When the Minnesota legislature opened a three-year window for victims of sexual abuse to commence lawsuits, hundreds of lawsuits were filed against the Archdiocese of St. Paul and Minneapolis and other Catholic dioceses and organizations. The thee-year window closed on May 25, 2016. Some of the cases filed during the three-year window were tried or settled, but a large number remained. The total potential exposure exceeds the ability of the different Catholic entities to pay.
Minnesota law provides that certain types of assets are exempt from creditor collection. These exemptions impact individual clients in a wide-range of matters ranging from estate planning to judgment executions to bankruptcy filings. The Minnesota legislature recently enacted a new exemption protecting up to $25,000 held in a health savings account. In addition, the Minnesota Commerce Department recently announced that certain exemptions have been increased, including the homestead to $429,000 and the farmstead to $1,072,500.
Wednesday, February 1 brought a welcome development for the many correspondent lenders currently defending against claims filed by (or threatened with future lawsuits by) Residential Funding Company (“RFC”) and its successor-in-interest, the ResCap Liquidating Trust (“ResCap”).
The Minnesota Court of Appeals recently ruled that a nonresident parent company may be subject to suit in Minnesota for damages claims against its insolvent Minnesota subsidiary company. The decision would appear to defeat a primary reason for forming a separate subsidiary business entity: the protection of related entities and their assets from potential liability arising from the business operations of the subsidiary.
In re Sky Ventures, LLC, 523 B.R. 163 (Bankr. D. Minn. 2014) –
After a debtor obtained court approval to retroactively reject a lease as of the bankruptcy filing date, the landlord moved to reset the rejection date and for allowance of an administrative expense priority claim for post-petition rent.
Applying Minnesota law, a federal district court has held that, where an entity’s principal shareholder was insolvent, but the entity was not, the individual’s insolvency could not be attributed to the entity for purposes of establishing Side A coverage for “Non-Indemnifiable Loss.” Zayed v. Arch Ins. Co., 2013 WL 1183952 (D. Minn. Mar. 20, 2013). The court further held that allegations of fraudulent inducement did not trigger an exclusion for claims “arising from” contractual liability, but that the claim was uninsurable as matter of law.
As of August 1st, the legal landscape for receiverships in the State of Minnesota will change dramatically. Receiverships have long been used a remedy for mortgage lenders to preserve commercial property in foreclosure, but a lack of clear guidance under Minnesota law has been problematic for all parties. The Minnesota State Bar Association convened a panel of experienced debtor creditor attorneys to create a new statutory framework, which was eventually passed by the Legislature and signed by the Governor this spring. The new receivership statute, codified under Minnesota St
Receiverships and assignments for the benefit of creditors (ABCs) can be important tools for banks and other lenders when a borrower is suffering financial distress. Because they are often cost-effective and efficient, receiverships are being used increasingly throughout the country, and ABCs are commonly utilized in many states. In Minnesota, however, the statutes regarding receiverships and ABCs were outdated or largely ignored; as a result, receivership practices and procedures are not uniform, and ABCs are almost never used.
On March 28, 2012, the Minnesota Legislature gave final passage to HF 382, a comprehensive revision of Minnesota statutes governing receiverships and assignments for the benefit of creditors (ABCs) in the state. Following signature by the governor (which is expected), the new statutes will take effect on August 1, 2012. Sponsored by the Minnesota State Bar Association and its Business Law and Real Property Sections, the new statutes are the product of more than two years of work by a committee of Minnesota lawyers and receivers.
Receiverships