In what appears to be a matter of first impression, the U.S. Bankruptcy Court for the Northern District of Illinois recently held that payments made to investors in a two tiered securitization structure commonly employed in commercial mortgage-backed securitization (“CMBS”) transactions are largely protected from fraudulent or preferential transfer claims by the securities contract safe harbor set forth in Bankruptcy Code section 546(e). Specifically, in Krol v.
Illinois legislators are considering a bill that would amend the Illinois Municipal Code to allow municipalities and other local government entities to file for bankruptcy. Representative Ron Sandack (R-Downers Grove) has called it a “measure of last resort” for municipalities with increasing debts, including police and firefighter pension obligations. Governor Rauner has indicated previously that he supports the concept, and local leaders are evaluating the need for such protection in light of dire fiscal projections.
Undersecured creditors may breathe a little easier. In a recent decision, the United States Bankruptcy Court for the Northern District of Illinois denied the debtors’ request to use an undersecured creditor’s cash collateral, in the form of postpetition rents, to pay estate professional fees, holding that the undersecured creditor was not adequately protected even though the value of its collateral was stable and possibly increasing.
Illinois Governor Rauner presented his turnaround agenda in his “State of the State” address last week and called for, among other things, the state “to extend to municipalities bankruptcy protections.” Mirroring the proposed legislation introduced by Representative Ron Sandack in January, and reported on in an earlier post, Illinois seems positioned to provide municipalities with clear and direct access to Chapter 9 bankruptcy and
In re Castle Home Builders, Inc., 520 B.R. 98 (Bankr. N.D. Ill. 2014) –
The debtors obtained confirmation of plans of reorganization that restructured prepetition mortgage loans. When the servicer for some of the loans continued to ignore the terms of the plans, the reorganized debtors sought enforcement of the court’s confirmation order and sanctions.
November 10, 2014, is the deadline for filing proof of claims with the Office of the Special Deputy Receiver in Illinois regarding the estates of Lumbermens Mutual Casualty Company, American Manufacturers Mutual Insurance Company and American Motorists Insurance Company. Those insurance companies are all part of the Lumbermens Mutual Group and were formerly known as Kemper. They entered liquidation on May 10, 2013.
Recently, the United States Court of Appeals for the Seventh Circuit held that Illinois mortgages entered prior to the amendment of 765 ILCS 5/11 need not strictly conform to the form presented in the statute. In re Crane, --- F.3d ---, 2013 WL 6731850 (7th Cir. Dec. 23, 2013). However, the court’s decision in Crane, considered as a whole, serves as a reminder to secured lenders to closely examine the contents of their mortgages and the requirements of applicable state law.
Nearly two years ago, a bankruptcy court in the Central District of Illinois caused quite a bit of commotion in the lending community when it held that the provisions of Section 11 of the Illinois Conveyances Act (the “Act”) (765 ILCS 5/11) were mandatory rather than permissive. Crane v. Richardson (In re Crane), 20121 WL 669595 (Bankr. C.D. Ill. Feb. 29, 2012).
In a recent advisory, we reported on an apparently favorable decision to secured creditors from the Fifth Circuit Court of Appeals that held that a secured creditor’s claim survives bankruptcy where the secured creditor received notice of the case and was found to have not actively participated in it.