In re Baber, 523 B.R. 156 (Bankr. E.D. Ark. 2014) –

The debtors objected to a proof of claim filed on behalf of a mortgagee based on issues arising from assignment of the mortgage note by the lender that originated the loan.  The mortgagee responded by, among other things, challenging the standing of the debtors to raise these issues.

If a loan or extension of credit requires collateral, banks prefer collateral that is readily marketable rather than taking a security interest in a closely-held business.  Occasionally, the only collateral that is available or that the borrower can offer is corporate stock that is not traded on a public market, an interest in a limited liability company ("LLC") or a partnership interest.  It is common for closely-held business entities to prohibit an assignment of an owner's interest or require as a condition to an assignment the consent of the other owners of the entity.