News & Analysis as of

Junior Lenders

Double Trouble—Is Black Sky Capital Blue Skies for Lenders?

by Perkins Coie on

An annoying question for lenders is whether or not a lender can enforce two loans to the same borrower and secured by the same property. The nagging issue is usually raised when a lender makes (1) a first loan and an...more

Debt Dialogue: January 2017

This month’s issue of Debt Dialogue address handover of records to a substitute collateral manager (in the Tilton litigation), the EU bail-in rules, the interplay of Section 3(c)(7) of the Investment Company Act and rights of...more

Intercreditor Agreements: Recognize That Second Lien Financings Are A Special Case Of Subordinated Lending

by Pepper Hamilton LLP on

BOKF, N.A. v. JPMorgan Chase Bank, N.A. (In re MPM Silicones, LLC), 518 B.R. 740 (Bankr. S.D.N.Y. 2014) – Senior lienholders sued lenders holding junior liens on common collateral, arguing that the junior lienholders...more

Recent Unanimous Supreme Court Decision Holds That Underwater Mortgages in a Chapter 7 Cannot be “Stripped off"

by Seyfarth Shaw LLP on

The Issue and Background - Debtors David Caulkett and Edelmiro Toledo-Cardona (“Debtors”) each filed for Chapter 7 bankruptcy relief with “underwater” junior mortgages held by Bank of America, N.A. (“Bank”). In other...more

Distressed Downloads - June 2015

A Battle in the Making in the Oil and Gas Sector: Second Lien vs. High Yield Debt - In the oil and gas industry, there is a storm brewing between holders of second lien debt and unsecured high yield bonds. These...more

"Strip, Strip Hooray!" - Supreme Court Settles Chapter 7 Lien-Stripping Debate

by Shipman & Goodwin LLP on

Twenty-three years after initially visiting the issue, the United States Supreme Court has recently settled what some would call “the single most important unresolved issue in consumer bankruptcy” - whether Chapter 7 permits...more

The Supremes Tell the Eleventh Circuit: No Lien Stripping

by Baker Donelson on

On June 1, 2015, the United States Supreme Court issued a unanimous ruling resolving a split amongst circuit courts in which the 11th circuit was the singular minority, addressing the permissibility of “lien-stripping” in...more

United States Supreme Court Begrudgingly Extends Dewsnup Decision

United States Supreme Court Begrudgingly Extends Dewsnup Decision in Holding That Chapter 7 Debtors May Not Strip Off Wholly Unsecured Junior Mortgages in Bankruptcy - On June 1, 2015, the United States Supreme Court, in...more

Supreme Court Decides Bank of America v. Caulkett and Bank of America v. Toledo-Cardona

by Faegre Baker Daniels on

On June 1, 2015, the United States Supreme Court decided Bank of America v. Caulkett, No. 13-1421, together with Bank of America v. Toledo-Cardona, No. 14-163, holding that a debtor in a Chapter 7 bankruptcy proceeding may...more

Real Estate Lien Priority Case - Effect of Subordination Agreement on Junior Liens

by Snell & Wilmer on

In a recent decision, the Utah Supreme Court addressed a matter of first impression in Utah, namely, whether a subordination agreement between two senior lenders, which reversed the priority of their respective liens against...more

Stripping of Unsecured Second Mortgages in Chapter 7 Bankruptcies in the Crosshairs

by Carlton Fields on

Since its 1989 opinion in Folendore v. Small Business Admin., the Eleventh Circuit Court of Appeals has allowed debtors to completely strip off and void wholly unsecured junior liens in Chapter 7 bankruptcies under Section...more

Should Underwater Junior Liens Survive Bankruptcy?

On March 24th, the Supreme Court heard oral argument on the consolidated appeals of two decisions from the Eleventh Circuit Court of Appeals, Bank of America v. Caulkett and Bank of America v. Toledo-Cardona. The appeals...more

Junior Lienholders: Know When To Admit Defeat

As any real estate lender or investor can testify, holding a junior lien on real estate security can be perilous. Sure, the yields are higher (and in this low interest rate environment, the “search for yield” is a persistent...more

Merger Doctrine Does Not Prevent Deed of Trust Beneficiary From Extinguishing Junior Lien through Foreclosure, California Court...

by Ballard Spahr LLP on

The California Court of Appeal recently held that a foreclosure by the beneficiary under a first deed of trust extinguished a junior lien, even though the beneficiary acquired the property by way of a deed in lieu of...more

The Full Credit Bid at a Foreclosure Sale: Don’t Make One Without the Advice of Knowledgeable Counsel

by Buchalter on

While the Great Recession appears to be slowly receding, rising oil costs and other price increases threaten to choke off what had appeared to be an economic recovery. Accordingly, foreclosures may become more frequent in the...more

U.S. Bank, Nat’l Ass’n v. Lightstone Holdings, LLC (N.Y. App. Div. Feb. 14. 2013) -- Senior Lender Gets Second Chance to Assert...

by King & Spalding on

A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements....more

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