This past Friday, February 8, 2019, a panel of the Fourth Circuit unanimously held that the Bankruptcy Code does not bar a creditor from asserting an unsecured claim for attorneys’ fees incurred after the filing of a bankruptcy petition if those fees are guaranteed by a pre-petition contract. In Summitbridge Nat’l Invs. III, LLC v. Faison, No. 17-2441, 2019 U.S. App. LEXIS 3967 (4th Cir. Feb.
Below are summaries of the noteworthy decisions, laws and requirements impacting the commercial lending industry which occurred or took effect in 2018. Please feel free to contact us for additional information or details on any of the items listed below and/or to discuss whether updates to your loan documents may be needed to address the same.
1. New, Improved Rules for High Volatility Real Estate Loans
Back in August, we wrote a blog about adjudication and liquidation, following the judgment in the TCC case of Michael J. Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (in Liquidation) [2018] EWHC 2043 (TCC) (Lonsdale).
In orders issued on January 25 and 28, 2019, FERC concluded that the Commission and the bankruptcy courts have concurrent jurisdiction to review and address the disposition of FERC-jurisdictional contracts sought to be rejected through bankruptcy and, therefore, a party to a FERC-jurisdictional wholesale power agreement must first obtain approval from both FERC and the bankruptcy court to modify the filed rate and reject the filed wholesale power contract, respectively. FERC made its determination in response to two separate petitions (“Petitions”) filed by NextEra Energy, Inc.
At the beginning of a new year it is customary to consider what the year ahead may bring. 2019 promises to be eventful not least with the UK's (planned) exit from the EU on 29 March 2019. Here's what to look out for in the next 12 months…
Brexit
Pursuant to 11 U.S.C. § 1322(b)(2), a Chapter 13 bankruptcy plan cannot modify the rights of a secured creditor whose claim is only secured by an “interest in real property that is the debtor’s principal residence.” On December 6, the Eleventh Circuit held that this provision prevents the discharge of a mortgage in a Chapter 13 bankruptcy, regardless of whether the plan “provided for” the mortgage or whether the mortgagee filed a proof of claim.
The West Virginia Consumer Credit and Protection Act (“WVCCPA”) is a remedial statute designed to protect West Virginia consumers from improper debt collection. Only “consumers” have standing to file a lawsuit under the WVCCPA. The term “consumer” is defined as a natural person that owes a debt or allegedly owes a debt. But does a person still owe debt if that debt was discharged by a bankruptcy court? Although there is some conflicting case law in West Virginia, an answer is forming.
On October 26, the Eastern District of Wisconsin issued a ruling dismissing a Fair Credit Reporting Act case. In Garland v. Marine Credit Union, the Court granted summary judgment in favor of the debt collector, holding the dispute was a legal issue such that the consumer could not establish a factual inaccuracy in the credit reporting.