Trustee Abandonment: Abandon Not Hope but A Home of Inconsequential Value

Posted on January 24, 2018 by BankruptcyRealEstateInsights

Jahn v. Burke (In re Burke), 863 F.3d 521 (6th Cir. 2017) –

After a chapter 7 trustee moved to evict the debtors from their residence, the debtors moved to compel the trustee to abandon the property, arguing that the market value less the amount due on the mortgage left no equity for the bankruptcy estate. The bankruptcy court agreed that the net value was inconsequential and granted the debtors’ motion. The district court concurred, and the trustee appealed to the Sixth Circuit. Continue reading →

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

Posted on January 17, 2018 by BankruptcyRealEstateInsights

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 →

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Assignment of Rents: Who Has What Interests?

Posted on January 10, 2018 by BankruptcyRealEstateInsights

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 →

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

Posted on January 3, 2018 by BankruptcyRealEstateInsights

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 →

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Discharge of Securities Law Violations: Nothing Is Ever Straightforward

Posted on December 27, 2017 by BankruptcyRealEstateInsights

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 →

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

Posted on December 20, 2017 by BankruptcyRealEstateInsights

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 →

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