Bankruptcy Estate: When Is A Joint Venture A Partnership (And Who Cares)?

Posted on June 6, 2014 by BankruptcyRealEstateInsights

Bank of England v. Rice (In re Webb), 742 F.3d 824 (8th Cir. 2014) –

A chapter 7 trustee sought to enjoin a bank from enforcing its security interest in rice and farming equipment that the trustee contended were assets of the bankruptcy estate. The bank, which had made loans to the chapter 7 debtors’ “joint venture,” claimed that the assets were owned by the joint venture not the individual debtors, and thus were not part of the bankruptcy estate. The bankruptcy court granted an injunction against the bank on the basis that the joint venture was not a separate entity. The district court affirmed and the bank appealed to the 8th Circuit. Continue reading →

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Fraudulent Transfer: How Can A Warehouse Lender Qualify For The Good Faith Exception?

Posted on June 3, 2014 by BankruptcyRealEstateInsights

Gold v. First Tennessee Bank Nat’l Ass’n (In re Taneja), 743 F.3d 423 (4th Cir. 2014) –

A liquidating trustee under a plan of reorganization sought to recover 12 payments totaling ~$4 million made by the debtor–mortgage broker to a bank that acted as a warehouse lender. The bank successfully asserted an affirmative defense that it was a good faith transferee for value, and the bankruptcy court dismissed the complaint. The district court affirmed, and the trustee appealed to the 4th Circuit. In a 2-to-1 decision, the 4th Circuit affirmed. Continue reading →

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Upsetting a Bankruptcy Auction: Money Talks

Posted on May 30, 2014 by BankruptcyRealEstateInsights

In re Sunland, Inc., 507 B.R. 753 (Bankr. D. N.M. 2014) –

After a bankruptcy auction to sell a peanut manufacturing plant concluded, but before a court hearing to approve the sale, a chapter 7 trustee received a substantially higher bid from a party that had not participated in the auction. Under the circumstances, the court declined to approve a sale to the highest bidder at the auction. Continue reading →

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Rents in Bankruptcy: Grab While You Can and You May Hold A Winning Hand

Posted on May 27, 2014 by BankruptcyRealEstateInsights

In re Madison Heights Group, LLC, 506 B.R. 728 (Bankr. E.D. Mich. 2013) –

A mortgagee exercised its assignment of rents prior to bankruptcy. After a Chapter 11 case was filed, the debtor sought court authority to use rents from the property as cash collateral. The mortgagee objected, arguing that the rents were not part of the bankruptcy estate. Continue reading →

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Bankruptcy Sales: “Free And Clear” Meets Tax Injunction Act

Posted on May 23, 2014 by BankruptcyRealEstateInsights

In re Old Carco LLC, 505 B.R. 151, (Bankr. S.D.N.Y. 2014) –

A bankruptcy purchaser filed a motion with the bankruptcy court to prevent state tax authorities from using the debtor’s experience rating to determine purchaser’s unemployment insurance tax rate. It argued that this was prevented by the court order approving the sale “free and clear” of all interests. The states responded with a variety of defenses, including sovereign immunity, lack of bankruptcy jurisdiction, and the Tax Injunction Act. Continue reading →

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Affiliates and Insiders: Is A Limited Liability Company A Corporation (And Who Cares)?

Posted on May 20, 2014 by BankruptcyRealEstateInsights

Redmond v. CJD & Assocs., LLC (In re Brooke Corp.), 506 B.R. 560 (Bankr. D. Kan. 2014) –

A preference defendant sought to amend its answer more than 21 months after the answer was filed to deny its “insider” status. The chapter 7 trustee objected on the basis of undue delay, prejudice, and futility. Continue reading →

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