In connection with the bankruptcy of a bank holding company (the “Bank Holdco”) and its operating bank subsidiary (the “Bank”), there are often different classes of creditors competing for one tax refund.

In Burcam Capital II, LLC v. Bank of America, N.A., et al, No. 13-00063-8 (Bankr. E.D. N.C. Oct. 1, 2013), an adversary proceeding filed in In re: Burcam Capital II, LLC, No. 12-04729-8, in the United States Bankruptcy Court for the Eastern District of North Carolina, the court held that the Debtor Plaintiff alleged sufficient facts to support a claim that its lender and the special servicer of the loan breached their duty to act in good faith and to deal fairly.

On October 17, Fannie Mae issued Servicing Guide Announcement SVC-2013-21, which revises servicers’ responsibilities in finalizing standard deed-in-lieu of foreclosures (DILs).

What you need to know:

One of the ironic issues for failing banks has been the fact that banks that they have had to continue to deal with their borrowers and depositors in the ordinary course of business even though they are already in the queue for resolution by the FDIC. So for example, loans continue to get renewed and documents executed. What happens if you renew a loan shortly before the bank fails, do you have some sort of defense to enforcement of the loan when the successor bank or the FDIC makes demand on you?

A recent New York court decision has cleared the way for lenders to seek recovery against non-recourse carve-out, or “bad boy,” guarantors during a pending mortgage foreclosure action if a borrower files for bankruptcy. In so doing, the court answered a question that, surprisingly, was thus far apparently unanswered in a reported decision in New York: whether New York’s “one action rule” under RPAPL § 1301 bars a lender from obtaining a money judgment against a “bad boy” guarantor for the debt if a mortgage borrower files for bankruptcy while a foreclosure action is underway.

The United States Court of Appeals for the Second Circuit (the “Second Circuit”) recently followed the emerging trend of affording the safe harbor protections of section 546(e) of the Bankruptcy Code (the “Code”) to intermediary financial institutions acting as only conduits in otherwise voidable transactions.

In an adversary proceeding arising out of the Chapter 11 case of Residential Capital, LLC (“ResCap”), the bankruptcy court denied in part and granted in part a secured lenders’ motion to dismiss certain claims in the case. Official Comm. Of Unsecured Creds. V. UMB Bank, N.A. (In re Residential Capital, LLC), Adv. P. No. 13-01277, -- B.R. --, 2013 WL 4069512 (Bankr. S.D.N.Y. Aug. 13, 2013). At issue was certain collateral, which was part of the secured lenders’ collateral, that the lenders released to enable ResCap to pledge it to different third parties.

As all creditors know, you must file a financing statement under the Uniform Commercial Code ("UCC"), called a "UCC-1," with the North Carolina Secretary of State to perfect a security interest in personal property (and with the county Register of Deeds if the property might become a real estate fixture).  The UCC-1 puts the world on notice of your security interest and establishes your place in line with respect to rights in the collateral.  But you must prepare and maintain

Section 4-9-513 of the Colorado Uniform Commercial Code (UCC) provides that "a secured party shall cause the secured party of record for a financing statement to file a termination statement . . . within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance . . . ."  Simply stated, when a secured obligation is paid and there is no commitment to make an advance, the secured party is obligated to file a termination statement.