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Ronnoco Coffee v. Westfeldt Brothers Inc., ___ F.4th___ (8th Cir. Sept. 19, 2019), case No. 18-1498
US Court of Appeals for the 8th Circuit Finds No Successor Liability for Buyer which Buys Debtor’s Assets from Bank, at a foreclosure sale held by the Bank, and then Buyer Continues the Business that debtor used to run, using debtor’s employees, and some of debtor’s executives: Bottom Line: Buyer Continuing debtor’s business after buying the assets from the lender at a foreclosure sale doesn’t bring successor liability to Buyer. Through a properly structured purchase of a debtor’s assets at a private foreclosure sale, a purchaser has no successor liability to a debtor’s unpaid creditors, the Eighth Circuit held. The…
Hackler v. Arianna Holdings Company, ___F.3d___ (3rd Cir. 9/12/19)
Re: Avoiding Tax Sales in Bankruptcy: Not All Foreclosures Are Equal When asked whether a foreclosure sale can be avoided in bankruptcy, the first answer that comes to many practitioners’ minds is “no” because of the Supreme Court’s opinion in BFP v. Resolution Trust Corp.[1] The correct answer, though, is a much more nuanced “it depends.” The Third Circuit’s Sept. 12, 2019, precedential opinion in Hackler v. Arianna Holdings Company LLC[2] is an excellent reminder why. The facts in Hackler are relatively straightforward. The Hacklers failed to pay taxes on a parcel they owned in New Jersey, which resulted in…
US Consumer Debt Surges To Record Highs
America has a shocking new “savings and loan” crisis. Consumer debt is surging to record highs, fueled by rising mortgage debt, student loans and a binge on credit card use. And more Americans are flat-out broke, with no emergency savings. “Consumer debt is an ongoing personal financial crisis for many Americans,” said John Madison, CPA and personal financial counselor at Dayspring Financial Ministry. “The ease of obtaining ever-increasing levels of available credit traps many consumers into the illusion that they can buy whatever they want — regardless of their ability to repay the debt they take on.” Despite borrowing beyond…
East West Bank vs. Altadena Lincoln Crossing, LLC
East West Bank vs. Altadena Lincoln Crossing, LLC, 2019 Westlaw 1057044 (US District Court, CD CA 2019): A district court in California has held that a state statute invalidating contractual penalty provisions was inapplicable to a default interest rate clause contained in loan documents. Facts: A lender and a commercial borrower entered into two related real estate construction loan agreements, both of which contained clauses increasing the base interest rate by 5% in the event of default. The agreements also contained late fee provisions, which were intended to compensate the lender for any additional administrative costs arising from late payments.…
Garvin v. Cook Investments NW, SPNWY, LLC, 922 F.3d 1031 (9th Cir. 2019)
The U.S. Trustee argued that a chapter 11 plan was “proposed by …means forbidden by law” because one of five debtors’ income was from lease of its real property to a marijuana grower. Debtors and property were located in Washington state in which marijuana is legal. Leasing property to a marijuana grower is illegal under federal law. Click here for more information
Bankruptcy Amendments
Three narrow in scope bankruptcy amendments have been passed by both the US House of Representatives, and the US Senate, and are awaiting President Trump signing these 3 amendments into law. Bankruptcy press reports that President Trump is expected to sign these 3 bills into law, as the 3 bills had little to no opposition, in Congress: H.R. 2938: Excludes VA and Department of Defense disability payments from the monthly income calculation used for bankruptcy means testing. H.R. 2336: “H.R. 2336, the “Family Farmer Relief Act of 2019,” would increase the current debt limit used to determine whether a family…
Klein v. Good (In re Good
Klein v. Good (In re Good), ___BR___, 2018 Bankr. LEXIS 3609 (9th Cir. BAP 2018) ( BAP No. WW-18-1125-KuTaB) , (9th Cir. BAP 2018), which is a case about a homestead exemption claimed by bankruptcy debtors, that a Chapter 7 trustee objected to, unsuccessfully: Summary: The United States Bankruptcy Appellate Panel for the Ninth Circuit held that in a case converted from chapter 13 to chapter 7, the relevant date for determining a debtor’s homestead exemption was fixed on the date of the chapter 13 filing. The BAP affirmed the bankruptcy court’s ruling denying the chapter 7 trustee’s objection to…
Seventh Circuit Solidifies a Circuit Split on the Automatic Stay
Disagreeing with the Tenth and D.C. Circuits and siding with four other circuits, the Seventh Circuit rules that passively holding estate property violates the automatic stay. Solidifying a split of circuits, the Seventh Circuit ruled that the City of Chicago must comply with the automatic stay by returning impounded cars immediately after being notified of a chapter 13 filing. The decision lays the foundation for the Supreme Court to grant certiorari and decide whether violation of the automatic stay requires an affirmative action or whether inaction amounts to control over estate property and thus violates the stay. The Second, Seventh,…
Risky Borrowing Is Making a Comeback, but Banks Are on the Sidelines, Reports American Bankruptcy Institute 6/13/19 E-Newsletter
A decade after reckless home lending nearly destroyed the financial system, the business of making risky loans is back, the New York Times reported on Tuesday. This time, the money is bypassing the traditional, and heavily regulated, banking system and flowing through a growing network of businesses that have stepped in to provide loans to parts of the economy that banks abandoned after 2008. With almost $15 trillion in assets, the shadow-banking sector in the U.S. is roughly the same size as the entire banking system of Britain, the world’s fifth-largest economy. In certain areas — including mortgages, auto lending…
In Ritzen Group Inc. v. Jackson Masonry LLC
In Ritzen Group Inc. v. Jackson Masonry LLC, the US Supreme Court, on 5/20/19, granted the Petition for Certioraris, to decide the question of what Is or Is not a ‘Final, Appealable Order’, in a bankruptcy case. In Davis v. Tyson Prepared Foods Inc, the US Supreme Court, also on 5/20/19, denied the petition for certiorari in that case, thereby declining to review and decide whether a creditor or other non-debtor passively holding property of the estate violates the automatic stay under § 362(a).