In a case originating out of bankruptcy court, the U.S. Court of Appeals for the Eighth Circuit affirmed the bankruptcy court’s finding that a perpetual, royalty free, assignable, transferable, exclusive license granted as part of the sale of the business operations, assets and intellectual property associated with two bread baking brands was an executory contract. Lewis Bros. Bakeries Inc. v. Interstate Brands Corp., Case No. 11-1850 (8th Cir., Aug. 30, 2012) (Bye, J.).
In a fairly controversial decision from January 2012, the United States Bankruptcy Court for the Central District of Illinois held that a financing statement must contain the “legal” name of an individual as it appears on the individual’s birth certificate. Miller v. State Bank of Arthur (In re Miller), Adv. P. No. 11-9055 (Bankr. C.D. Ill. Jan. 6, 2012). On appeal, the United States District Court for the Central District of Illinois reversed and held that the Uniform Commercial Code requires only that a “correct” name appear on the financing statement.
Disgruntled debtors seeking to evade their obligations by filing fraudulent liens soon face new threats under Illinois law. On July 25, 2012, Governor Patrick Quinn approved and signed Senate Bill 1692, which is intended to provide additional remedies for wrongfully filed UCC liens.5 Senate Bill 1692 becomes effective January 1, 2013 and will be incorporated into section nine of the Illinois Uniform Commercial Code.
Olsen v. Heaver (In re Heaver), 473 B.R. 734 (Bankr. N.D. Ill. 2012) –
The short story is that when a deed and mortgage are executed at the same time, but the mortgage is recorded before the deed, the recorded mortgage does not provide constructive notice and can be avoided in a bankruptcy – at least under Illinois law as interpreted by the Heaver bankruptcy court.
On July 2, 2012, the Illinois Department of Insurance (IDOI) entered an Agreed Order of Rehabilitation against Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company, which is the part of the Lumbermens Mutual Group formerly known as Kemper (collectively, “Lumbermens”). Under the order, IDOI’s Director will serve as Lumbermens’ Rehabilitator with powers to restructure Lumbermens’ insurance business. From this point forward, Lumbermens will no longer take on any new insurance obligations, issue any new policies, or renew any existing policies.
Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company (part of the Lumbermens Mutual Group and formerly known as Kemper) (“Lumbermens”), after years of struggling financially under the supervision of the Illinois Department of Insurance, recently entered rehabilitation proceedings. Policyholders who purchased workers’ compensation and other types of insurance from Lumbermens should be aware that many opportunities for recovery remain.
In February the Bankruptcy Court for the Central District of Illinois held in Crane v.
In In re Crane, the Bankruptcy Court for the Central District of Illinois recently held that a mortgage can be avoided in bankruptcy if it fails to include the maturity date and the interest rate of the underlying debt within the mortgage document. The court found that failing to include these loan terms on the face of the mortgage as recorded, violated the requirements of Illinois conveyancing statutes, and therefore did not provide the constructive notice to the trustee necessary for preventing the avoidance.
In a decision that potentially has serious implications for mortgage financing transactions in Illinois, the Bankruptcy Court for the Central District of Illinois recently held that a mortgage is avoidable in bankruptcy if it fails to include the maturity date and the interest rate of the underlying debt within the mortgage document as recorded. In re Crane, Case No. 11-90592, U.S. Dist. Ct. C.D. Ill., February 29, 2012; Supplemental Opinion and Order, April 5, 2012.
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.