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

Tag Archives: Bankruptcy

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

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

Dismissal for Failure to Prosecute: Debtor’s Bankruptcy Appeal Tossed for Delay by Eleventh Circuit

Posted in Bankruptcy, Debt and Judgment Collection, Student Loans

As creditors’ counsel, we have often faced debtors who file bankruptcy simply to delay and frustrate the collection process.  A recent case out of the Eleventh Circuit typifies the no-nonsense attitude that bankruptcy and appellate judges take with debtors who attempt to use the Bankruptcy Code as a vehicle for delay. In 2009 a pro… 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

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

What can Twinkies and Beer Teach Investors about Purchasing the Assets of an Insolvent Corporation?

Posted in Bankruptcy

When Hostess announced last November that it would be shutting the doors to its factories, spooked by the news and likely addled by decades of cream filling, hoarders of Ho-Ho’s scurried to buy every brand name snack cake they could find, boosting the online sale of Twinkies alone by 31,000% in the first twenty-four hours…. 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