Morris v. Ark Valley Credit Union (In re Gracy), 522 B.R. 686 (Bankr. D. Kan. 2015) –
A chapter 7 trustee sought to avoid a credit union’s security interest in a manufactured home by asserting his strong arm powers as a hypothetical lien creditor based on the lender’s failure to perfect its lien. The bankruptcy court declined to avoid the lien since it held there was no lien to avoid.
In a 2014 decision rued by debt collectors everywhere, the Eleventh Circuit in Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014) ruled that filing a proof of claim to collect a time-barred debt in a Chapter 13 bankruptcy violated the Fair Debt Collection Practices Act (“FDCPA”). Not surprisingly, the Crawford decision spawned a tidal wave of copycat claims based on the simple act of filing a proof of claim on a stale debt.
Since its 1989 opinion in Folendore v. Small Business Admin., the Eleventh Circuit Court of Appeals has allowed debtors to completely strip off and void wholly unsecured junior liens in Chapter 7 bankruptcies under Section 506(d) of the Bankruptcy Code. Complete lien stripping forever prevents creditors from seeking relief against a debtor’s collateral if it is underwater, even if the property value later increases. Since Chapter 7 debtors are also discharged of personal liability, subordinate debt is, in such cases, rendered worthless.
That may soon change.
On March 16, 2015, the Spanish subsidiary of Banca Privada d’Andorra, Banco de Madrid, sought bankruptcy protection in the midst of a run on the bank by depositors. The run and bankruptcy were the result of FinCEN’s March 10, 2015, announcement that it would bar U.S. banks from providing correspondent banking services to Banca Privada d’Andorra or any bank that processes transactions for Banca Privada d’Andorra.
In a recent decision, In re Black Diamond Mining Company, LLC,[1] the United States Court of Appeals for the Sixth Circuit held that a netting provision contained in a contract was enforceable against an assignee from one of the parties to the contract. The decision is sound, and is worth noting by parties to contracts and by those parties that succeed to their rights
This case is the product of yet another dispute in the extensive, multi-billion dollar fraud perpetrated by Tom Petters. In 2005, as the sole board member of Petters Group Worldwide, LLC (“PGW”), Petters directed the acquisition of Polaroid, which operated independently and legitimately as a going concern. In late 2007 and early 2008, Polaroid and other Petters companies began experiencing financial difficulties. In January 2008, PGW approached Ritchie about a loan and the next day, Ritchie loaned $31 million to PGW to pay debts of Polaroid and PGW.
We don’t know about you, but we’ve been following the contentious litigation between the Consumer Financial Protection Bureau (CFPB) and debt-relief services company Morgan Drexen pretty closely. The CFPB filed its lawsuit in August 2013, alleging, among other things, that the company deceived consumers into paying unlawful up-front fees for debt relief services by disguising them as fees related to “sham” bankruptcy services.
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.
On March 3, the DOJ’s U.S. Trustee Program announced a $50 million settlement with a national bank to resolve allegations that the bank engaged in improper actions during bankruptcy proceedings.
Liebzeit v. Intercity State Bank (In re Blanchard), 520 B.R. 740 (Bankr. E.D. Wis. 2014) –
A Chapter 7 trustee sought to avoid a mortgage on the debtors’ property using the “strong arm” powers of a hypothetical bona fide purchaser of real estate. The complication was that the debtors sold the real estate on land contract before they granted the mortgage.