For example, you make a commercial real estate loan and record your deed of trust. The borrower pays you for a time but then defaults. You tried loan forbearance and modification, but it was unsuccessful. The borrower falls...more
A hallmark of bankruptcy law is equal treatment of similarly-situated creditors. The Bankruptcy Code frowns upon a debtor who, while insolvent, pays some creditors but not others in the run-up to bankruptcy – whether...more
The 16th Century gave plenty to the world – Leonardo da Vinci's "Mona Lisa," the Scientific Revolution, the Protestant Reformation, Michaelangelo's "David," and the Statute of Elizabeth. That last one may be a...more
For a lender in bankruptcy, the best situation is to be an over-secured creditor, meaning the value of your collateral exceeds your debt. A creditor in this exalted category can recover principal, interest (including...more
For creditors, it can be difficult to navigate the financial difficulties of your customers. It seems like it would only get worse in bankruptcy, but that is not always the case. Subchapter V of Chapter 11 of the Bankruptcy...more
In North Carolina, a creditor who obtains a judgment against an individual with an ownership interest in a limited liability company or limited liability partnership may enforce its unsatisfied judgment by petitioning the...more
A recent decision by the North Carolina Business Court highlights the risks of interfering with property that is part of a receivership estate. The North Carolina Commercial Receivership Act celebrated its three-year...more
Subchapter V of Chapter 11 of the Bankruptcy Code, which turned three earlier this year, created a more streamlined and less expensive Chapter 11 reorganization path for small business debtors. It also created a new position...more
In Chapter 11, value is king. Secured creditors have rights in proportion to the value of their collateral.
When a secured creditor and the debtor can't agree on value, appraisals and appraiser testimony become...more
In North Carolina, a loan agreement can require a borrower to pay attorneys' fees upon default to reimburse the lender for collection expenses....more
The Bankruptcy Code generally allows a debtor to wipe out all pre-bankruptcy debts and get a fresh start in life.
But not all debts are equal. Some debts can't be discharged, meaning they survive bankruptcy, and the...more
Five years ago, the General Assembly amended the foreclosure statute to prohibit an attorney who serves as trustee or substitute trustee from representing the noteholder or the borrower during a foreclosure proceeding. ...more
Last year, we offered a lesson and a moral from a North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court.
The lesson from the case was that the bankruptcy court...more
In January, we wrote about the Purdue Pharma mega-bankruptcy. A United States District Court in New York vacated Purdue Pharma's confirmed Chapter 11 plan, holding it was improper for the plan to contain non-consensual...more
For creditors dealing with debtors in the shadow of bankruptcy, a common scenario repeats itself.
The creditor repossesses collateral, attaches an account, or sets off a bank account, and then the debtor files a...more
This is a story about contempt and clarity -
It comes to us from a July 2021 North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court. The story offers a lesson and...more
We previously informed you that if you are a small business that needed to file bankruptcy to save your company, then you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.
The new...more
When a debtor files bankruptcy under Chapter 11, the bankruptcy court does not automatically appoint a trustee.
Unlike Chapter 7, where the court appoints a trustee to investigate the debtor's assets, liquidate assets, and...more
9/18/2020
/ Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 7 ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Debtors-in-Possession ,
Liquidation ,
Perjury ,
Reorganizations ,
Trustees
We have previously informed you that if you are a small business that needed to file bankruptcy to save your company, then you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.
The new...more
It is a cardinal sin to attempt to collect a debt or repossess collateral after a borrower files bankruptcy.
Bankruptcy triggers the automatic stay – a command, not a suggestion, that collection activity ceases. This is a...more
8/18/2020
/ Adjournment ,
Attorney's Fees ,
Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 7 ,
Commercial Bankruptcy ,
Creditors ,
Criminal Prosecution ,
Embezzlement ,
Popular
In a Chapter 13 bankruptcy, debtors propose a plan to re-pay all or a portion of their debts.
The amount to be repaid depends on how much the debtors earn, the amount and types of debt owed, and how much property they own....more
Under the Bankruptcy Code, filing a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.
This is the "automatic stay," and it is a command, not a suggestion....more
1/21/2020
/ Appeals ,
Automatic Stay ,
Bankruptcy Court ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Dismissals ,
Federal Rules of Bankruptcy Procedure ,
Motion for Relief from Automatic Stay ,
Reaffirmation ,
Right To Appeal ,
Ritzen Group Inc v Jackson Masonry LLC ,
SCOTUS ,
Time-Barred Claims
If you lend money, you know – or should know – it is a cardinal sin to collect a debt or repossess collateral after a borrower files bankruptcy.
Bankruptcy triggers the automatic stay – a command, not a suggestion, that...more
12/13/2019
/ Actual Damages ,
Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 13 ,
Creditors ,
Debtors ,
Harley-Davidson ,
Lenders ,
Punitive Damages ,
Section 362 ,
Willful Violations
Bankruptcy court is not the first place that comes to mind when a lender thinks about full recovery on a loan.
Usually, debtors file bankruptcy because they can't pay all their creditors in the ordinary course of business....more
When your customer is in bankruptcy, there are two major no-nos that you must remember.
First, don't violate the automatic stay, which prevents a creditor from attempting to collect a debt while the debtor is in bankruptcy...more
6/27/2019
/ Appeals ,
Attorney's Fees ,
Bankruptcy Appellate Panel (BAP) ,
Bankruptcy Code § 524(a) ,
Bankruptcy Discharge Order ,
Chapter 7 ,
Civil Contempt Orders ,
Concurrent Litigation ,
Creditors ,
Dischargeable Debts ,
Injunctive Relief ,
Money Judgment ,
Reasonable Belief Test ,
Remand ,
Reversal ,
SCOTUS ,
Standard of Review ,
Statutory Violations ,
Taggart v Lorenzen ,
Vacated