With the havoc being wreaked by the COVID-19 virus on businesses and supply chains, shuttering many businesses and decimating certain industries, business owners and management are seeking guidance to help mitigate their risk of financial distress. Following is a checklist with specific action items for decisionmakers to review, recognizing that every situation is unique and there is no universal solution that will fit every business scenario in our current unprecedented economic environment.

The United States District Court for the District of Massachusetts recently dismissed a borrower’s complaint against a lender, finding that the lender did not wrongfully foreclose on the borrower or engage in predatory lending. SeeHealy v. U.S. Bank, N.A. for LSF9 Master Participation Tr., 2018 WL 3733934 (D. Mass. Aug. 3, 2018). In the case, the borrower executed a loan agreement secured by a mortgage on his house in 2004. In 2013, he defaulted on the loan, and the note and mortgage were assigned to the defendant lender thereafter.

The United States District Court for the Western District of New York recently reversed a Bankruptcy Court’s dismissal of an action and held that sales arising from tax foreclosures may be avoidable as fraudulent transfers. SeeHampton v. Ontario Cty., New York, 2018 WL 3454688 (W.D.N.Y. July 18, 2018). The case involves two adversary proceedings commenced by homeowners against the County of Ontario (the “County”). In each matter, the County foreclosed on plaintiffs’ homes after plaintiffs failed to pay property taxes.

The Wisconsin Supreme Court recently held that a mortgage servicer was not barred from bringing a second foreclosure action after the first action was dismissed with prejudice. SeeFederal Nat’l Mortg. Ass’n v. Thompson, 2018 WI 57 (Wis. 2018). In the case, a mortgage servicer brought a foreclosure action against the defendant borrower in November 2010, alleging that the borrower defaulted on his April 2009 loan payment. As part of the lawsuit, the servicer accelerated the debt.

The Supreme Court of New York, Suffolk County, recently granted a foreclosing plaintiff summary judgment and held that plaintiff did not need to send a 90-day notice pursuant to RPAPL 1304 because plaintiff was not a lender, assignee, or mortgage loan servicer. SeeNIC Holding Corp. v. Eisenegger, 59 Misc. 3d 1221(A) (N.Y. Sup. Ct. 2018). In the case, one of plaintiff’s employees was relocating and defendant wanted to purchase the employee’s home.

With two decisions (No. 1895/2018 and No. 1896/2018), both filed on 25 January 2018, the Court of Cassation reached opposite conclusions in the two different situations

The case

The Constitutional Court (6 December 2017) confirmed that Art. 147, para. 5, of the Italian Bankruptcy Law does not violate the Constitution as long as it is interpreted in a broad sense

The case

With the decision No. 1195 of 18 January 2018, the Court of Cassation ruled on the powers of the extraordinary commissioner to require performance of pending contracts and on the treatment of the relevant claims of the suppliers

The case

The District of Columbia Court of Appeals recently reversed a lower court’s decision granting summary judgment to a condominium association and held that the association’s foreclosure of a “super-priority” condominium lien may not have extinguished an otherwise first-priority mortgage on the property. SeeU.S. Bank Nat’l Ass’n v. Green Parks, LLC, No. 16-cv-842 (D.C. Mar. 13, 2018). In the case, the borrower obtained a loan to purchase a condominium.

The California Court of Appeals recently held that a mortgage (the “Mortgage”) recorded simultaneously with a home equity line of credit (the “HELOC”) had priority and was not entitled to any surplus proceedings from the foreclosure of the HELOC, despite the fact that the HELOC’s instrument number was prior to that of the Mortgage. SeeMTC Fin., Inc. v. Nationstar Mortg., 19 Cal. App. 5th 811 (Ct. App. 2018).