In a post-housing crisis economy, many homeowners, facing a plummet in home values, found themselves trapped in homes that are worth less than the amount they owe bank. Those homeowners have sought refuge in Chapter 7 bankruptcy proceedings, attempting to strip down the first mortgage and leaving many junior lienholders holding nothing but the bag—until now. In a big win for lenders, the U.S.
On June 11, 2015, the United States Bankruptcy Court for the District of New Jersey recognized that a condominium association’s lien is entitled to a limited six-month priority over a first mortgage.
Breach or termination? In most cases involving the rejection of an unexpired lease where the debtor is the lessee, whether a rejection constitutes merely a “breach,” as stated in section 365(g) of the Bankruptcy Code, or a “termination” is largely academic – the debtor vacates the premises, and the lessor files a prepetition claim for rejection damages. The debtor and its landlord may argue about the
Sophisticated real estate lenders spend significant amounts of time and energy attempting to insulate themselves from potential bankruptcy filings by their borrowers. A primary reason, which many an experienced real estate lender has found out the hard way, is the risk that a debtor in bankruptcy may “cram down” a plan of reorganization over its lender’s objection. Under a typical cramdown plan, a debtor may stretch out payments to its secured creditor for several years and attempt to replace its negotiated interest rate with a new, below- market rate of interest.
The Nutter Bank Report is a monthly electronic publication of the firm’s Banking and Financial Services Group and contains regulatory and legal updates with expert commentary from our banking attorneys.
The approval by Colorado voters of medical marijuana in 2000, and recreational marijuana in 2012, has created a burgeoning legal marijuana industry in our state. Not only have marijuana growing operations and dispensaries flourished, but they have provided new leasing opportunities for landlords.
When a retail business becomes a debtor in bankruptcy, it often decides to trim its operations by closing some of its retail stores. This strategy inevitably leaves the debtor with unnecessary leases. Instead of simply rejecting the leases, retail debtors often assume the agreements and assign them to other entities. The assumption and assignment of the unnecessary leases may allow a debtor to avoid potentially significant rejection damage claims from landlords.
The Fourth Circuit, on June 15, 2007, affirmed the dismissal of a Chapter 11 reorganization petition filed by a tenant debtor in a commercial lease dispute. Maryland Port Administration v. Premier Automotive Services, Incorporated (In re Premier Automotive Services, Incorporated), ___ F.3d ___, 2007 WL 1721951 (4th Cir. 6/15/07).
Is a landlord’s ability to recover repair costs chargeable to the lessee limited because such repair costs are included in “damages resulting from the termination of a lease of real property” pursuant to section 502(b)(6) of the Bankruptcy Code? In In re Foamex International, Inc., 2007 WL 1461954 (Bankr. D. Del. May 16, 2007), the bankruptcy judge said “Yes.”