In re Betchan, 524 B.R. 830 (Bankr. E.D. Wash. 2015) –
A mortgagee was the highest bidder at a foreclosure sale that took place shortly before the debtor filed bankruptcy. The lender requested relief from the automatic stay in order to evict the debtor on the basis that transfer of the property was completed prepetition so that it was not part of the debtor’s bankruptcy estate.
A chapter 7 trustee objected to the claim of a creditor/lessor on the basis that it should be disallowed because the lessor failed to turn over property recoverable using the trustee’s voiding powers, or alternatively, that it constituted a claim for lease termination damages that was subject to a cap.
Secured transactions typically include two key documents, which are often executed simultaneously: a promissory note memorializing loan and repayment terms executed by the borrower in favor of the lender and a security agreement granting the lender an interest in collateral securing the borrower’s debt owed to the bank. If a borrower ends up filing for bankruptcy, the bank likely will seek to enforce the security agreement against the borrower and recover the collateral. However, as made clear by the U.S.
Dishi & Sons v. Bay Condos LLC, 510 B.R. 696 (S.D.N.Y. 2014) –
In approving the sale of a Chapter 11 debtor’s assets, a bankruptcy court found that a tenant of the debtor was entitled to continue in possession of the leased portion of the sold property for the remainder of its lease. The successful bidder at the sale appealed, arguing that the sale was “free and clear” of the tenant’s interests.
In nearly every bankruptcy proceeding there is some constituency that ends up having its claim or interest impaired. Not surprisingly, therefore, these same constituencies would like to avoid that outcome by restricting the debtor’s ability to commence bankruptcy in the first place.
In a decision released on March 11, 2020, the Ontario Court of Appeal provided reassurance for those in the construction industry of the effectiveness of section 9(1) of the Construction Act, RSO c C.30 (“CA”) in insolvency proceedings. This decision did not overturn the previous decision rendered in Re Veltri Metal Products Co (2005), 48 CLR (3d) 161 (Ont CA) (“Veltri”); rather, the Court of Appeal distinguished the two cases on the facts.