Bankruptcy is all about the debtor’s assets, specifically how many and who gets them. The reason that many bankruptcy cases are contentious is that the parties often disagree about the amount of assets available for distribution to creditors, as well as how the assets should be divvied up.
In In re Zair, 2016 U.S. Dist. LEXIS 49032 (E.D.N.Y. Apr. 12, 2016), the U.S. District Court for the Eastern District of New York became the latest to take sides on the emerging issue of “forced vesting” through a chapter 13 plan. After analyzing Bankruptcy Code §§ 1322(b)(9) and 1325(a)(5), the court concluded that a chapter 13 debtor could not, through a chapter 13 plan, force a mortgagee to take title to the mortgage collateral.
Background
The IRS issued a Memorandum on April 15, 2016 clarifying the treatment of nonrecourse debt subject to certain “bad boy” guarantees. The Memorandum takes a position contrary to the recent Chief Counsel Advice (CCA 201606027) and is more in keeping with the general view of the real estate industry.
(Bankr. E.D. Ky. Apr. 15, 2016)
The bankruptcy court dismisses the plaintiff’s complaint because it failed to state a claim. The complaint was based on a factual assertion that the plaintiff’s predecessor had an interest in certain bank account funds. However, the prior 11 U.S.C. § 363 sale order and confirmation order adjudicated otherwise. Thus, the claims were barred by the doctrine of res judicata. Opinion below.
Judge: Wise
Attorneys for Plaintiff: Philip G. Fairbanks, M. Austin Mehr, John M. Simms
For secured lenders, a consumer debtor’s chapter 13 bankruptcy filing can be a mixed bag.
GAO has issued a report which noted the FDIC and Federal Reserve have developed separate but similar review processes for determining whether a resolution plan, often referred to as a “living will,” is “not credible” or would not facilitate a company’s orderly resolution under the Bankruptcy Code.
SEC and FDIC Propose Dodd-Frank Broker-Dealer Resolution Rules
On April 6, the Federal Deposit Insurance Corporation (FDIC) rescinded Financial Institution Letter (FIL) 50-2009 entitled “Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions.” The FIL, among other measures, had extended the de novo period for newly organized, state nonmember institutions from three to seven years for examinations, capital maintenance and other requirements.
The recent decision from the United States District Court for the Eastern District of Michigan, ECP Commercial II LLC v. Town Center Flats, LLC (In re Town Center Flats, LLC), gives us at the Weil Bankruptcy Blog a reason to revisit the issue of “absolute” assignments of rent.
Creditors seeking to exercise control over a borrower or collateral may utilize a number of remedies. They may seek a foreclosure or UCC sale, assignment for the benefit of creditors, file an involuntary bankruptcy petition under Section 303 of the Bankruptcy Code (if they hold unsecured claims),[1] or, seek the appointment of a receiver.