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Florida Banking Law Blog Legal developments impacting banking, finance and loan enforcement in Florida

J. Ellsworth Summers, Jr.

J. Ellsworth Summers practices primarily in bankruptcy and commercial litigation, representing secured and unsecured creditors and committees. Mr. Summers also has extensive experience with workouts and other business reorganizations. Prior to private practice, Mr. Summers clerked for the Honorable Stephen C. St. John, U.S. Bankruptcy Judge for the Eastern District of Virginia.

Posts by J. Ellsworth Summers, Jr.


Posted in Bankruptcy

Trustees, creditors and other interested parties are responsible for reviewing a chapter 13 Debtor’s plan and schedules to determine whether the Debtor’s plan complies with the Bankruptcy Code. This point is illustrated in a recent case out of the Middle District of Florida, Bankruptcy Court. In In re Ford, the chapter 13 Debtor’s schedules reflected… Continue Reading

Ninth Circuit Allows “Chapter 20” Debtors to Lien Strip

Posted in Bankruptcy

In a tough opinion for creditors, the Ninth Circuit has ruled that “Chapter 20” debtors can still take advantage of lien stripping, the bankruptcy tool that effectively bars wholly unsecured junior lien holders from foreclosing on a debtor’s property. Chapter 20 is a colloquial term used for the practice of filing for Chapter 13 bankruptcy… Continue Reading

Time is Running Out for a 2015 Interest Rate Increase

Posted in Banking Operations

Despite indications from the Federal Reserve in as early as March that rates would be raised in 2015, the window for the Fed to hike interest rates this year is quickly closing. The Federal Open Market Committee (“FOMC”) makes decisions over monetary policy, including setting the benchmark interest rates. The FOMC meets eight times a… Continue Reading


Posted in Bankruptcy

As mentioned in previous posts, filing an involuntary bankruptcy petition could subject a petitioning creditor to extensive attorneys’ fees and costs. In the final installment of the “Involuntary Bankruptcy 101” series, this post reviews a recent Eleventh Circuit decision posing major pitfalls for creditors hoping to collect on their debts. Section 303(i)(1) of the Bankruptcy… Continue Reading


Posted in Bankruptcy

In the right circumstances, creditors can utilize involuntary bankruptcy a tool for collecting on its debts. This post addresses the process a creditor must follow after filing an involuntary petition under chapter 7 or 11 of the Bankruptcy Code. Before a creditor can initiate this procedure, it is important to understand the basic requirements of… Continue Reading


Posted in Bankruptcy

Involuntary bankruptcy can be a useful tool for creditors.  Filing an involuntary bankruptcy petition against a debtor can help actualize the value of a debtor’s assets. The following are some basic requirements when considering filing an involuntary bankruptcy petition. Involuntary petitions may only be filed under chapters 7 and 11 of the Bankruptcy Code. A… Continue Reading

Stripping Off Junior Mortgages Now Barred in Chapter 7 Bankruptcy Cases

Posted in Bankruptcy

The Supreme Court has unanimously decided that debtors are prohibited from stripping off junior mortgage liens in Chapter 7 bankruptcy cases. Lien stripping is where a bankruptcy court relieves a debtor of his second mortgage because the value of the property is less than the balance of the first mortgage. The Court’s decision in Bank… Continue Reading

Deepening Insolvency: A Viable Theory of Damages in the Eleventh Circuit

Posted in Bankruptcy

“Deepening Insolvency” is a developing theory of law in cases brought by bankruptcy trustees, litigation trust trustees, receivers, reorganized debtors, or some other plaintiff “standing in the shoes” of an insolvent company. Essentially, the deepening insolvency theory is premised on allegations that the defendants (directors, officers, law firms, accounting firms, or any combination of the… Continue Reading

Holder of Equity Interest in Bankrupt Company not Entitled to Become Shareholder in Reorganized Entity

Posted in Bankruptcy

A recent Eleventh Circuit case examines equity shareholders’ role (or lack thereof) in a reorganized entity.  Vision-Park Properties owned an equity share of Seaside Engineering & Surveying, Inc.  Seaside filed for Chapter 11 protection in 2011, and shortly thereafter proposed to reorganize and continue operations as Gulf Atlantic, LLC. According to the proposed Chapter 11… Continue Reading

Two Sides of the Same Coin: Chapter 11 Reform in the House and Senate

Posted in Bankruptcy

As we discussed in our previous post, in the wake of the financial crisis that began with large financial institutions failing in 2008, practitioners and politicians alike have been calling for Bankruptcy Code reform.  Both the U.S. House and Senate have proposed solutions, yet with the recent midterm election results, the future of these two… Continue Reading

Commission Calls for Overhaul of Chapter 11 Bankruptcy Code

Posted in Bankruptcy

On Monday, December 8, 2014, the American Bankruptcy Institute’s Chapter 11 Reform Commission, which is tasked with recommending reforms to the nearly 40-year-old bankruptcy regime, released a report which found that the current Chapter 11 system has fallen behind the times.  The Commission’s report urges Congress to provide troubled businesses with a better chance at… Continue Reading

Ms. McNeal Goes to Washington

Posted in Bankruptcy

For those of you who have followed our blog since its inception, you will know that one of our most discussed opinions is that of In re McNeal, in which the Eleventh Circuit held that a debtor may strip a wholly unsecured junior mortgage in a Chapter 7 proceeding.  Although the decision is anathema to… Continue Reading

Written Document Retention and Destruction Policy Saves the Day (Again)

Posted in Debt and Judgment Collection

As we mentioned in our previous posts regarding document preservation, establishing a written document retention and destruction policy is essential to any company, large or small.  As with the Pradaxa case out of the Southern District of Illinois, a recent case out of the Northern District of New York, Research Foundation of SUNY v. Nektar… Continue Reading

Detroit Bankruptcy Update: Settlements and Feasibility

Posted in Bankruptcy, Debt and Judgment Collection

In Detroit’s ongoing restructuring effort, the city cleared a major hurdle last week by settling with its largest adversary, Syncora Guarantee, a New York based bond insurer.  The settlement was negotiated just a week into the bankruptcy trial and was so significant that Judge Steven Rhodes adjourned the trial for two days to allow the… Continue Reading

Non-Dischargeable Tax Debt Not Special Class of Unsecured Creditors

Posted in Bankruptcy, Debt and Judgment Collection

In numerous previous posts, we have noted that the purpose of the Bankruptcy Code is to help the “honest but unfortunate debtor.”  Like gerrymandering, certain “creative” debtors have attempted to classify their non-dischargeable debt as a separate, special class of unsecured creditors.  In a recent case out of the Eighth Circuit, In re Copeland, the… Continue Reading

Discharging the Brunner Test: Student Loan Debt in Bankruptcy

Posted in Bankruptcy

Twenty-seven years ago the Second Circuit was faced with a debtor who proposed to use the Bankruptcy Code to avoid her student loan debt – only five months after graduation.  The Second Circuit came down harshly on Ms. Brunner and established an “undue hardship” test, which few debtors have passed since the decision in the… Continue Reading

Detroit Bankruptcy Update: Restructuring the Restructuring Plan

Posted in Bankruptcy

On Friday July 25, 2014, the City of Detroit released a revised restructuring plan that provides for a reserve fund that may enhance the recovery for certain classes of unsecured creditors.  The plan also creates a post-bankruptcy “monitor” whose role and responsibility would be to evaluate the city’s ongoing compliance with the plan and confirmation… Continue Reading

Detroit Bankruptcy Update: Sixth Circuit Throws Wrench into Restructuring Timetable

Posted in Bankruptcy

Earlier this month the Sixth Circuit Court of Appeals ruled that the appeal of Syncora Guarantee Inc. must be heard by the lower federal district court before the bankruptcy court may conduct its trial on the city’s proposed Chapter 9 restructuring plan, which is scheduled to begin on August 14th.  Syncora, a municipal bond insurer… Continue Reading

Eleventh Circuit Doubles Down on Lien Stripping

Posted in Uncategorized

When the Fourth Circuit handed down its opinion in the case of In re Davis,[1] which permitted lien stripping in “Chapter 20” proceedings, the stage was set for the Eleventh Circuit to expand debtor’s ability to escape from underwater junior mortgages.  Before the June 18th opinion in In re Scantling,[2] bankruptcy courts within the Eleventh… Continue Reading

A Lesson on What Not to do in a § 363 Auction

Posted in Bankruptcy

For numerous corporate Chapter 11 debtors, the sale of some or all of the company’s assets may be the only way to reorganize the company’s debt.  Section 363 of the Bankruptcy Code provides the authority for a debtor to sell estate assets outside the normal course of the debtor’s business.  Oftentimes, a court establishes specific… Continue Reading

Supreme Court Clarifies Stern v. Marshall

Posted in Bankruptcy

Not even Nostradamus could have predicted the profound effect that former Playmate Vickie Lynn Marshall (a/k/a Anna Nicole Smith) would have on the landscape of U.S. bankruptcy court jurisdiction.  Nevertheless, two and a half years after the Supreme Court issued its opinion in Stern v. Marshall, questions remained as to what role a bankruptcy court… Continue Reading