The Trustee for the Liquidation of MF Global Inc. – the defunct futures commission merchant that filed for bankruptcy in October 2011 – received approval from the US Bankruptcy Court overseeing its dissolution to make a final, cumulative 95 percent distribution on all allowed general unsecured creditor claims.

On August 4, 2015, we posted: “Equitable Mootness In The Third Circuit: Dead Or Alive?”, which analyzed the Third Circuit’s opinion in In re One2One Communications.   The post predicted that Judge Krause’s concurrence would likely result in further opinions on equitable mootness.  Less than a month later we have such an opinion.  InAurelius v. Tribune, 14-3332 (3d Cir.

Following a foreclosure sale the general rule is that the amount of the debt is reduced by the net proceeds realized from the sale, setting the deficiency amount the foreclosing creditor may seek to recover.  N.C.G.S. § 45-21.31(a)(4).  However, when the foreclosing creditor is the successful high bidder at the foreclosure sale this general rule is abrogated by N.C.G.S.

It’s not an uncommon sight, especially in light of the burst of the housing bubble in recent years: a debtor in bankruptcy has two mortgages on a property with a fair market value of less than the amount of the senior mortgage. The junior mortgage lien is then wholly underwater, so that creditor would receive nothing from the sale of the property. The question then becomes, can the debtor void those liens in a Chapter 7 bankruptcy proceeding? The Supreme Court, in an increasingly rare show of unanimity, said “No.”

Foreclosure defense and bankruptcy often go hand in hand, but sometimes it seems like the left hand doesn’t talk to the right. This has proven especially common with bankruptcy plans that propose to “surrender” real property encumbered by a mortgage. The term “surrender” is not defined in the bankruptcy code. As a result, lenders and borrowers often interpret the term differently. For example, most lenders interpret surrender to mean not defending a foreclosure.

On Jan. 21, in Official Committee of Unsecured Creditors of Motors Liquidation v. JPMorgan Chase Bank (In re Motors Liquidation), No. 13-2187, (2d Cir. Jan. 21, 2015), the U.S. Court of Appeals for the Second Circuit addressed whether a UCC-3 termination statement, which was improperly filed as part of the repayment of an unrelated loan, may be considered effective to terminate the security interest in question, even where none of the parties intended that result.

In re RML Dev., Inc., 528 B.R. 150 (Bankr. W.D. Tenn. 2014) –

A mortgagee sought to modify a sale order to (1) modify the bid procedures and (2) confirm that it had a right to credit bid.

Setoff is commonly encountered in bankruptcy and non-bankruptcy situations.  If there are mutual debts between two entities, either may generally offset the debts.  These debts frequently arise where one entity is a vendor to a customer and selling on credit, and at the same time is also making occasional purchases on credit from the customer.  If one entity owes $100 to a second entity but is owed $300 by this second entity, these mutual debts may be offset, leaving just the $200 owed by the second entity.

The United States Bankruptcy Appellate Panel for the Eighth Circuit recently held that filing a proof of claim on a time-barred debt is not, alone, a prohibited debt collection practice under the federal Fair Debt Collection Practices Act.

A copy of the opinion is available at: Link to Opinion.

In an interesting decision with important implications for both Chapter 15 practice and financial institutions’ global credit risk analyses, a US Chapter 15 court (the “Court”) granted recognition of a number of Brazilian proceedings involving entities within the OAS Group.  See In re OAS S.A. et al., Case No. 15-10937 (SMB) (Bankr.