Business Law Commercial Transaction Committee

Bankruptcy Judge Montali applied California law to find that a “settlement agreement” extending the term of a business purpose mortgage loan was usurious, and that a late charge, applied to a balloon payment was unenforceable as liquidated damages Read more

The Court of Special Appeals of Maryland (the Court), interpreting its version of UCC § 3-309, recently held that an entity that lost a note in its possession may assign that lost note, along with the right to enforce it, so long as the initial entity was entitled to enforce the note when it lost possession. Read more

A California court of appeal held that two competing liens, a perfected security interest and a charging order, obtained against the same property are prioritized strictly based on the dates of their creation and that a payment to counsel for the judgment debtor made by an LLC that was wholly owned by the debtor amounted to a “distribution” under California law Read more

The following is an update analyzing a recent case of interest. Read more

The Ninth Circuit Bankruptcy Appellate Panel (the BAP) recently affirmed a bankruptcy court’s ruling that a mechanic’s lien was not timely perfected under California law, determining that the time for filing a notice under Bankruptcy Code § 546(b) was not tolled by § 108(c). Read more

The following is an update analyzing a recent case of interest. Summary The United States District Court for the District of Delaware has dismissed the post-foreclosure complaint of a secured lender on “D&O claims” allegedly acquired from a corporate borrower in a UCC foreclosure. The Court determined that the lender had not acquired a security interest because the claims were insufficiently described in the security agreement. The case is Polk 33 Lending, LLC v. Schwartz, No. CV 20-1647 (MN), 2021… Read more

Applying 7th Circuit precedent, a Bankruptcy Court in the Eastern District of Wisconsin (the “Court”) ruled that obligations of a debtor created by a personal guaranty of an LLC’s debt signed years before the debtor’s chapter 7 petition was filed were discharged despite the fact that the debts which the creditor sought to collect under the guaranty arose after the debtor’s discharge. Read more

Interpreting Ohio’s versions of two uniform acts, the Uniform Commercial Code (UCC) and the Uniform Fraudulent Transfer Act (UFTA), the Sixth Circuit Court of Appeals (the “Court”) ruled that an involuntary debtor’s payments to a lender under the parties’ revolving loan agreement were encumbered by a “valid lien” created by the lender’s perfected security interest and as such were not “transfers” which could be avoided by a bankruptcy trustee despite debtor’s participation in a Ponzi scheme and the lender’s alleged bad faith acts after learning of the scheme. Read more

A creditor’s failure to include a debtor’s middle name on its financing statements was strong indication under Georgia’s interpretation of the UCC that the liens were invalid and thus they could not be used to support a motion for relief from stay in a Chapter 12 bankruptcy case filed in the Middle District of Georgia Bankruptcy Court (the “Court”). Read more

In Severin Mobile Towing, Inc. v. JPMorgan Chase Bank, N.A., 2021 WL 2351648 (Cal. Ct. App. June 9, 2021) the California Court of Appeal reversed a trial court ruling under Article 3 of the Uniform Commercial Code which exonerated a bank from liability for accepting for deposit to an employee’s account a series of checks payable to his employer, but indorsed simply with an illegible scrawl which appeared to be the employee’s initials. Read more