Protecting Liens: “Allowing A Credit Bid” May Be More Complicated Than It Appears At First Glance

Posted on December 30, 2015 by BankruptcyRealEstateInsights

Baker Hughes Oilfield Operations, Inc. v. Morton (In re R.L. Adkins Corp.), 784 F.3d 978 (5th Cir. 2015) –

An undersecured mechanic’s lien claimant contended that it was entitled to elect to treat its claim as fully secured under Section 1111(b) of the Bankruptcy Code. Both the bankruptcy court and the district court rejected the election as invalid, and the creditor appealed to the 5th Circuit. Continue reading →

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Partner Liability: Choice of Law Could Make More of a Difference Than You Might Expect

Posted on December 23, 2015 by BankruptcyRealEstateInsights

Residential Liquidating Trust v. Mortgage Investors Group, Inc. (In re Residential Capital, LLC), 527 B.R. 590 (Bankr. S.D.N.Y. 2015) –

A liquidating trust sued the general partners of a partnership for claims of contractual breach by the partnership.  The partners argued that Federal Rule of Civil Procedure 17 required the court to apply New York law, and under New York law the complaint should be dismissed.  The trust argued that Tennessee or Minnesota law applied so that the general partners were jointly and severally liable with the partnership. Continue reading →

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Individual Debtor Exemptions: What Can You Do With a Rent-Stablized Lease?

Posted on December 16, 2015 by BankruptcyRealEstateInsights

Santiago-Monteverde v Pereira (In re Santiago-Monteverde), 780 F.3d 126 (2d Cir. 2015) –

A Chapter 7 trustee sought to assume a debtor’s rent-stabilized lease so that he could sell it to the owner of the building.  In response, the debtor amended her bankruptcy exemption schedule and claimed the value of the rent-stabilized lease as exempt from the bankruptcy estate as a right to receive a “local public assistance benefit” as contemplated by state law. Continue reading →

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Sales Free and Clear: Does Consent Really Mean Consent?

Posted on December 10, 2015 by BankruptcyRealEstateInsights

In re Arch Hospitality, Inc., 530 B.R. 588 (Bankr. W.D.N.Y. 2015) –

A Chapter 11 debtor sought bankruptcy court approval to sell a hotel free and clear of liens in a Section 363 sale.  The issues before the court ultimately turned on whether creditors with liens on the hotel were required to affirmatively consent. Continue reading →

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Non-Recourse Loans: Turning Into Recourse and Back Again

Posted on December 2, 2015 by BankruptcyRealEstateInsights

Mastan v. Salamon (In re Salamon), 528 B.R. 171 (9th Cir. BAP 2015) –

The bankruptcy court disallowed the claim of a deed of trust creditor on the grounds that it was barred by the applicable state anti‑deficiency statute.  The creditor contended that it was entitled to treat its non-recourse loans as recourse loans under the Bankruptcy Code, which trumped the anti‑deficiency statute.

The debtor acquired an apartment building subject to two pre-existing loans secured by the property.  The acquisition was financed by the seller through a “wraparound” note and mortgage, which covered the first two loans, and an additional new loan. Continue reading →

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Bare Legal Title: Joint Tenancy Meets Equitable Resulting Trust

Posted on November 25, 2015 by BankruptcyRealEstateInsights

Davis v. Hoa Thi Phan (In re Tung Thanh Nguyen), 783 F.3d 759 (10th Cir. 2015) –

A chapter 7 trustee sought to avoid as a fraudulent conveyance a debtor’s transfer of real property to his sister by quit claim deed for no consideration. The bankruptcy court ruled that the debtor held only bare legal title, so the transfer could not be avoided. The bankruptcy appellate panel affirmed, and the trustee appealed to the 10th Circuit. Continue reading →

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