Following a $9 million judgment in its favor, Granite Re was further awarded pre- and post-judgment interest on that judgment. Granite Re filed a proof of claim in Acceptance Insurance’s bankruptcy action for the amount of $10.9 million, the balance of the premium due under a reinsurance contract plus interest. Acceptance disputed the claim, arguing it no longer needed reinsurance, and filed a separate adversary proceeding against Granite Re alleging unjust enrichment. The Eighth Circuit’s Bankruptcy Appellate Panel reversed the bankruptcy court’s ruling in favor of Acceptance.
People’s Capital and Leasing Corp. v. BIG3D, Inc. (In re BIG3D, Inc.), 438 B.R. 214 (9th Cir. BAP 2010)
CASE SNAPSHOT
In re Buttermilk Towne Center, LLC, No. 10-8036, 2010 Bankr. LEXIS 4563 (B.A.P. 6th Cir. Dec. 23, 2010)
CASE SNAPSHOT
In Hardesty v. CitiFinancial, Inc.,1 the Sixth Circuit affirmed the bankruptcy court’s denial of the trustee’s request to avoid the debtors’ mortgages with the creditor based on allegedly defective certificates of acknowledgement in the mortgage documents under Ohio law.
Reversing the bankruptcy court, a Sixth Circuit Bankruptcy Appellate Panel held that a debtor in a single asset real estate case did not provide adequate protection to a creditor by providing replacement liens in the rents where there was no equity cushion.4 The notion that granting the lender a lien on future rents to replace the expenditure of prior months' rents was rejected. Accordingly, the appellate panel held that the debtor could not use rents collected post-petition to pay ordinary administrative expenses, such as fees of its professionals.
It is commonly known that a borrower's agreement with a third party not to file a bankruptcy case is unenforceable due to public policy considerations. Accordingly, lenders have searched for ways to make it difficult or painful for their borrowers to file for bankruptcy, such as imposing the requirement that prior authorization of an independent director or member be a prerequisite to a bankruptcy filing by the borrower, or requiring the borrower's principal to execute a non-recourse carve-out guaranty that would impose personal liability should the borrower file for bankruptcy.
People are generally familiar with the concept that a party’s right to appeal applies to those orders that are “final.” A “final” order is one that resolves or disposes of the disputes between the parties. While an interlocutory order may be appealable at the discretion of the appellate court, the aggrieved party has no absolute right to appeal an order that is not “final.”
The Bankruptcy Appellate Panel for the First Circuit recently held that a creditor holding a perfected security interest in accounts and payment intangibles did not have a perfected security interest in the proceeds of an insurance settlement. In re Montreal, Maine & Atlantic Ry., Ltd., 521 B.R. 703 (B.A.P. 1st Cir. 2014). In this case, the creditor had extended a line of credit to the borrower, which it secured by a security interest in all the borrower’s accounts and payment intangibles. The creditor filed a financing statement to perfect its security interest.
If cramdown failures are par for the course, why are we all so fascinated with them? One thing is certain: they always provide a good teaching moment for practitioners. Marlow Manor’s chapter 11 single asset real estate case is no different.