Although not intended to be classics of literature, we have found tales of two municipalities and their Chapter 9 bankruptcies. One was warm and prosperous and on the West Coast, whose housewives we have followed in the age of reality TV. The other was from a grittier place in the midwest with industrial gothic scenes and rappers who have captured its spirit. Please join us as we discuss the post Chapter 9 filing bond disclosures of Orange County, CA and the City of Detroit.

In Investors Bank v. Trylon/Crest Construction, Inc., 2016 WL 5922751 (N.J. App. Div. Oct. 12, 2016), the Appellate Division affirmed the Trial Court’s discharge of a rent receiver over the defendant’s objection that the receiver was required to make certain payments to the defendant. In October 2008, the defendant borrowed $5,200,000 from the plaintiff, Investors Bank (the “Bank”), secured by a first mortgage on property owned by the defendant. In addition, the mortgage granted the Bank the right to have a rent receiver appointed for the property.

The U.S. Court of Appeals for the Seventh Circuit recently held that a bank’s lawsuit against the husband of a debtor who had filed for bankruptcy did not violate the co-debtor stay because the husband’s credit card debts were not a consumer debt for which the debtor was personally liable.

Recent changes to New York’s foreclosure statutory scheme are set to go into effect on December 20, 2016. These wide-ranging revisions include the following amendments:

AN FTI CONSULTING White PAPER DECEMBER 2016

...accounting standards applying to recognition and measurement of a company's assets can be complex and need to be interpreted and applied with care to ensure the valuations are fit for purpose

Asset-based valuations: Valuation floor or flawed valuation?

Mark Bezant and David Rogers

Synopsis

(7th Cir. Dec. 22, 2016)

(Bankr. E.D. Ky. Dec. 27, 2016)

The bankruptcy court dismisses the creditor’s non-dischargeability complaint under 11 U.S.C. § 523(a)(2)(A) and (a)(6). The creditor conceded that the debt was based on a breach of contract claim. However, the creditor alleged the debt was converted to a non-dischargeable debt based on the debtor’s post-judgment efforts to avoid collection. The court finds that the creditor failed to state a claim in part because the alleged behavior did not result in the debt sought to be declared non-dischargeable. Opinion below.

Judge: Schaaf

(N.D. Ind. Dec. 22, 2016)

The district court affirms the bankruptcy court’s order lifting the stay to permit the creditor to proceed with the real property foreclosure action. The debtor failed to provide factual or legal support for his claims of fraud by the creditor. Opinion below.

Judge: Miller

Plaintiff: Pro Se

Attorneys for Defendants: Dykema Gossett PLLC, Jordan S. Huttenlocker, Louis S. Chronowski

(Bankr. W.D. Ky. Dec. 22, 2016)

(7th Cir. Dec. 21, 2016)

The Seventh Circuit affirms the bankruptcy court’s judgment that certain real property of the debtor was exempt because it was held in a tenancy by the entirety under Illinois law. The creditor argued that the tenancy by the entirety was severed when the real property had been transferred to a trust prepetition. The Seventh Circuit examines applicable Illinois statutes and concludes that the transfer did not sever the tenancy by the entirety. Opinion below

Judge: Posner

Attorney for Debtor: Kofkin Law, Scott J. Kofkin