In a ruling on February 29, 2012, the U.S. Bankruptcy Court for the Central District of Illinois allowed a bankruptcy trustee to avoid an Illinois mortgage as to other creditors of the estate because the mortgage failed to expressly state the maturity date of and interest rate on the underlying debt (In Re Crane, Case 11-90592, U.S. Dist Ct, C.D. IL, February 29, 2012).

Earlier this month, we reported to you on the bipartisan legislation introduced in the Michigan Legislature known as the Nonrecourse Mortgage Loan Act (the “Act”).  

The Act has been approved overwhelmingly by both chambers of the Michigan Legislature and will be presented to the Governor’s office for signature. It is expected that the legislation will be signed into law within the next several business days.  

According to a U.S. Department of Justice press release, the federal government and 49 state attorneys general have reached a $25 billion settlement agreement with the nation’s five largest mortgage servicers to settle claims over alleged mortgage loan servicing and foreclosure abuses. If reports are correct, the agreement, which Attorney General Holder called the “the largest joint federal-state settlement ever obtained,” compels the mortgage servicers to adhere to extensive new servicing standards and provides considerable financial relief for homeowners.

On January 19, 2012, the 7th Circuit Court of Appeals issued an opinion in In re River East Plaza, LLC , 2012 WL 169760 (7th Cir. January 19, 2012), affirming an order by the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, granting an undersecured creditor's motion to lift the automatic stay and dismissing the debtor's single asset real case. The debtor attempted to defeat the mortgagee's motion to lift the automatic stay by proposing a "cramdown" Chapter 11 plan of reorganization.

A promissory note is a one-way undertaking. The maker promises to pay to the payee. There is nothing promised by the payee. The whole point of having a promissory note is to have a document that clearly states an obligation to pay. By contrast, most contracts are bilateral, meaning that each party promises to do something. And those promises are usually mutually dependent: if one party breaches, then the other may be excused from further performance. But that is not the case with a promissory note.

Yesterday, we announced the results of our fourth annual Reuters HedgeWorld & Dykema Insolvency Outlook Survey, which provides an inside look at the distressed investing landscape through the eyes of 100 hedge fund managers.

Many landlords are very familiar with provisions of the United States Bankruptcy Code dealing with assumption and rejection of leases. However, the particular consequences of lease rejection may not be as well known. For example, once a lease is rejected or deemed to be rejected, a landlord may not know its rights with respect to regaining possession of the leased premises. A recent case from a Florida bankruptcy court shed some light on this issue when it held that after a debtor has rejected a lease, the tenant must surrender the premises to the landlord.

Introduction

The Eleventh Circuit Court of Appeals has just issued an opinion that should concern anyone doing business with a debtor in bankruptcy. In short, the court ruled that a company that supplied $1.9 million worth of goods to a debtor after the petition date had to return the debtor's payment. The reason? The debtor did not have permission from the court or its secured creditor to use the money. The payments were for value given post-petition and were apparently made in accordance with the pre-petition practice between the parties.

Under Section 1031 of the Internal Revenue Code, a taxpayer does not recognize gain or loss on the exchange of like-kind property. Before 1984, the Code did not specifically address so-called deferred exchanges - exchanges in which the taxpayer relinquished property and some time later received the replacement property - although at least one leading case did. The 1984 rules require that the taxpayer identify the replacement property within 45 days after the disposition and close on the replacement property and close within 180 days after the disposition.