Field v. Bank of America, N.A. (In re Gibbs), 522 B.R. 282 (Bankr. D. Hawaii 2014) –
A bankruptcy trustee sued a mortgage lender to recover for defects in a prepetition non-judicial foreclosure sale. The lender brought a motion to dismiss for failure to state a claim. The primary focus of the court was on claims under the state Unfair and Deceptive Acts or Trade Practices (UDAP) law.
In re Betchan, 524 B.R. 830 (Bankr. E.D. Wash. 2015) –
A mortgagee was the highest bidder at a foreclosure sale that took place shortly before the debtor filed bankruptcy. The lender requested relief from the automatic stay in order to evict the debtor on the basis that transfer of the property was completed prepetition so that it was not part of the debtor’s bankruptcy estate.
Chief Judge Leonard P. Stark of the District Court for the District of Delaware reversed and remanded the decision of the Bankruptcy Court which approved a Bankruptcy Rule 9019 settlement that Judge Stark concluded had been inadequately noticed under the circumstances.
Parties to all legal proceedings - including bankruptcy proceedings - are entitled to Constitutionally protected due process rights, including reasonable notice and an opportunity to be heard. In the bankruptcy context, the debtor must give known creditors reasonable notice of certain critical events, including the sale of the debtor’s assets and the deadline to file claims against the debtor.
Walro v. The Lee Group Holding Co., LLC (In re Lee), 524 B.R. 798 (Bankr. S.D. Ind. 2014) –
A chapter 7 trustee sought a court determination that (1) a debtor’s voting rights in a limited liability company (LLC) were property of the bankruptcy estate, and (2) other members of the LLC violated the automatic stay by taking action to remove the debtor as a member and terminating his voting rights.
Chief Judge Cecelia G. Morris of the Bankruptcy Court for the Southern District of New York decided that banks may not place an administrative freeze, even a temporary one, on the bank account of an individual who files for bankruptcy.
* This article was first published by INSOL International on April 17, 2015.
The bankruptcy case of Energy Future Holdings (EFH) and its affiliates has already provided the Delaware bankruptcy court occasion to tackle a number of important bankruptcy questions, including the propriety of using tender offers to settle noteholder claims during the pendency of the case.