In re SR Real Estate Holdings, LLC, 506 B.R. 121 (Bankr. S.D. Cal. 2014) –
A group of lenders moved to dismiss the debtor’s bankruptcy case on the basis that it was filed in bad faith, or in the alternative asked the court to find that the debtor was a “single asset real estate” and then to grant the lenders relief from the automatic stay.
On October 31, 2014, the U.S. Court of Appeals for the 4th Circuit interpreted Maryland law in ruling that a bank’s security interest in a Chapter 11 debtor’s property created by a deed of trust that was executed before, but recorded after, the Internal Revenue Service filed a tax lien, had priority over the tax lien.
Background
The Portland Press Herald reports that the bankruptcy trustee for Great Northern Paper has said there is sufficient evidence to pursue claims against the Company’s owners, officers and directors for breach of their fiduciary duties and breach of the duty of loyalty arising from the structuring and execution of a Maine new markets tax credit transaction.
You might recognize the last name “Underhill” from the 1980’s movie, Fletch. In the movie, the main character, Irwin “Fletch” Fletcher overhears snobby country club member Mr. Underhill speaking rudely to a waiter. To get revenge, Fletch famously tells the waiter he’s “with the Underhills” and proceeds to charge a Bloody Mary, a steak sandwich and…a steak sandwich to the Underhills’ tab.
On November 7, 2014, Judge Steven Rhodes, the judge presiding over the City of Detroit's bankruptcy case, announced that he would confirm the City's proposed Plan of Adjustment (the "Plan"), including the creditor settlements contained within that Plan. A more detailed written opinion will follow, but the opinion read from the bench on November 7, together with an earlier opinion in this case, are among the most important precedents in U.S. municipal bankruptcy law.
Section 1322(c)(1) of the Bankruptcy Code1 allows debtors to cure defaults and reinstate a
mortgage on their principal residence "until such residence is sold at a foreclosure sale that is
conducted in accordance with applicable nonbankruptcy law."2
Like many provisions of the
Bankruptcy Code, this one appears fairly straightforward at first glance; a debtor has the right to
cure and reinstate a home mortgage until the property is sold at a foreclosure sale.
Sophisticated distressed investors know the benefits of acquiring assets through a § 363 sale in a bankruptcy case. The primary benefit, of course, is acquiring assets free and clear of pre-existing liens, claims and interests. There are some occasions, however, where it is not practical for a buyer to request that a sale be run through a bankruptcy process, especially when the value of the assets and/or a sharp decline in the assets’ value does not justify the time and expense associated with a chapter 11 filing.
“Will you, won’t you, will you, won’t you, won’t you join the dance?” – The Mock Turtle’s Song, Lewis Carroll’s Alice’s Adventures in Wonderland
Vinny Gambini: Are you suuuuure? Mona Lisa Vito: I’m positive. – My Cousin Vinny
On October 17, 2014, the Delaware Supreme Court held that under the Delaware Uniform Commercial Code, the subjective intent of a secured party is irrelevant in determining the effectiveness of a UCC-3 termination statement if the secured party authorized its filing.[1]
Background