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

Tag Archives: Bankruptcy

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

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

Caveat Charities: Disgorging Donations as Fraudulent Transfers

Posted in Bankruptcy

The Bankruptcy Code permits a trustee to avoid transfers of property that a debtor has made within two years prior to its bankruptcy filing. In 1998, Congress added a safe-harbor provision for contributions to qualified religious or charitable organizations which prevents the trustee from avoiding the transfer so long as (1) “the amount of that… 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

Collecting Deficiency on Wholly-Unsecured Nonrecourse Loan (in Chapter 11)

Posted in Bankruptcy, Debt and Judgment Collection

Some of you who read the title of this post may have done a quick double-take, as it is well established that lenders may not collect a deficiency on a nonrecourse loan under state law. However, the Bankruptcy Code provides some relief to a holder of a wholly unsecured nonrecourse loan when the debtor files… 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

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

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