Original Issue Discount Claim: Maybe It’s Allowed, And Maybe It’s Not

Posted on October 15, 2013 by BankruptcyRealEstateInsights

Official Comm. of Unsecured Creditors v. UMB Bank, N.A. (In re Residential Capital, LLC), 495 B.R. 250 (Bankr. S.D. N.Y. 2013) –

An unsecured creditors committee brought an action against an indenture trustee and collateral agent (a) seeking to recharacterize a facility as a secured financing, (b) requesting a declaratory judgment that liens did not extend to released collateral and loans, and (c) seeking partial disallowance of claims of noteholders on the basis that the claims included original issue discount (OID) that should be disallowed as unmatured interest.  In this decision the bankruptcy court ruled on the trustee’s motion to dismiss these claims. Continue reading →

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Foreclosure: Is A National Bank Authorized to Foreclose Non-Judicially In Arkansas?

Posted on October 11, 2013 by BankruptcyRealEstateInsights

JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010 (8th Cir. 2013) –

The 8th Circuit considered the issue of whether a national bank is “authorized to do business” in Arkansas, as required by a state statute in order to proceed with a non-judicial foreclosure, in connection with a consolidation of three bankruptcy cases that were appealed to the district court, another case that was removed from state court to the district court, and a fifth class action case. Continue reading →

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Financial Institution Payments: When Is A Preference Not A Preference?

Posted on October 8, 2013 by BankruptcyRealEstateInsights

Official Comm. of Unsecured Creditors of Quebecor World (USA) Inc. v. American United Life Ins. Co. (In re Quebecor World (USA) Inc.), 719 F.3d 94 (2d Cir. 2013) –

Shortly before filing bankruptcy, the debtor made a ~$376 million payment to a financial institution in its capacity as trustee for a group of noteholders in order to repurchase the notes.  Normally the payment could have been avoided as a preference.  The question for the 2dnd Circuit was whether the payment came within one of the safe harbors in Section 546(e) of the Bankruptcy Code. Continue reading →

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Of Auction Sales and Fees: Going, Going, Going … Not Gone

Posted on October 4, 2013 by BankruptcyRealEstateInsights

Garden v. Central Nebraska Housing Corp., 719 F.3d 899 (8th Cir. 2013) –

A secured party obtained relief from the automatic stay to allow the trustee under a deed of trust to sell a farm.  The secured party contended that (i) it had a contract to purchase the farm as the result of the trustee’s auction, and (ii) its secured claim included certain attorney and inspection fees.

The 8th Circuit upheld a district court decision that (a) the secured creditor did not have a binding sale contract, (c) rejected its claim for attorney fees, and (c) not only disallowed the claim for inspection fees but also found that the inspections violated the automatic stay, justifying an award of sanctions.  A dissenting opinion argued that the request for inspection fees was not properly evaluated by the district court:  there was no violation of the automatic stay, and thus no basis for sanctions. Continue reading →

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Landlord Claims: Calculating Capped Future Rent Claims Should Be A Simple Matter of Arithmetic – Right?

Posted on October 1, 2013 by BankruptcyRealEstateInsights

In re MDC Systems, Inc., 488 B.R. 74 (Bankr. E.D. Pa. 2013) –

A chapter 7 debtor’s landlord filed a proof of claim for ~ $1 million.  An unsecured creditor objected on the basis that (1) the lease was terminated prepetition, so the landlord did not have any claim for rent, and (2) to the extent that it did have a claim, it was subject to the statutory cap on lease claims.  Resolving this objection required the bankruptcy court to examine various aspects of lease claims under the Bankruptcy Code. Continue reading →

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Property Transfers: What Goes On In Probate Court Stays In Probate Court – Wrong

Posted on September 27, 2013 by BankruptcyRealEstateInsights

Baldiga v. Golemo (In re Golemo), 494 B.R. 588 (Bankr. D. Mass. 2013) –

A chapter 7 trustee sought to use his strong-arm powers to avoid the transfer of several properties from the debtor to his ex-wife pursuant to an unrecorded prepetition divorce decree.  The trustee was successful in his quest. Continue reading →

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