On December 22, 2011, the United States Bankruptcy Court for the District of Delaware inIn re JER/Jameson Mezz Borrower II LLC 1 dismissed with prejudice a mezzanine borrower’s bankruptcy case for bad faith under Section 1112(b) of the Bankruptcy Code. In doing so, the court clarified that the standard in the Third Circuit to evaluate the good faith of a debtor seeking shelter under the umbrella of Chapter 11 of the Bankruptcy Code is an objective one and does not consider the subjective good faith of a debtor as do courts within the Secon d Circuit.
Last month, the U.S. Supreme Court agreed to hear another bankruptcy case and this one could have a profound effect on a lender’s bidding rights when its collateral is up for sale. RadLAX Gateway Hotel, LLC v. Amalgamated Bank, No. 11-166, cert. granted Dec.
Generic Legal Advice Memorandum AM 2011-003 (August 18, 2011)
Overview
The case of In re Dickson, 655 F.3d 585 (6th Cir. 2011) centered on the status of the debtor’s manufactured home under Kentucky law. In Kentucky, a manufactured home is considered personal property. As such, in order for a lien to be effective, it must be noted on the certificate of title. A manufactured home may be converted to real property, however, if the owner files an affidavit that states it is permanently affixed to real estate and then surrenders title.
In a recent appeal to the Sixth Circuit Bankruptcy Appellate Panel, Inre Collins, 2011 WL 4445451 (6th Cir. BAP Aug. 12, 2011), the trustee sought a declaratory judgment to determine the validity, extent, and priority of liens on the debtor’s real property held by four defendants. The trustee appealed the district court’s dismissal of his complaint as to purported holders of the debtor’s first and second mortgages on the debtor’s property.
FILING CHAPTER 13
The U.S. Court of Appeals for the Seventh Circuit recently affirmed a bankruptcy court’s decision refusing to confirm debtors’ reorganization plan that included auction procedures that forbade secured creditors from “credit bidding” for the assets. Inre River Road Hotel Partners, LLC, No. 10-3597, 2011 WL 2547615 (7th Cir. June 28, 2011). In that case, the debtors (owners of various hotel properties) proposed a plan of reorganization that included auctioning certain properties encumbered by security interests.
In connection with the administration of the debtors’ bankruptcy case, the trustee in Badovick v. Greenspan (In re Greenspan), No. 10-8019, 2011 Bank. LEXIS 272 (B.A.P. 6th Cir. Feb.
The Second Circuit Court of Appeals has now weighed in on the Bankruptcy Code’s safe harbor provisions. In Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., Docket Nos. 09–5122, 09–5142, 2011 WL 2536101 (2d Cir. June 28, 2011), the Second Circuit Court of Appeals faced an issue of first impression—whether Section 546(e) of the Bankruptcy Code, which shields certain payments from avoidance actions in bankruptcy, extends to an issuer’s payment to redeem its commercial paper made before maturity.
Debtors filed a voluntary petition for relief under Chapter 7. The Debtors own and have title to real property ("Property"). Prior to the Petition Date, the husband borrowed $85,000 from Lender. This loan was reflected by a promissory note signed only by the husband, as "Borrower." The term "Note" is defined in the Mortgage as the promissory note signed by Borrower. On the same date, a mortgage granting Lender a mortgage on the Property was executed.