Cash Collateral: What Does It Take to Address the Risk That Once Cash Is Used It Is Just Gone?

In re Tevoortwis Dairy, LLC, 605 B.R. 833 (E.D. Mich. 2019) –

A Chapter 11 debtor filed a motion to use cash collateral. The key question was whether there was adequate protection of the lender’s interest in the cash collateral. Continue reading

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Discharge Injunction: Is a Billing Statement Disclaimer Enough to Avoid Contempt?

Roth v. Nationstar Mortgage, LLC (In re Roth), 935 F.3d 1270 (11th Cir. 2019) –

A chapter 13 debtor sought to reopen her case so that she could move for imposition of contempt sanctions against a mortgagee based on its willful violation of the discharge injunction. The bankruptcy court denied the motion. The debtor appealed and the district court affirmed. The debtor then further appealed to the 11th Circuit. Continue reading

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Recovery of Avoided Transfers: Section 550 Run Amok (Again)?

Rajala v. Husch Blackwell LLP (In re Generation Resources Holding Co., LLC), 604 B.R. 896 (Bankr. Kan. 2019) –

After a consent decree avoiding the transfer of property from the debtor to a second entity, a chapter 7 trustee sought to recover from law firms paid by the second entity from proceeds of sale of the transferred property. Recovery turned on the meaning of “immediate transferee” under section 550(a)(2) of the Bankruptcy Code. Continue reading

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Mortgage Legal Descriptions: To Avoid Litigation, Get It Right in the First Place

Ivy v. U.S. Bank N.A. as Legal Title Trustee for Truman 2016 SC6 Title Trust (In re Ivy), 604 B.R. 540 (Bankr. W.D. Ark. 2019) –

A chapter 7 debtor brought an adversary proceeding against a foreclosing lender seeking a bankruptcy court determination that the lender’s mortgage lien was void due to an incomplete legal description, or alternatively that it was voidable as a cloud on his superior title. This case turned on state law and exemption impairment rather than a typical trustee’s exercise of strong arm powers. Continue reading

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Foreclosure Adjournment: Does Continue Really Mean Continue?

In re Winters, 604 B.R. 54 (Bankr. D. Utah 2019) –

A chapter 7 debtor contended that a mortgage creditor’s postponement of a scheduled nonjudicial foreclosure sale after receiving notice of the debtor’s bankruptcy constituted a violation of the automatic stay. Accordingly, it sought an order for contempt and sanctions against the trustee and beneficiary under a deed of trust and a law firm involved in the foreclosure. The trustee and law firm moved for summary judgment, requesting that the bankruptcy court deny the debtor’s motion. Continue reading

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Extending the Stay to Third Parties: Sometimes a Bankruptcy Court Will Intercede

Durr Mechanical Constr., Inc. v. I.K. Constr. Inc. (In re Durr Mechanical Constr., Inc.), 604 B.R. 131 (S.D.N.Y. 2019) –

A general contractor debtor filed an adversary proceeding against a subcontractor seeking various relief. It then filed a motion seeking to extend the automatic stay to protect nondebtor insurers that had issued a surety bond relating to the debtor’s contract with the subcontractor. Continue reading

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Easements and Sales “Free and Clear”: Oops – All Gone

Port of Corpus Christi Auth. v. Sherwin Alumina Co., L.L.C. (In re Sherwin Alumina Co., L.L.C.), 932 F.2d 404 (5th Cir. 2019) –

A state port authority (1) challenged sale of property free and clear of its road easement on Eleventh Amendment grounds and (2) sought revocation of a Chapter 11 plan confirmation order arguing that it was obtained by fraud. The bankruptcy court rejected these claims; the district court affirmed; and the port authority appealed to the Fifth Circuit. Continue reading

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