On November 4, 2010, the United States Bankruptcy Court for the Northern District of Illinois certified the appeal of debtors River Road Hotel Partners, LLC, et al. of the court’s Order Denying Debtors’ Bid Procedures Motion (the Order) entered October 5, 2010. In its Order, the bankruptcy court expressly denied the debtors’ attempts to prevent their secured creditors from credit bidding in a proposed sale of assets under a chapter 11 plan.

The United States Bankruptcy Court for the Western District of Kentucky recently found that a vendor’s filing of a prepetition notice of lis pendens served to place any hypothetical judicial lien creditor, execution creditor, or purchaser of real property on notice of its equitable lien against the property for the unpaid portion of the purchase price. This prepetition notice of lis pendens prevented the debtors-in-possession from avoiding the vendor’s lien in exercise of their strong-arm powers under 11 U.S.C. § 544.

In yet another attack on Mortgage Electronic Registration Systems (MERS), the U.S. Bankruptcy Court for the Southern District of California has refused to allow the assignee of a deed of trust (DOT) to regain possession of a home on which it had foreclosed where the assignment had not been recorded.

STAMAT v. NEARY (March 24, 2011)

On April 7th, a federal bankruptcy court sanctioned Lender Processing Services, Inc., a home foreclosure service provider against whom the Federal Reserve Board and OCC have initiated enforcement action. The opinion explains LPS's business model and that model's failings, and cites case law documenting LPS's historic shortcomings. It reminds litigants that proving a default is the lender's, not counsel's, responsibility. In re Ron Wilson, Sr.  

On April 12th, a federal district court addressed the in pari delicto defense, including the sole actor exception to the adverse interest exception. In the instant case, a litigation trust created in bankruptcy court to pursue the debtor's claims sued Credit Suisse for allegedly assisting the debtor's founders' looting of the debtor's subsidiaries. Credit Suisse sought summary judgment, asserting the in pari delicto defense. The Court agreed, finding that the evidence supported the conclusion that the founders so dominated the subsidiaries that the subsidiaries lacked a separate existence.

Summary

In a 13 page decision signed, April 11, 2011, Judge Carey of the Delaware Bankruptcy Court granted a motion disallowing a creditor’s late-filed bankruptcy claim, and held that if there is no legal requirement that a party respond to an affidavit, a lack of response does not bind a party to that affidavit nor can it be considered an admission by that party. Judge Carey’s opinion is available here.

Background

In Hardesty v. CitiFinancial, Inc.,1 the Sixth Circuit affirmed the bankruptcy court’s denial of the trustee’s request to avoid the debtors’ mortgages with the creditor based on allegedly defective certificates of acknowledgement in the mortgage documents under Ohio law.

In re Innkeepers USA Trust, et al., -- B.R. --, 2011 WL 1206173 (Bankr. S.D.N.Y. 2011)

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