The Bankruptcy Court’s conversion of Section 11 of the Illinois Conveyance Act from a safe harbor provision to a mandatory checklist that must be satisfied to survive avoidance challenges has been reversed (Crane Bankruptcy – D Ct decision).  The Central District of Illinois holds compliance with the statute is permissive.  While the statute provides that mortgages containing the enumerated terms, including the interest rate and matu

Recently, on the eve of closing a large mortgage loan for a regional mall intended for a single asset securitization, it was determined that there was an extremely remote risk that the mortgage might not be foreclosable due to a peculiarity of the improvements on the real property and local foreclosure practices.

Those who practice in the secured transactions arena, and our clients, understand the importance of filing financing statements and continuing them on a regular basis. Failure to maintain perfection of a security interest can be disastrous to a secured lender in the case of a bankruptcy case involving its borrower. Financing statements can, however, sometimes be mistakenly terminated. Two recent cases illustrate the issues which may arise when a financing statement is inadvertently terminated.

In a ruling on February 28, 2013, the U.S. District Court for the Central District of Illinois reversed the February 29, 2012 order of the U.S. Bankruptcy Court for the Central District of Illinois allowing a bankruptcy trustee to avoid an Illinois mortgage as to unsecured creditors for lack of “constructive notice” because the mortgage did not expressly state the maturity date of and interest rate on the underlying debt (In Re Crane, Case 12-2146, U.S. Dist. Ct., C.D. IL, February 28, 2013).

A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements.

A new troubling case from California allows borrowers to present evidence of prior oral statements of a lender which contradict the terms of the written agreement between the parties with a standard integration clause. Marsha Houston of our Los Angeles office writes more about the case below.

Inre Brooke Capital Corp., 2012 WL 4793010 (Bankr. D. Kan., Oct. 5, 2012)

Custom and practice in Illinois with respect to mortgages has been to incorporate the note or other debt instrument by reference, rather than to disclose all of the financial terms of a loan transaction in the mortgage.

On December 31, 2012, Strategic Growth Bancorp Inc. (“Strategic Growth”), an El Paso, Texas-based bank holding company, acquired Mile High Banks (the “Bank”), a Colorado community bank, from the Bank’s parent, Big Sandy Holding Company (“Big Sandy”), through an auction process conducted pursuant to section 363 of the Bankruptcy Code. Davis Polk represented Strategic Growth and advised on the complex and overlapping bankruptcy, mergers and acquisitions, credit, tax and bank regulatory issues presented by the transaction.

The Sixth Circuit Court of Appeals recently affirmed the decisions of the courts below and held in an unpublished opinion that a secured lender’s credit bid at a Michigan foreclosure sale extinguished all of the Chapter 13 debtor’s indebtedness to the lender, thereby precluding the lender from executing on a prepetition foreclosure judgment obtained against the debtor in Wisconsin. State Bank of Florence v. Miller (In re Miller), 2013 WL 425342 (6th Cir. Feb. 5, 2013).