After an oversecured creditor obtained relief from the automatic stay and foreclosed on some property, the bankruptcy court asserted jurisdiction over disposition of the sale proceeds and denied in part the creditor’s claim for fees. The district court reversed and the case was appealed to the 5thCircuit.
A senior mortgagee battled the debtor and a junior mortgagee over its entitlement to post-petition interest: If and when did it become oversecured and thus entitled to interest? Was it entitled to interest at the default rate? Should the interest be compounded?
Steven Enright and his wife borrowed money from a bank to buy dairy cows and other improvements for the family dairy farm. The bank loan was secured by assets of the Enrights, and also guaranteed by Steven’s parents, with the parents’ guarantee secured by a mortgage on the dairy farm itself (which was owned by the parents).
Reprinted with permission from the March 18, 2011 issue of The Legal Intelligencer © 2010 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
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