Foreclosure: Will a Last Minute Sale Survive?

Posted on January 10, 2013 by BankruptcyRealEstateInsights

In re Cook, 481 B.R. 265 (Bankr. N.D.N.Y. 2012) –

A couple of hours before the Cooks filed a chapter 13 bankruptcy case, their home was sold at a foreclosure sale as the final step in a foreclosure of the first mortgage.  The debtors argued that the automatic stay applied to prevent further action to take possession of the property, and further that the sale should be avoided as a fraudulent transfer on the basis that they were insolvent and less than reasonably equivalent value was realized at the sale. Continue reading →

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Mortgagees Beware: Stay Relief Does Not Mean You Are Home Free

Posted on January 8, 2013 by BankruptcyRealEstateInsights

Trauner v. State Bank & Trust Co. (In re Solid Rock Development Corp.), 481 B.R. 221 (Bankr. N.D. Ga. 2012) –

A lender obtained relief from the automatic stay in a bankruptcy so that it could proceed with foreclosure of its mortgage.  It obtained the property at the foreclosure sale with a credit bid of approximately $2 million, which included principal and interest as well as statutory attorney fees of $262,386.87.  The bankruptcy trustee contended that the lender’s ability to recover attorney fees was limited to a lower amount by the Bankruptcy Code, and thus the lender was required to turn over excess sale proceeds since a portion of its credit bid was not valid. Continue reading →

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Prepetition Post-Default Rents: Who Gets the Cash – Round 2?

Posted on January 3, 2013 by BankruptcyRealEstateInsights

In re Prospect Studios, L.P., 478 B.R. 367 (Bankr. W.D. Mo. 2012) –

In Prospect Studios, the law firm representing a chapter 11 debtor requested court authority to apply a prepetition retainer to payment of its fees.  Since the source of the retainer was post default rents, a mortgagee with an assignment of rents objected on the basis that it had a perfected security interest in the rents. Continue reading →

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Prepetition Fire Insurance Proceeds: Who Gets the Cash?

Posted on December 27, 2012 by BankruptcyRealEstateInsights

Crews v. TD Bank, N.A. (In re Crews), 477 B.R. 835 (Bankr. M.D.Fla. 2012) –

A mortgaged building was destroyed by fire prior to the mortgagor’s bankruptcy filing.  In an earlier opinion the bankruptcy court held in that the mortgagee had an equitable lien on the fire insurance proceeds of $350,000.  This opinion addresses the debtors’ attempt to avoid the equitable lien using their “strong arm” powers. Continue reading →

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Protecting Utilities: Would You Believe a Bill Payment is a Settlement Payment Under a Forward Contract?

Posted on December 20, 2012 by BankruptcyRealEstateInsights

Lightfoot v. MX Energy Electric, Inc. (In re MBS Management Services, Inc.), 690 F.3d 352 (5th Cir. 2012) –

The bankruptcy trustee of a property management company sought to recover money paid to a power company prior to bankruptcy as an avoidable preference.  The Fifth Circuit agreed with both the bankruptcy court and the district court that the payments were settlement payments under a forward contract exempt from avoidance.

MBS Management was the property management company for a number of apartment complexes.  MBS Management had a two year contract with Vantage Power Services, LP (predecessor of MX Energy) to purchase the “full electric requirements” for specified properties at a fixed price per kilowatt hour based on actual metered usage.  Shortly before MBS Management filed bankruptcy, it paid MX Energy ~$156,000 for its affiliate property owners’ past-due electric bills.  After MBS Management filed bankruptcy, an adversary proceeding was initiated to recover the payment as an avoidable preference. Continue reading →

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Rent as Administrative Expense: Can a “Terminated” Lease Also Be “Unexpired”?

Posted on December 18, 2012 by BankruptcyRealEstateInsights

Super Nova 330 LLC v. Gazes, 693 F.3d 138 (2d Cir. 2012) –

In Super Nova the landlord obtained issuance of a warrant of eviction, but was not able to execute on the warrant prior to the bankruptcy filing.  The landlord eventually claimed post-petition rent, attorneys’ fees and interest for the period between the filing of the bankruptcy and execution of the warrant.  The bankruptcy court and district court rejected the claim.  The Second Circuit disagreed and remanded for further proceedings. Continue reading →

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