Secured transactions typically include two key documents, which are often executed simultaneously: a promissory note memorializing loan and repayment terms executed by the borrower in favor of the lender and a security agreement granting the lender an interest in collateral securing the borrower’s debt owed to the bank. If a borrower ends up filing for bankruptcy, the bank likely will seek to enforce the security agreement against the borrower and recover the collateral. However, as made clear by the U.S.
In re Stacy’s, Inc., 508 B.R. 370 (Bankr. D. S.C. 2014) –
A debtor sold substantially all of its assets after negotiating with its primary secured creditor for carve-outs from the sale proceeds for administrative priority and general unsecured claims. When the administrative claims turned out to be greater than anticipated, the debtor sought court approval to use additional proceeds to pay income tax and other claims.
In re SR Real Estate Holdings, LLC, 506 B.R. 121 (Bankr. S.D. Cal. 2014) –
A group of lenders moved to dismiss the debtor’s bankruptcy case on the basis that it was filed in bad faith, or in the alternative asked the court to find that the debtor was a “single asset real estate” and then to grant the lenders relief from the automatic stay.
n re New Bride Missionary Baptist Church, 509 B.R. 85 (Bankr. E.D. Mich. 2014) –
After the bankruptcy court denied confirmation of a debtor’s proposed chapter 11 plan of reorganization because there was no accepting impaired class, the debtor proposed an amended plan that placed a mortgagee’s large deficiency claim in one class and claims of other unsecured creditors in a separate “administrative convenience” class.
U.S. Bank, N.A. v. Brumfiel (In re Brumfiel), 514 B.R. 637 (Bankr. D. Colo. 2014) –
After a debtor reopened her chapter 7 bankruptcy case, a lender moved for relief from the automatic stay in order to continue with a foreclosure action. The debtor objected, arguing among other things that the lender did not have standing to request relief.
In re Arenas, 514 B.R. 887 (Bankr. D. Colo. 2014) –
The U.S. trustee sought to dismiss “for cause” a chapter 7 case filed by a marijuana grower and his wife. The debtors countered by moving to convert to a chapter 13 case. The case turned on the impact of the federal Controlled Substances Act.
First Am. Bank v. First Am. Transp. Title Ins. Co., 759 F.3d 427 (5th Cir. 2014) –
After a mortgagor filed bankruptcy, a lender brought claims under a ship mortgage insurance title policy. The lender appealed the district court’s determination of the amount due under the policy, contending that the court used the wrong date of valuation, miscalculated the value of one of the insured vessels, and improperly made certain deductions.