The United States Bankruptcy Court for the Central District of Illinois recently held that an Illinois mortgage is subject to avoidance in bankruptcy pursuant to 11 U.S.C. § 544(a)(3) unless the mortgage contains among other things, (i) the amount of the debt, (ii) the maturity date of the debt, and (iii) the underlying interest rate. Richardson v. The Gifford State Bank (In re Crane), Adv. Pro. No. 11-9067 (Bankr. C.D. Ill.).
In the recent decision in In Re Duckworth (March 22, 2012), the Chief Bankruptcy Judge for the Central District of Illinois issued a decision that may have far reaching effects on some lenders using automated loan documentation software1. In this case, the State Bank of Toulon (the “Bank”) generated loan documents for a $1.1 million agricultural loan.
InYessenow v. Executive Risk Indemnity, Inc., 2011 IL App 102920, 953 N.E.2d. 433 (1st Dist.
The Bottom Line:
An Illinois appellate court, applying Indiana and federal law, has held that neither a bankruptcy exclusion nor an insured versus insured exclusion applied to bar coverage for claims brought by a bankruptcy trustee. Yessenow v. Exec. Risk Indem., Inc., 2011 WL 2623307 (Ill. App. Ct. June 30, 2011).
Does the bankruptcy filing of a limited liability company without the approval of its “Special Member,” the secured lender serving as “blocking director,” render that filing infirm as unauthorized and subject to dismissal? Not necessarily, held the United States Bankruptcy Court for the Northern District of Illinois in a
A Chicago bankruptcy court declined to dismiss the Chapter 11 case of a “bankruptcy remote” limited liability company even though the debtor failed to obtain the unanimous consent of its members as required by its operating agreement. See In re Lake Mich. Beach Pottawattamie Resort, LLC, Case No. 15bk42427, 2016 Bankr. LEXIS 1107 (Bankr. N.D. Ill. April 5, 2016).
NASA defines a black hole as a place in space where gravity is relentless and pulls so much that not even light can get out. And, so it goes with Chicago as it attempts to get out of its pension black hole. The recent Illinois Supreme Court opinion in Jones v. Municipal Employees’ Annuity and Benefit Fund of Chicago, 2016 IL 119618 (Ill. 2016) (“Jones”) may have created a wormhole or way through Chicago’s pension black hole. That way through is collective bargaining, as discussed below.
For a distressed company running low on capital, an investment from insiders may represent a last best hope for survival. Insiders may be willing to risk throwing good money after bad for a chance to save the company even when any third party would stay safely away. Insiders of a failing company may also have an ulterior motive for making an eleventh hour capital infusion, as they may use their control over a distressed company to enhance their position relative to the company’s other creditors. The line between a good faith rescue and bad faith self-dealing is often a hazy one.
Two decisions issued within a day of each other highlight the continuing debate over whether a time barred proof of claim violates the FDCPA and more importantly, whether the Bankruptcy Code preempts the FDCPA. As copycat cases continue to be filed, courts continue to resoundingly reject the rationale ofCrawford v. LVNV Funding, LLC, a decision out of the Eleventh Circuit.