code (UCC) and other state law based on the lender’s sale of equipment that was part of its collateral. The debtors sought summary judgment on the issue of the lender’s liability for failing to sell the collateral in a commercially reasonable manner as required by the UCC. Specifically the debtors claimed that notice of disposition of the equipment was not commercially reasonable. Continue reading

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