Authority to File Bankruptcy: What Will a Court Consider?

Posted on January 10, 2014 by BankruptcyRealEstateInsights

In re Quad-C Funding LLC, 496 B.R. 135 (Bankr. S.D.N.Y. 2013) –

After a multi-member limited liability company filed a chapter 11 bankruptcy petition, one member (Crossroads) moved to dismiss the case on the basis that the filing was not properly authorized since it did not consent.

This challenge was only the latest in a series of battles between the parties.  The fundamental objection raised by the Crossroads was that the debtor’s operating agreement required a super majority vote of 62.5% to approve certain actions (including a bankruptcy filing), which Crossroads contended meant that it had to consent. Continue reading →

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The Ivanhoe Rule: Double Recovery Is Not Permitted, But … (a/k/a Limitation-on-Dividend Approach Meets Reduction-of-Claim Approach)

Posted on January 7, 2014 by BankruptcyRealEstateInsights

In re Del Biaggio, 496 B.R. 600 (Bankr. N.D. Cal. 2012) –

The creditors committee objected to proofs of claim filed by a group of unsecured lenders who had received partial payment from a non-debtor co-obligor, arguing that the claims should be reduced by the payments.  If you bet that the creditors committee would prevail, you would lose. Continue reading →

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Mortgagee Relief: “Cause” Is In the Eye of the Beholder – Round 2

Posted on January 3, 2014 by BankruptcyRealEstateInsights

In re GEL, LLC, 495 B.R. 240 (Bankr. E.D. N.Y. 2012) –

A mortgagee moved to dismiss two Chapter 11 bankruptcies that were filed by its mortgagors to prevent a scheduled foreclosure sale.  It also sought relief relating to the automatic stay arising from future bankruptcy filings.  The bankruptcy court agreed that there was “cause” to dismiss the cases, and further that the mortgagee was entitled to an order that would prevent application of the automatic stay to the mortgaged property in connection with bankruptcies filed within 2 years. Continue reading →

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Options for an Underwater Mortgagee: The Mysteries of an 1111(b) Election

Posted on December 31, 2013 by BankruptcyRealEstateInsights

In re River Canyon Real Estate Investments, LLC, 495 B.R. 526 (Bankr. D. Colo. 2013) –

A chapter 11 debtor’s plan of reorganization placed two secured creditors in the same class.  (No one objected to this classification.) One of the creditors attempted to make an election under Section 1111(b) of the Bankruptcy Code to have its entire claim treated as secured, and the debtor objected.  The court concluded that the election was not valid. Continue reading →

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Mortgagee Relief From the Automatic Stay: “Cause” Is In the Eye of the Beholder – Namely the Court

Posted on December 27, 2013 by BankruptcyRealEstateInsights

In re Doug Wilson Ins. Agency, Inc., 495 B.R. 428 (Bankr. E.D. Ark. 2013) –

A debtor that owned several properties filed a chapter 11 bankruptcy proceeding on April 1st.  A bank that had mortgages on two of the properties moved for relief from the automatic stay on April 2nd.  The bankruptcy court focused primarily on whether there was “cause” for relief. Continue reading →

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Lease Termination: Say It Like You Mean It (Or Else)

Posted on December 24, 2013 by BankruptcyRealEstateInsights

Franklin Advisors LLC v. Sherwood Mgmt. Corp. (In re Whyco Finishing Technology, LLC), 500 B.R. 517 (Bankr. E.D. Mich. 2013) –

A landlord filed an amended proof of claim for ~$700,000 based on a chapter 11 debtor’s breach of a real estate lease.  The debtor’s plan liquidation trustee brought an adversary proceeding seeking to disallow or reduce the claim, and moved for summary judgment. Continue reading →

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