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

Category Archives: Commercial Lending

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“Substantial Compliance” With Notice Requirements Not Enough

Posted in Banking Operations, Commercial Lending, Residential Foreclosure

Florida’s Fifth District Court of Appeal recently emphasized the need for lenders to strictly comply with the notice requirements of a mortgage prior to foreclosure. In Samaroo v. Wells Fargo, the borrower appealed the circuit court’s entry of a summary final judgment of mortgage foreclosure. Finding that the bank failed to strictly comply with all… Continue Reading

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

An Exception to the Fair Market Value Rule: Use the Foreclosure Sales Price for a Deficiency after a Third Party Purchaser

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

If the value of a foreclosed property is less than the loan amount, lenders may seek a deficiency judgment from borrowers and guarantors after the foreclosure sale. In most cases, the lender is the sole bidder at the sale and takes title to the collateral property, so the court must determine the fair market value… Continue Reading

Guarantors Are Liable For Renewal Promissory Notes Executed Without Notice or Consent Even After Revoking Guaranty

Posted in Commercial Lending, Commercial Real Estate Lending, Residential Foreclosure, Residential Real Estate Lending

Promissory notes are often renewed and extended without the express written consent of, or even notice to, the guarantors of the note.  A guarantor, faced with changing circumstances and wishing to cut off his liability under a promissory note that has been renewed and extended beyond its initial maturity date, may decide to revoke or… 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

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

Obtaining a Deficiency Judgment in Georgia – Overview of Procedures

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Residential Foreclosure, Residential Real Estate Lending

A previous post discussed the non-judicial foreclosure procedure used in Georgia. This post discusses the steps that a Florida bank doing business in Georgia, or with clients owning property in Georgia, must take to obtain a deficiency judgment against the debtor. A power-of-sale foreclosure is truly non-judicial; the procedure does not contemplate any involvement of… 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

Standing qua Mortgagee: Challenging the Assignment of a Mortgage in Federal Court

Posted in Commercial Lending

Mortgages are big business. When mortgages are assigned, however, the mortgagor often is a non-party to the assignment. Thus, within certain jurisdictions, mortgagors have historically lacked the requisite standing to challenge the validity of the assignment. Recently the First Circuit handed down the decision of Culhane v. Aurora Loan Services of Nebraska, in which they… Continue Reading

Georgia Non-Judicial Power of Sale Foreclosure – Overview of Procedures

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Residential Foreclosure, Residential Real Estate Lending

Given our geographic proximity, it is not uncommon for Florida banks to do business in Georgia or with clients owning property in Georgia. This geographic proximity, however, does not lend itself to equivalence of foreclosure procedures. This is because, unlike Florida, Georgia recognizes non-judicial foreclosures. Indeed, power of sale foreclosures, as they are called, are… Continue Reading

What is an Allonge?

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

Given the importance of the allonge in establishing a bank’s standing in commercial foreclosure cases, you may be surprised that the term “allonge” is nowhere to be found in Florida’s Commercial Code. In one case, the court describes an allonge as “simply an elegant-sounding legal term for a supplemental attachment to a note in which endorsements… 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

Enforcing a Lost Promissory Note

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Dischargeability of Debts, Loan Sales and Syndications, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

In Florida, it is well established that the original promissory note must be surrendered to the court as a condition of its enforcement. What do you do when you cannot find the original promissory note? Florida Statutes 673.3091 sets out a procedure to follow in order to  “reestablish” a lost note and provides that a… Continue Reading

The Perils of Post-Judgment Pre-Sale Modifications

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Loan Workouts, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

A reasonable workout often remains the prudent choice for defaulted commercial real estate loans even in the context of a pending (or nearly completed) foreclosure action. Thus, it is not surprising that we have seen a number of foreclosure cases where the bank and debtor entered into a modification agreement after obtaining a foreclosure judgment… Continue Reading

Amendment to UCC Filing Requirements

Posted in Commercial Lending

Florida’s Uniform Commercial Code was subject to some recent changes and revisions which became effective on July 1, 2013. One change in particular was to Florida Statute § 679.5 16 which governs the UCC filing requirements in order to have an effective financing statement. The statute’s amendment has changed the minimum requirements for the UCC… 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

Garnishing Professional Fees After Close of Bankruptcy Proceeding

Posted in Bankruptcy, Commercial Lending

It is not an uncommon practice for commercial lenders or real estate owners to employ a broker to assist with the sale of property for a commission. Recently, a corporation owning a marina in South Florida filed for Chapter 11 and, with court approval, employed real estate broker and his agency to sell the marina… Continue Reading

Caveat Creditor: Courts Split Regarding Abrogation of Absolute Priority Rule for Individual Chapter 11 Debtors

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

Although the 2005 BAPCPA amendments appeared to be a boon for creditors, at least with respect to Chapter 7 claims, individual Chapter 11 debtors immediately seized upon a perceived ambiguity in Congress’ language with regards to cramdown, which may ultimately prove costly for creditors. Generally, a plan of reorganization can be confirmed in one of… Continue Reading

Lack of Permanent Visa May Preclude Invocation of Florida Homestead Exemption

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

Creditors often find themselves at the crossroads of multiple disciplines of law, such as the intersection of bankruptcy and tort law. Less commonly, however, creditors may find themselves at the intersection of bankruptcy and immigration, but the ramifications of this meeting of laws are significant, especially when a debtor’s immigration status may significantly affect the… Continue Reading

A Lesson from the Lumber Yard: Middle District of Florida Raises Particularity Requirement for Trustee Standing in § 549 Avoidance Actions

Posted in Bankruptcy, Commercial Lending

One of the primary roles of a Chapter 7 trustee is to ensure that the bankruptcy estate is preserved prior to liquidation. It is no wonder, then, that the Trustee’s avoidance powers are well defined by the Bankruptcy Code. Nevertheless, a string of recent cases out of the Middle District of Florida has illustrated that… Continue Reading

Debts Non-Dischargeable When Use of Proceeds Intentionally Misrepresented

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

When an individual obtains a loan with no intention of repaying the lender, it is well established that such a debt is not dischargeable in bankruptcy. If, however, a debtor does not misrepresent its intent to repay the lender, but instead materially misrepresents the purpose of the loan, is the debt dischargeable in the debtor’s… Continue Reading

Let the Stripping Begin: Lower Courts in the Eleventh Circuit Cautiously Embrace McNeal

Posted in Bankruptcy, Commercial Lending

It was only a matter of time before judges in the lower courts of the Eleventh Circuit began to accept the appellate court’s decision in McNeal. Two such opinions have recently been published in the Middle Districts of Florida and Georgia, and they address McNeal with as much contempt as many commentators have previously expressed…. Continue Reading