Fraudulent Transfer: “Reasonably Equivalent Value” Meets Debt Recharacterization

Posted on August 13, 2013 by BankruptcyRealEstateInsights

Official Comm. of Unsecured Creditors v. Hancock Park Capital II, L.P. (In re Fitness Holdings International, Inc.), 714 F.3d 1141 (9th Cir. 2013) –

A chapter 11 unsecured creditors’ committee sought to recover payments made to the debtor’s shareholder as a fraudulent transfer.  The bankruptcy court dismissed the claims, and the district court affirmed.  On appeal the 9th Circuit focused on whether there was “reasonably equivalent value” for the payments, and remanded the matter to the district court for further proceedings. Continue reading →

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Cross-Collateralization: Your Dragnet Clause May Have at Least a Little Hole In It

Posted on August 9, 2013 by BankruptcyRealEstateInsights

Peoples National Bank, N.A. v. Banterra Bank, 719 F.3d 608 (7th Cir. 2013) –

In this case, the district court had reversed the bankruptcy court – holding that a standard dragnet clause in a mortgage was not sufficient to secure a loan made by the mortgagee that was secured by other property in the face of a claim by a junior mortgagee.  The mortgagee appealed and the 7th Circuit reversed the district court. Continue reading →

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Cross-Collateralization: Beware the Intricacies of Local Real Estate Law

Posted on August 6, 2013 by BankruptcyRealEstateInsights

Hari Aum, LLC v. First Guar. Bank (In re Hari Aum), 714 F.3d 274 (5th Cir. 2013) –

A debtor and its lender sought a determination of whether a mortgage on the debtor’s motel secured only a loan to the debtor, or also a loan by the lender to a second affiliated entity.  The bankruptcy court granted the mortgagee’s motion for summary judgment, and on a direct appeal to the 5th Circuit, it agreed that the cross-collateralization in the mortgage was effective, and the lien on the debtor’s motel secured both its loan and the loan to an affiliate. Continue reading →

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Foreclosure Sale As a Preference: “Strong Arm” Powers Strike Again

Posted on August 2, 2013 by BankruptcyRealEstateInsights

Nguyen v. Wells Fargo Home Mortgage (In re Nguyen), 490 B.R. 230 (Bankr. S.D. Tex. 2013) –

An individual debtor in a chapter 7 bankruptcy brought an adversary proceeding seeking to recover from a mortgagee for negligent misrepresentation and to set aside a pre-petition foreclosure sale as a preference.  The court held that the debtor did not have standing to bring the negligent misrepresentation claim, but did allow him to pursue the preference claim.  The court then denied the lender’s motion for summary judgment on the preference claim. Continue reading →

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Lease Claims: Sometimes Privity Matters

Posted on July 30, 2013 by BankruptcyRealEstateInsights

In re Parrott Broadcasting Ltd. P’ship, 492 B.R. 35 (Bankr. D. Idaho 2013) –

A chapter 7 trustee objected to a proof of claim filed by a landlord for rent and late charges due under a lease.  The debtor was an assignee of the tenant, but was not a party to the lease, and the landlord did not consent to the assignment.   Under the circumstances, the bankruptcy court disallowed the landlord’s claims. Continue reading →

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Failure to Negotiate Mortgage Note: “Strong Arm” Powers With A Twist

Posted on July 26, 2013 by BankruptcyRealEstateInsights

Rogan v. Vanderbilt Mortgage & Finance, Inc. (In re Dorsey), 491 B.R. 464 (Bankr. E.D. Ky. 2013 –

A chapter 7 trustee sought to use his “strong arm” powers as a hypothetical judgment lien creditor, arguing that a mortgage could be avoided because the mortgagee (which was an assignee of the original mortgagee) was not entitled to enforce the note secured by the mortgage.  Although the bankruptcy court did not avoid the mortgage lien, it did conclude that the trustee could sell the mortgaged property free of any claim by the mortgagee assignee. Continue reading →

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