Liquor License Sales: Who Gets the Money?

In re Aqua Pesca, LLC, 588 B.R. 241 (Bankr. D. Alaska 2018) –

A chapter 7 trustee sought bankruptcy court authorization to distribute proceeds from the sale of a liquor license. The trustee proposed to distribute proceeds pro rata to creditors with “holds” against the license as contemplated by state regulatory requirements as opposed to distribution strictly in accordance with the priorities set forth in the Bankruptcy Code. Continue reading

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Mortgage Loans: Beware Time Bars on Enforcing a Note or Mortgage

In re Eastman, 588 B.R. 600 (Bankr. D. Colo. 2018) –

A chapter 13 debtor objected to the proof of claim filed by a mortgagee. The primary issue was whether the applicable statute of limitations precluded recovery of delinquent payments that became due prior to acceleration of the debt. Continue reading

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Foreclosure Sales: When Does a Debtor Lose the Ability to Interfere with the Sale?

In re Vertullo, 593 B.R. 92 (Bankr. D. N.H. 2018) –

A mortgagee that sold a chapter 13 debtor’s home in a prepetition foreclosure auction but had not yet recorded a foreclosure deed sought relief from the automatic stay in order to evict the debtor. In the meantime, the debtor filed a plan that proposed to cure the prepetition mortgage defaults and continue payments. The bankruptcy court had to decide whether the mortgagee had completed the foreclosure sale within the meaning of the Bankruptcy Code and whether the debtor retained sufficient interest in the property to allow her to exercise a right to cure the mortgage defaults. Continue reading

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Foreclosure Procedure: Very Small Details Can Make A Very Big Difference

HSBC Bank USA, N.A. v. Crum, 907 F.3d 199 (8th Cir. 2018) –

A mortgagee brought an action in district court seeking to foreclose its mortgage. It filed a summary judgment motion that was granted by the district court. The debtor appealed, arguing among other things that the lawsuit was untimely. Continue reading

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Construction Payments: Can A Debtor Grab the Money?

Insite Corp. v. Walsh Constr. Co. Puerto Rico, 906 F.3d 139 (1st Cir. 2018) –

A debtor subcontractor sought to recover progress payments it claimed were due from a general contractor. The general contractor argued that the debtor did not have any interest in the withheld funds. The bankruptcy court agreed with the general contractor, the district court affirmed, and the debtor appealed to the First Circuit. Continue reading

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Disclosing Assets: You Cannot Have Your Cake and Eat It Too

Fornesa v. Fifth Third Mtg. Co., 897 F.3d 624 (5th Cir. 2018) –

A debtor and his son sued a bank for foreclosing on property that the debtor acquired from his son postpetition while the automatic stay was in effect. Litigation that began in state court and the bankruptcy court were removed, withdrawn and consolidated in the district court. After the district court ruled in favor of the bank, the debtor and his son appealed to the Fifth Circuit. Continue reading

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Strong Arm Powers: Watch out for That Hypothetical Bona Fide Purchaser – It Can Do More Than Void Transfers and Obligations

Fallon Family, L.P. v. Goodrich Petroleum Corp. (In re Goodrich Petroleum Corp.), 894 F.3d 192 (5th Cir. 2018) –

A non-debtor party filed a motion to either (1) compel the debtor to assume or reject a settlement agreement, or (2) “dissolve” the settlement agreement based on the debtor’s nonpayment, thus stripping the bankruptcy estate of rights to a mineral lease. The bankruptcy court denied the motion, finding that the debtor’s strong arm powers protected it from the challenge to the lease. The district court affirmed and the non-debtor party appealed to the Fifth Circuit. Continue reading

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