Centimark Corp. v. Pegnato & Pegnato Roof Mngt, Inc., Case No. 05-708 (W.D. Pa. May 6, 2008)

In Geygan v. World Savings Bank, FSB, 2008 FED App. 0005P (6th Cir. B.A.P. Mar. 12, 2008), the Sixth Circuit BAP affirmed the bankruptcy court, holding that the mortgage’s certificate of acknowledgment, which included the phrase “witness my hand” next to the notary’s signature, did not comply with Ohio law, and that the Trustee was a bona fide purchaser pursuant to the U.S. Bankruptcy Code. 

On June 16, 2008, the United States Supreme Court held that the stamp-tax exemption under 11 U.S.C. § 1146(a) does not apply to transfers made before confirmation of a Chapter 11 plan. This decision will impact the structuring of asset sales in Chapter 11 cases where the transfers involve significant stamp taxes or similar taxes. Full text of the opinion.

In a decision issued on June 26, 2008, the Sixth Circuit Court of Appeals held that the earmarking doctrine does not provide a refuge for late-perfecting secured creditors and thus does not shield the creditor from preference exposure in a subsequently filed bankruptcy case.Lee v. Shapiro.

On July 17, 2008, in Phar-Mor, Inc. v. McKesson Corp. (Nos 05-4525/4526), the Sixth Circuit affirmed the Northern District of Ohio's ruling that a vendor's administrative expense priority on its reclamation claim survives, even after the goods that are subject to reclamation are sold and the proceeds are used to satisfy a secured creditor's superior claim. Full text of the opinion.

Facts

The Court of Appeals for the Sixth Circuit became the first circuit court to rule on the issue of whether a bankruptcy court has authority to retain a case filed in improper venue. The Court found that a bankruptcy court may not retain jurisdiction on a case that was filed in an improper venue. In Thompson v. Greenwood, 507 F.3d 416 (6th Cir. 2007), the Sixth Circuit follows strict statutory construction in holding that where there is improper venue a bankruptcy court must dismiss the case or transfer it to a district where it could have been brought originally.

U.S. v. Henry, Case No. 08-003 (W.D. Va. July 1, 2008)

The revisions to Ohio’s exemption law set forth in O.R.C. §2329.66 become effective on September 25, 2008 by Senate Bill 281 that was signed by Governor Strickland on June 27, 2008. The purpose of the changes to Ohio’s exemption law is to increase the exemptions for property that a debtor may hold exempt from execution, garnishment or sale for the satisfaction of a judgment. Ohio’s current exemptions have not been revised since 1979, and the current exemptions do not reflect the costs of living in 2008.

On August 26, 2008, the United States Court of Appeals for the Sixth Circuit held that a state-court judgment that modifies a discharge order is void ab initio.

At the end of the day, what really drives lender decisions with regard to addressing problem loan modifications, workouts, and restructuring issues revolves around the impact of those decisions on the financial statements condition of the institution.

Likewise, the regulatory and accounting treatment behind those decisions tends to dictate policy and procedure for the CRE lending and workout areas of the bank.