A fundamental tenet of chapter 11 bankruptcies is the absolute priority rule. Initially a judge-created doctrine, the absolute priority rule was partially codified in section 1129(b)(2)(B)(ii) of the Bankruptcy Code. Under section 1129, plans must be “fair and equitable” in order to be confirmed.
Currently, some courts allow borrowers to bring Fair Debt Collection Practices Act claims for non-judicial foreclosures while other courts do not, but that is about to change.
A lawyer’s usual task is to help solve the client’s current problem: resolve a dispute; close a loan; obtain a permit; avoid a conviction; etc. Lawyers are so task oriented that some consultants advise us to have task specific engagement understandings and send dis-engagement letters when a task is complete. For bankruptcy lawyers representing individuals in a Chapter 13 bankruptcy, the task at hand is getting clients to and through a confirmed Chapter 13 plan with the promised debt relief and fresh start.
The Southern District of West Virginia recently held that the reporting of an account being paid through a Chapter 13 bankruptcy plan as having an outstanding balance or past due payments does not violate the Fair Credit Reporting Act.
The Bottom Line
A recent Ninth Circuit Court of Appeals decision provides insight into “bad faith” claims-buying activity; specifically whether a creditor’s purchase of claims for the express purpose of blocking plan confirmation is permissible. In In re Fagerdala USA-Lompoc, Inc., the Court found it was—the secured creditor did not act in bad faith when it purchased a subset of all general unsecured claims and voted those claims against confirmation because it was acting to further its own economic interest as a creditor, without some extrinsic ulterior motive.
The U.S. Bankruptcy Appellate Panel for the Eighth Circuit recently applied the “conceivable effect” test in holding that a bankruptcy court lacked jurisdiction over a state law fraud claim raised by a third party regarding the validity of a lender’s lien, and therefore, declined to consider the issue on appeal.
In so ruling, the Panel ruled that the state law fraud claim did not invoke “arising under” or “arising in” jurisdiction of the bankruptcy court because the state law fraud claim was not created or determined by the Bankruptcy Code, and could exist outside of bankruptcy.
On June 29, the FDIC and Federal Reserve issued (here and here) a joint request for public comment on proposed revisions to resolution plan guidance for the eight largest and most complex U.S. banks.
Ground leases are fairly common but sometimes overlooked property interests. A succinct but adequate definition of a ground lease was articulated by Herbert Thorndike Tiffany (Tiffany on Real Property § 85.50 [3d ed.]) as follows:
Happy National ESIGN Day! Eighteen years ago this week, Congress passed the Electronic Signatures in Global and National Commerce Act, ensuring the legal validity of contracts entered into using electronic signatures and records. National ESIGN Day was established by Senate Resolution 576 and House Concurrent Resolution 290 on June 30, 2010.
A fact of business today is that customers – both consumers and other businesses – and employees expect to transact digitally. To remain competitive, companies find themselves increasing their efforts to digitally transform their businesses.