Repossession: Just Because You Have A Legal Right To Recover Assets Doesn’t Mean It Is Going To Be Easy

Posted on September 24, 2013 by BankruptcyRealEstateInsights

Alexander v. Hedback, 718 F.3d 762 (8th Cir. 2013) –

After extended litigation regarding the rights of two Chapter 7 debtors, the bankruptcy court ordered that two bankruptcy trustees were entitled to possession of the debtors’ home and authorized the U.S. Marshals to evict anyone at the property.  After the debtors’ son was evicted, he sued the bankruptcy trustees, the United States Marshal, unnamed deputy marshals, the City of St. Paul and two St. Paul police officers.  The complaint included a claim under 42 USC §1983 alleging a violation of the son’s constitutional rights, as well as several equitable and tort claims.  The federal district court dismissed the §1983 and equitable claims with prejudice, and the remaining claims without prejudice.  The son (Alexander) appealed the dismissal of the §1983 and tort claims to the 8th Circuit. Continue reading →

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Cramdown Plan of Reorganization: “Dirt-For-Debt”

Posted on September 20, 2013 by BankruptcyRealEstateInsights

In re Investors Lending Group, LLC, 489 B.R. 307 (Bankr. S.D. Ga. 2013) –

The treatment of a bank’s claim under a Chapter 11 plan of reorganization became the last issue that required resolution in order to confirm the proposed plan.  The bank’s debt was secured by 12 separate pieces of property with an aggregate value in excess of its debt.  After the creditors’ committee filed a competing plan, the debtor and committee submitted a joint plan that proposed to surrender 5 of the 12 parcels to the bank in full satisfaction of its claim.  The bank objected, arguing that this treatment did not provide the bank with the “indubitable equivalent” of its claim, as required for cramdown purposes. Continue reading →

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Fractional Remainder Interest: Sale Will Thwart Grantor’s Estate Planning Objectives – Who Cares?

Posted on September 17, 2013 by BankruptcyRealEstateInsights

In re Corse, 486 B.R. 241 (Bankr. D.R.I. 2013) –

The chapter 7 trustee in an individual debtor case asked for court approval to sell the debtor’s one-quarter remainder interest in a residential property.  The debtor’s mother, who had transferred the interest to the debtor, along with two of the debtor’s sisters, objected. Continue reading →

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Trying to Protect Crop Sale Claims: Title Retention Does Not Help

Posted on September 13, 2013 by BankruptcyRealEstateInsights

In re Wezbra Dairy, LLC, 493 B.R. 768 (Bankr. N.D. Ind. 2013) –

Crop farmers grew corn for use as feed for the debtor’s dairy herd and then stored the corn in bunkers on the debtor’s property under a license from the debtor.  Title to the corn did not transfer until the debtor removed the corn from the bunkers to feed it to its herd.  This opinion addresses when the debtor “received” the corn for purposes of determining whether the crop farmers could assert administrative expense priority claims. Continue reading →

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Title Insurance Claims: What Happens When “Push Comes to Shove”

Posted on September 10, 2013 by BankruptcyRealEstateInsights

Henderson v. Cmty. Bank of Mississippi (In re Evans), 492 B.R. 480 (Bankr. S.D. Miss. 2013) –

An individual (Evans) together with thirteen entities he controlled filed bankruptcy.  In the context of an adversary proceeding brought by a chapter 7 trustee to determine the validity and priority of liens on various properties involved in the bankruptcies, three of the lenders asserted cross-claims against two title companies.  After determining that the title companies were liable for breach of an implied duty of good faith and fair dealing, the bankruptcy court went on to address damages. Continue reading →

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Loss Mitigation Program: Sooner Or Later a Court May Lose Patience With a Dilatory Mortgagee

Posted on September 6, 2013 by BankruptcyRealEstateInsights

In re Bambi, 492 B.R. 183 (Bankr. S.D.N.Y. 2013) –

The Bankruptcy Court for the Southern District of New York has adopted Loss Mitigation Program Procedures to facilitate negotiation in cases where individual debtors are in danger of losing their homes due to foreclosure.  In Bambi, the bankruptcy court imposed sanctions on a bank that held a mortgage loan on the debtors’ home for failing to participate in good faith in the loss mitigation process.  On the one hand, this case illustrates that there may be adverse consequences if a court loses patience.  On the other hand, it also suggests that sometimes it may take a lot to cause the court to lose its patience. Continue reading →

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