Business Law Insolvency Law Committee

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. Jones v. Ward, 2022 WL 556977, ___ A. ___ (Md. Court of Special Appeals, 2/24/22). Read more

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

In a published order denying a petition for writ of mandamus to compel a district court to grant a stay pending appeal of a bankruptcy sale order, the Fifth Circuit Court of Appeals (the Court) ruled that a chapter 11 trustee could sell real property free and clear of leasehold interests which were junior to the rights of a mortgagee which could have foreclosed out those interests in a state court proceeding, but for the bankruptcy. Read more

The Bankruptcy Court for the Southern District of New York (the “Court”) recently granted a Subchapter V debtor’s motion to extend the 90-day deadline in section 1189(b) to file a plan, expounding upon the standard for extension in the statute compared to that in general business cases. Read more

In Faulkner v. Broadway Festivals, Inc. (In re Reagor-Dykes Motors, L.P.), ___ B.R. ___, 2022 WL 120199 (No. 20-0503) (Bank. N.D. Tex. January 12, 2022) (“Reagor-Dykes”), in a thoughtful decision on various aspects of preference law under Bankruptcy Code (the “Code”) § 547, the Bankruptcy Court for the Northern District of Texas (the “Court”) denied the plaintiff’s motion for summary judgment against defendant Broadway Festivals, Inc. (“Broadway”) on a preference claim by finding that Broadway established an ordinary course defense based on a single similar transaction with the debtor, even though the timing of the payments at issue in the two transactions was substantially different. Read more

The Eighth Circuit Court of Appeals (the Court) recently ruled that a judgment debtor who was mailed a copy of a garnishment summons which was served on his bank did not have standing to pursue a claim under the Fair Debt Collection Practices Act (FDCPA) because the mere receipt of a copy of the summons did not cause a concrete and particularized injury as required by Article III of the Constitution. Ojogwu v Rodenburg Law Firm, 2022 WL 433034 (8th Cir. 2/14/22). Read more

The Bankruptcy Appellate Panel of the 9th Circuit upheld the order of Eastern District Bankruptcy Judge Rene Lastreto, II, which granted a summary judgment of non- dischargeability based on a stipulated Judgment over the objection of the Debtor, who argued the stipulation did not contain sufficient stipulated facts to establish issue preclusion. Read more

The Fifth Circuit Court of Appeals (the Court), in a case arising from the failure to perform by the successful online bidder at a bankruptcy auction, reversed the district court’s admission of online documents which provided a monetary limit for the bidder’s liability. Deciding evidentiary issues which had not been adequately addressed by precedent in the circuit, the Court found the documents had not been properly authenticated and were not excepted from the hearsay rul Read more

In an unpublished disposition, the Ninth Circuit Court of Appeals (the Court) affirmed bankruptcy court and district court rulings that a debtor’s beneficial interest in real property owned by an irrevocable trust was a sufficient equitable interest to support an automatic homestead exemption under California law. Read more

Two recent opinions, one from the 11th Circuit in the case of Jackson v. Le Ctr. On Fourth, LLC (In re Le Ctr. On Fourth, LLC) 2021 U.S. App. LEXIS 33845 (11th Cir. 2021), and the second from the Eastern District of Virginia in the case of Patterson v. Mahwah Bergen Retail Grp. Inc. (2022 U.S. Dist. LEXIS 7431) (E.D. Va 2022), express opposite views of Chapter 11 third-party releases. Read more