Avoiding Mortgages: What Happens When A Stranger to The Transaction Files a Discharge in Error?

Kelley v. Ocwen Loan Servicing, LLC (In re Bowers), 595 B.R. 869 (Bankr. M.D. Ga. 2018) –

A chapter 7 trustee sought to avoid a security deed based on the fact that as of the petition date satisfactions of the security deed had been recorded. The secured party contended that its security interest was still enforceable because the satisfactions had been recorded in error, and alternatively asked for equitable recognition of its interest by subrogation or reinstatement. Continue reading

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Selling Real Estate Free and Clear: The Trustee Does Not Always Win

Belfance v. Shelton (In re Shelton), 593 B.R. 755 (Bankr. N.D. Ohio 2018) –

A chapter 7 trustee sought a determination of rights in connection with seeking authority to sell property free and clear of other interests using its power of a hypothetical bona fide purchaser of real property under section 544(a)(3) of the Bankruptcy Code. The court addressed both the interests held by the bankruptcy estate and the impact of constructive notice on the rights of a hypothetical bona fide purchaser. Continue reading

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Tax Lien Foreclosures: Property Tax Collection Meets Fraudulent Transfers – Who Wins?

Hampton v. Ontario County, New York, 588 B.R. 671 (W.D. N.Y. 2018), 588 B.R. 671 (W.D. N.Y. 2018) –

The debtors sought to set aside prepetition property tax foreclosures as constructively fraudulent transfers. The bankruptcy court granted the government’s motion to dismiss on the grounds that the price paid at a tax foreclosure sale that was regularly conducted in accordance with state law was conclusively presumed to be “reasonably equivalent value” for the property. The debtors appealed to the district court. Continue reading

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Sales Free and Clear: The Devil Is in the Details

In re Bridge Assoc. of Soho, Inc., 589 B.R. 512 (Bankr. E.D. N.Y. 2018) –

The debtor filed a motion to sell a residential loft building free and clear of possessory rights of the occupants. The bankruptcy court determined that the occupants had statutory rights of possession that could not be stripped in a bankruptcy sale. Continue reading

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Construction Subcontractor Claims: Is a Subcontractor Merely a Creditor of a Creditor Without Standing?

In re Alliance Consulting Group LLC, 588 B.R. 169 (Bankr. S.D. Miss. 2018) –

A subcontractor sought to reopen a bankruptcy case so that it could assert an administrative expense claim for work it did on a chapter 11 debtor’s facility. The bankruptcy court determined that the subcontractor did not have standing, and even if it did, the subcontractor did not establish cause to reopen the case. Continue reading

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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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