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New Products Corp. v. Tibble (In Re Modern Plastics Corp.), 534 B.R. 723 (Bankr. W.D. Mich. 2015) – The assignee of a mortgage lender sued a former Chapter 7 trustee and his surety for claims based on breach of fiduciary duty. … Continue reading →
2 weeks 14 hours ago
Joel R. Spivack was recently named a South Jersey Magazine “Awesome Attorney” for 2015. Each year, South Jersey Magazine readers choose the state’s most outstanding lawyers. This year, Joel Spivack has been named one of New Jersey’s 152 top attorneys. This is just one of many honors that Mr. Spivack has achieved over the course of his distinguished legal career. He was previously named one of the Top Bankruptcy Attorneys in Southern New Jersey by South Jersey Magazine. Mr. Spivack has also served as a commentator and panelist on “Legal Line,” a WPSJ and Garden State Television program. Mr. Spivack has dedicated his practice to assisting clients with bankruptcy and real estate matters in South Jersey and Philadelphia. He understands the importance of maintaining good credit, especially because a poor credit rating can cause serious problems down the road. If you are looking to buy or rent a home in the future, your past could quickly catch up with you. That’s why it is imperative that you consult with a qualified bankruptcy and debt management attorney before making any final decisions about whether to file for bankruptcy.
2 weeks 1 day ago
In the absence of congressional action on housing finance reform, here is what the Federal Housing Finance Agency should do sooner rather than later.

Read More from: BankThink

2 weeks 1 day ago
Nuo Therapeutics, Inc. (NUOT.PK), a biomedical company, has commenced a case (Case No. 16-10192) under Chapter 11 of the Bankruptcy Code by filing a petition with the U.S. Bankruptcy Court for the District of Delaware.  The debtor’s petition is available here, and additional documents are available from the Court’s website.  The company states in a press release that it intends to sell substantially all of its assets. Contact Norman L. Pernick, Nicholas J. Brannick, or David W. Giattino for more information.
2 weeks 1 day ago
Yesterday’s post discussed the recent appellate ruling in Sentinel’s bankruptcy, Grede v. Bank of New York Mellon Corp. (In re Sentinel Management Group, Inc.), and, specifically, the Seventh Circuit’s finding that Bank of New York Mellon (“BNY”) was on inquiry notice that the assets Sentinel had used to secure the bank’s loans had been fraudulently conveyed to the bank and that a reasonably diligent inquiry would have uncovered the fraud.  Thus, the court ruled that BNY could not avail itself of a good faith transferee defense to the liquidating trustee’s fraudulent transfer claim.  As a result of this ruling, BNY is an unsecured creditor of Sentinel’s estate.  The second question that the court resolved was whether the court should lower the priority of BNY’s unsecured claim through application of the doctrine of equitable subordination.  This second question is the focus of today’s post.  Background
2 weeks 1 day ago
Lenders and secured creditors often require that debtor-customers direct all receivable collections into a lockbox, hoping to wrangle any available proceeds to apply to their debtors’ outstanding debt. In requiring a debtor or its customer to remit payments to a lockbox, however, creditors may be overlooking a potential source of significant liability. A creditor using a lockbox may unwittingly expose itself to greater risk and liability than just a debtor’s default if it receives funds that were collected as sales tax on a debtor’s goods or services. As a lender or secured creditor, how do you know if you are at risk? First and foremost, understand your debtor’s business and whether its goods or services are taxed. Second, know what the laws provide for in the jurisdiction where your debtor is conducting business – particularly with respect to third-parties that collect or receive sales tax. By way of example, the State of Texas treats anyone who collects or receives money that is collected as a tax as a strict, statutory trustee, holding the collected tax for the benefit of the taxing authority. Recipients and holders of such proceeds may be liable for the full tax amount collected – plus any accrued interest and penalties. See Tex. Tax Code Ann. § 111.016 (2007).
2 weeks 1 day ago
Are “electronic document” provisions appearing in your commercial loan documents?  This is the second in a series examining two provisions recently reviewed by me in commercial real estate transactions.   Unfortunately, the two provisions have serious problems: for UCC Article 3 notes, making a copy of it will not clothe the copy with Article 3 protections. Copy & Trash the Original Note: No No & No Electronic documents are not a passing fad:  the growing use of eSign tells me that the bank examination “report card” in 2016 or 2017 will include the use of electronic documents by banks.  This topic is not going away.  We will see more of these provisions, even in commercial loan documents.

Read More from: Tough Times for Lenders

2 weeks 1 day ago
The question presented to the Supreme Court in Husky Int’l v. Ritz is so bizarre, I just had to dig deeper. The question is whether the exception to discharge in section 523(a)(2)(A) for debts arising from “actual fraud” requires a showing that the debtor’s fraud involved a false representation. Note immediately that section 523(a)(2)(A) excepts from discharge debts arising from “false pretenses, a false representation, OR actual fraud” (emphasis added). This seems like such a simple statutory interpretation exercise (do you see the “OR” sitting there?!), I figured I must be missing something in thinking that the whole dispute is one step shy of contrived. After looking more closely, I still think the Fifth Circuit has run completely off the rails with this one … unless I’m totally missing something here. I’d be grateful if anyone can disabuse me of my ignorance; otherwise, it seems the Supreme Court must have granted certiorari simply to fix an obvious and egregious error that no one but the Supreme Court can fix.

Read More from: Credit Slips

2 weeks 1 day ago
Authored by Adam B. BrandonTo establish standing to enforce a promissory note, a lender must prove that it is the rightful holder of the negotiable instrument. Typically, this entails producing the original note together with all allonges endorsing the note to subsequent holders. Under Florida’s Uniform Commercial Code (“UCC”), an allonge must be “affixed” to the note such that it becomes part of the instrument itself.[1] This requirement prevents fraud and preserves the chain of title. Borrowers frequently challenge the validity of allonges when it is unclear whether an allonge was stapled or otherwise firmly affixed to a note. However, the Fourth District Court of Appeal recently clarified, for the first time, that an allonge need not be physically attached to an instrument to satisfy the UCC. In Purificato v. Nationstar Mortgage, LLC, the lender established standing by entering the original promissory note and allonge into evidence. The allonge identified the borrowers, the loan number, and the original date and amount of the loan. The lender also introduced a computer screen shot showing that the lender stored both the note and allonge in its records as a single electronic document. However, the lender offered no evidence that the allonge was physically affixed to the note prior to litigation.

Read More from: Florida Banking Law Blog

2 weeks 1 day ago
Hypo Group Alpe Adria AG, an Austrian banking group, was nationalized by the Austrian government in 2009 in order to avert a bank collapse. The Austrian province of Carinthia owned the bank until 2007 and the guarantees given by Carinthia for the bank’s debt still amount to several times its annual budget, which has made the winding-down process more complicated because sharing the losses with bondholders would lead to significant claims against Carinthia. See German Creditors Challenge failure of Austrian Hypo-Alpe-Adria Bank for more background.

Read More from: eSQUIRE Global Crossings

2 weeks 1 day ago
Verso Corporation (VRSZ, OTC), a producer of printing papers, specialty papers and pulp, and 26 affiliated debtors have filed chapter 11 petitions before the United States Bankruptcy Court for the District of Delaware (lead case number 16-10163).  The cases have been assigned to the Honorable Kevin Gross.  The voluntary petition (including the consolidated list of top 30 creditors), and the docket are available through Prime Clerk.  The debtors have issued a press release discussing their restructuring plans. Contact Norman L. Pernick, Nicholas J. Brannick, or David W. Giattino for more information.
2 weeks 1 day ago
Many people in the Birmingham area have watched the Walter Energy case with great interest because they work for or know someone who has a connection to Walter Energy. The court’s most recent opinion will allow the company to reject its labor agreements and end retiree benefits. This, the company said, was needed to sell off its operations.  Shortly after the Bankruptcy Court’s opinion, I received a call from one of our clients who is being laid off from his job at Walter Energy. As one can well imagine, he is very concerned about the how this will affect his chapter 13 case. I am optimistic that he will find new employment such that he will be able to continue making his chapter 13 payments. Another option may be to ask the court for a temporary suspension of his payments until he obtains new employment and can resume his payments to his creditors. Hillary Clinton Condemns Walter Energy

Read More from: Bonds & Botes, P.C.

2 weeks 1 day ago
Too many institutions focus on time-wasting tasks that divert their attention from how to stay relevant in a rapidly changing banking environment.

Read More from: BankThink

2 weeks 1 day ago
Breaking News This Morning ... JPMorgan Settles Lehman Claims: JPMorgan Chase & Co. will pay $1.42 billion in cash to the Lehman Brothers Holdings creditors, settling most of the remaining claims from the failed investment bank. In particular, the settlement relates to $6.3 billion of clearing-related claims and $2.3 billion of derivatives-related claims, two of the three major pieces of litigation pending between the two entities, the Financial Times noted. Lawyers for the estate of Lehman...

Read More from: BankThink

2 weeks 1 day ago
Paper maker Verso Corp. filed for chapter 11 bankruptcy after skipping debt payments, battered by weakening demand. The Wall Street Journal has the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) J.P. Morgan Chase & Co. is paying $1.42 billion to settle some claims brought against it by Lehman Brothers Holdings Inc., DBR reports via WSJ. A bankruptcy judge approved retailer American Apparel Inc.’s chapter 11 plan, ending a bid by ousted Chief Executive Dov Charney to take over. Read the DBR article via WSJ.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 1 day ago
In the latest ruling in the long-running dispute in Sentinel Management’s bankruptcy case, the Seventh Circuit recently held that a bank employee’s suspicions about the source of the bank’s collateral should have put the bank on inquiry notice, thus precluding the bank from asserting a “good faith” defense to a fraudulent transfer claim that a liquidating trustee brought against the bank.  However, the bank’s failure to follow up on its suspicions of wrongdoing did not meet the high standard for equitable subordination.  Today’s post will review the appellate court’s decision on the fraudulent transfer claim, while a follow up post will discuss the court’s ruling on equitable subordination. Background
2 weeks 2 days ago
A hearing has been scheduled before United States Bankruptcy Judge Robert D. Drain for 10:00 am on February 1, 2016 concerning whether Patriarch Partners XV, LLC (a company that is subject to investigation by the Securities and Exchange Commission) should be allowed to bankrupt certain of the Zohar feeder funds.The hearing is to be held in the courthouse located at 300 Quarropas Street in White Plains, New York.  For more information, see http://www.nysb.uscourts.gov/content/judge-robert-d-drainNo notice of hearing has been filed with the Bankruptcy Court by the parties before the Bankruptcy Court.  This is highly abnormal.  The hearing information below is from the calendar kept on the Bankruptcy Court's website, http://www.nysb.uscourts.gov/calendars/rdd.htmlIt is difficult to characterize the nature of the February 1, 2016 hearing beyond that it will be an evidentiary hearing.  This is because the transcript of the previous hearing in this case is not available to the public.  According to commentators, issues to be addressed at the February 1, 2016 hearing include whether the bankruptcy process is being used in good faith by Patriarch Partners XV, LLC or whether it is engaged in a delay tactic.If you are an investor in Zohar CDO 2003-1, Limited, Zohar CDO 2003-1, Corp.

Read More from: The COMI

2 weeks 2 days ago
If you have been sued prior to filing bankruptcy, then you may have a judicial lien filed against you in the county in which you reside.  A judicial lien is created when a party records a judgment in probate court after winning a lawsuit.  If the judgment is recorded in the county where the losing party resides then there is a judicial lien placed on non-exempt property owned by the party (i.e., real estate, personal property, etc.).  The judicial lien can attach to current or future property owned if it remains outstanding.  Please see our blog post here, to learn more about a judicial lien. When you file bankruptcy, it is very important for you to let your attorney know whether you have been sued in the past or whether you have a current outstanding judicial lien.  You can find out if you have a judicial lien filed under your name by visiting your county probate office.  It is important for you to check for judicial liens under all aliases as well. Motion to Avoid a Judicial Lien

Read More from: Bonds & Botes, P.C.

2 weeks 2 days ago
Gas Prices Drop As gas prices continue to drop, the yearly benefit to the average consumer can approach $750.00 or more per year.  This precipitous drop in prices may help many that are on the fence about filing for bankruptcy.  For a married couple, the savings can approach $1,500.00 or more.  Here are the details:+ Read More The post Lower Gas Prices May Forestall Some Bankruptcy Filings appeared first on David M. Siegel.
2 weeks 2 days ago
In the last couple of years, claims against creditors for alleged violations of the Fair Debt Collection Practices Act (FDCPA) have become a hot item in Bankruptcy Courts.  One such question is whether the filing of a proof of claim for a stale debt (i.e., one that has become unenforceable pursuant to the applicable statute of limitations) constitutes a violation.  The Eleventh Circuit Court of Appeals appeared to have answered the question for federal courts in Georgia, Alabama and Florida in the case of Crawford v. LVNV Funding, 758 F.3d 1254 (11th Cir. 2014)(cert. denied) (read opinion here).  According to the Court’s introductory paragraph (which provides a hint to the outcome), there had been a deluge of debt buyers “armed with hundreds of delinquent accounts purchased from creditors—… filing proofs of claim on debts deemed unenforceable under state statutes of limitations.” The Court began by acknowledging the many courts that have held that the filing of a lawsuit by a collector to collect a stale debt was a violation of the FDCPA.

Read More from: Georgia Bankruptcy Blog

2 weeks 2 days ago

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