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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.

Eleventh Circuit Holds Replacement Value – Applies to Surrender of Collateral in Chapter 13 Plan

Posted in Bankruptcy, Commercial Lending

On March 27, 2014, the Eleventh Circuit (the “Court”) issued a ruling, which will have a major impact on how Chapter 7 and 13 debtors are able to treat claims of secured creditors. The issue in In re Brown, 13-13013, 2014 WL 1245266 (11th Cir. 2014) was whether §506(a)(2)’s valuation standard, which requires use of… Continue Reading

Recent Decision Caps Secured Creditor’s Credit Bid in §363 Sale to Purchase Price of Acquired Debt

Posted in Bankruptcy, Commercial Lending

It is well-settled that secured creditors are ordinarily entitled to credit bid their allowed secured claim in a sale pursuant to § 363 of the Bankruptcy Code (the “Code”). In Radlax Gateway Hotel, LLC v. Amalgamated Bank, 132 S.Ct. 205 (2012), the Supreme Court acknowledged that bankruptcy courts have the power to prohibit a secured… Continue Reading

Caveat Debtor: Disgorging Inheritance in Chapter 13 Cases

Posted in Bankruptcy

A recent case out of the 9th Circuit, In re Dale, revives a controversial subject for Chapter 13 debtors: whether an inheritance received more than 180 days after commencement of the case is part of the bankruptcy estate.  Ultimately the 9th Circuit agreed with the 4th Circuit that while inheritance that debtor received more than… Continue Reading

Dirt-for-Debt Buries Creditor with Risk and Uncertainty

Posted in Bankruptcy, Commercial Lending

In order to confirm a chapter 11 plan of reorganization, a debtor must satisfy all the provisions of §1129(a) of the Bankruptcy Code, except for §1129(a)(8). Section (a)(8) requires that each class of creditors either (i) accepts the proposed plan or (ii) is unimpaired under the proposed plan. When a debtor fails to meet 1129(a)(8),… Continue Reading

Google Case Provides Spoliation Exception to Living Document Safeguard

Posted in Banking Operations

Google has come under scrutiny in the last few years over collecting information from users’ email accounts to provide targeted advertising for its paid clients. In a 2013 case filed in the Northern District of California, Keith Dunbar filed a class action lawsuit against the internet behemoth, alleging that Google had unlawfully and intentionally intercepted… Continue Reading

Gross Negligence Enough for Adverse Inference Instruction

Posted in Uncategorized

In 2003, Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York issued five landmark decisions, which have since shaped the landscape of electronic discovery and document preservation. In her Zublake decisions, Judge Scheindlin held that potential litigants have an affirmative duty that requires a party anticipating litigation to refrain… Continue Reading

“Saving Everything” No Defense to Spoliation Argument

Posted in Uncategorized

As we discussed in our previous spoliation post, parties are required to place a litigation hold on all documents once litigation could be reasonably anticipated. Although there are certain definite “trigger events”, such as the receipt of a demand letter or the filing of a civil complaint, many courts have looked beyond these definite events… Continue Reading

Case Update: Authority to Endorse Note and Mortgage IS Self-Authenticating

Posted in Banking Operations, Debt and Judgment Collection

In our August 29, 2013 post, we reported on a shift in the case law regarding the self-authentification of the authority to endorse a note and mortgage. Subsequently, however, the court in Bennett v. Deutsche Bank National Trust Company granted the bank’s motion for rehearing, and summarily reversed its previous decision. In the subsequent opinion… Continue Reading

Status as a Debtor not Enough to Confer Appellate Standing

Posted in Bankruptcy, Debt and Judgment Collection

“Standing” is a legal term of art that refers to a party’s ability to bring a cause of action, to intercede in one or to appeal the court’s judgment. To prove appellate standing in a bankruptcy proceeding, a party must show that “he was directly and adversely affected pecuniarily by the order of the bankruptcy… Continue Reading

Detroit Bankruptcy Update: Direct Appeal to Sixth Circuit Permitted

Posted in Bankruptcy

Yesterday Bankruptcy Judge Steven Rhodes ruled that the appeals to his earlier holding that Detroit was entitled to proceed in its Chapter 9 Bankruptcy proceeding would be allowed to bypass a federal district court and head straight to the U.S. Court of Appeals for the Sixth Circuit. What remains to be seen is whether Judge… Continue Reading

The Absolute Priority Rule in Individual Chapter 11 Bankruptcy Cases lives on … for now

Posted in Bankruptcy, Commercial Lending

The principle behind the absolute priority rule is simple: unsecured creditors should be paid before the debtor is entitled to retain property of the bankruptcy estate. In a corporate setting the absolute priority rule operates to ensure that an unsecured creditor is paid in full before a shareholder is able to retain its ownership interest… Continue Reading

Detroit Judge Clears Way for Largest Municipal Bankruptcy in Country’s History

Posted in Debt and Judgment Collection

The oral summary of Bankruptcy Judge Steven Rhodes’s opinion lasted roughly ninety minutes, and the forthcoming written opinion is rumored to be over one hundred and forty pages in length. In making his decision the Detroit bankruptcy judge green-lighted the City’s hopeful recovery through Chapter 9 bankruptcy. The court noted that “this once-proud city cannot… Continue Reading

BAPCPA Backfires: Unsecured Creditor’s Returns Decrease in Post-BAPCPA Landscape

Posted in Bankruptcy, Debt and Judgment Collection

A new study published by the American Bankruptcy Institute has found that the aggregate effect of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which was passed in part to improve creditor returns in consumer bankruptcy proceedings, has actually had the opposite effect since the Act’s sweeping changes to the consumer bankruptcy… Continue Reading

Chapter 20 in the Eleventh Circuit: Modification of Secured Claims Impermissible Without Discharge

Posted in Debt and Judgment Collection

Nearly a year ago to the day, we published a post regarding the uncertainty that bankruptcy practitioners and lenders faced when a Chapter 7 debtor received a discharge, and subsequently filed a Chapter 13 petition to strip wholly unsecured liens (The Threat of Lien Stripping in “Chapter 20″ Bankruptcy). So-called “Chapter 20” filings had firmly divided… Continue Reading

When the FDCPA and the Bankruptcy Code Conflict: Which Controls?

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

As most lenders and banking litigators understand, courts construe the language of the Fair Debt Collection Protection Act (FDCPA) very broadly. As we have discussed in previous posts, an initial communication to collect a debt must contain specific language that “the debt collector is attempting to collect a debt and that any information obtained will… Continue Reading

The Shell Game: Bankrupt Debtor’s Concealment of Pre-Petition Claims

Posted in Bankruptcy, Debt and Judgment Collection

Part I:  The Setup:  Treatment of Prepetition Causes of Action in Bankruptcy Proceedings In commercial lending, as in law, no single practice area exists independently of another. Bankruptcy law often intersects with contract law and even personal injury law when debtors find themselves as the plaintiff or defendant in a prepetition civil action. It is… Continue Reading

New York Bankruptcy Court Clears Way for McNeal Rehearing

Posted in Bankruptcy, Debt and Judgment Collection

The long-awaited rehearing of In re McNeal has been given the green light from an unlikely source – a New York Bankruptcy Court Judge. The Chapter 7 lien stripping saga has been well documented in previous posts, and as we had noted, last February the Eleventh Circuit ordered that all proceedings – including a pending… Continue Reading

Motor City Meltdown: Municipal Bankruptcy in Brief – Chapter 9 Administration in a Nutshell

Posted in Bankruptcy, Bond Finance, Debt and Judgment Collection, State Tax Issues

From March 2012 to March 2013, 76,467 bankruptcy petitions were filed in Florida under Chapters 7, 11 and 13. In contrast, since the Great Depression less than 500 municipalities have filed for Chapter 9 protection. In fact, only twelve municipalities filed for bankruptcy protection last year. Nevertheless, once Detroit became the largest city in U.S…. Continue Reading

Discharge and the Unscheduled Debt Part III: Collection of Non-Discharged Debt

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection, Dischargeability of Debts

The Bankruptcy Code provides that creditors holding nondischargeable claims may pursue post-confirmation collection efforts. For example, § 1141(a), provides that a confirmed plan binds the debtor and the debtor’s creditors, “except as provided in subsections (d)(2),” which subsection provides that the confirmation of a plan does not discharge an individual debtor from debts that are… Continue Reading

Discharge and the Unscheduled Debt Part II: Punitive Effects of Intentional Non-Disclosure

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection, Dischargeability of Debts

In our previous post we discussed the due process requirements that underpin a debtor’s bankruptcy discharge. We noted that a debtor’s failure to schedule an actual or potential claim may prejudice the debtor’s ability to discharge any debt under such claim. Courts understand that debtors may inadvertently fail to list or schedule a debt. Under… Continue Reading

Discharge and the Unscheduled Debt: Discharge Requires Due Process

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection, Dischargeability of Debts

Often referred to as the “holy grail” of bankruptcy law, a bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. Because of the sweeping relief, a debtor must follow numerous requirements, among the most important disclosing all current or potential claims against the debtor or the bankruptcy estate. Failure of… Continue Reading

Denying Discharge for Passive Falsification of Financial Statements

Posted in Bankruptcy, Debt and Judgment Collection

As we have discussed in previous posts, if a debtor actively falsifies a financial statement to obtain a loan, such debt is not dischargeable in a subsequent bankruptcy proceeding under § 523(a)(2)(B) of the Bankruptcy Code. When a debtor is not directly responsible for preparing the false financial statement, but nonetheless “turns a blind eye”… Continue Reading