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

Tag Archives: Bankruptcy

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

The Lien Stripping Saga Continues in Chapter 7 Bankruptcy Cases

Posted in Bankruptcy

In the latest chapter of “lien stripping,” the Honorable Judge Erik P. Kimball of the Southern District of Florida, Bankruptcy Court, recently grappled with the issue of whether a debtor can strip a completely unsecured junior mortgage on abandoned property.  In Bodensiek, a creditor held two mortgages on the debtor’s homestead property.  However, the minimal… 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

Chapter 13 Debtors Choosing to Retain Residential Property and Not Claim Homestead Are Not Entitled to Wildcard Exemption

Posted in Bankruptcy

In Florida, it is well settled that a Chapter 7 debtor who does not claim or receive the benefit of the homestead exemption on his bankruptcy schedules is entitled to claim the “wildcard” exemption pursuant to Fla. Stat. § 222.25(4).  The “wildcard” exemption provides that a debtor can exempt up to $4,000 in personal property… Continue Reading

Judgment Debtor in Garnishment Action Has No Vested Right to Compel Strict Compliance With Service of Process Requirements on Garnishee

Posted in Bankruptcy

Garnishments are one of the most effective tools at a creditor’s disposal for collection purposes.  The rules and requirements for initiating a garnishment action are laid out in Chapter 77, Florida Statutes.  Garnishment actions are generally ancillary to the main action brought by a creditor to establish a debt.  However, Garnishment proceedings are still treated… Continue Reading

Recent Decision Creates Split in Middle District Regarding Whether 11 U.S.C. § 707(b)(2) Applies to Cases Converted to Chapter 7

Posted in Bankruptcy

In the last 2 years, three judges of the Middle District of Florida (Judges Funk, Delano and Williamson) have each issued opinions finding 11 U.S.C. § 707(b)(2) inapplicable in cases converted from a Chapter 13 to a Chapter 7.  These Courts have based their findings on the “plain language” of the provision. 11 U.S.C. §… Continue Reading

Bankruptcy Trustee Lacks Standing to Bring Derivative Claim Against Bank’s Directors After Bank’s Closure and Receivership by FDIC

Posted in Bankruptcy, FDIC Related Issues

In April of 2010, the Office of the Comptroller of the Currency closed First National Bank Myrtle Beach, S.C., a wholly-owned subsidiary of Beach First National Bancshares, a bank holding company, and named the FDIC as its receiver.  As a consequence of the bank’s failure, Bancshares filed for Chapter 7 bankruptcy.  Shortly thereafter, the Trustee… 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

Eleventh Circuit Concludes That Filing a Proof of Claim After the Expiration of Statute of Limitations On the Ability to Collect a Debt Violates the FDCPA

Posted in Bankruptcy, Commercial Lending

Recently, the Eleventh Circuit Court of Appeals (the “Court”) ruled whether filing a proof of claim in a chapter 13 bankruptcy case after the statute of limitations on the ability to collect the debt expires violates the FDCPA.  In Crawford v. LVNV Funding, LLC, et. al., Debtor was indebted to a furniture company.  A third-party… 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

Eleventh Circuit Rules Post-Confirmation Settlement Proceeds are Property of Chapter 13 Estate

Posted in Bankruptcy, Commercial Lending

A recent case out of the Eleventh Circuit Court of Appeals (the “Court”) concluded that proceeds stemming from a post-confirmation settlement agreement between a chapter 13 debtor and its mortgagor related to a violation of the automatic stay become property of the bankruptcy estate.  In Crouser v. BAC Home Loans Servicing, LP (In re Crouser),… 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

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

Applicability of the Automatic Stay to Serial Chapter 13 Petition Filers

Posted in Bankruptcy

Ordinarily, when a debtor files a chapter 13 bankruptcy petition, the automatic stay is triggered immediately.  The stay prohibits lenders from pursuing any claim against the debtor unless they seek and are provided relief from the automatic stay.  However, lenders should be aware of certain scenarios where the automatic stay may expire without the need… 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

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