Posted by NCBRC - December 13th, 2021
The debtor lacked standing to appeal the bankruptcy court’s order approving an agreement between the chapter 7 trustee and a creditor under which the creditor agreed to fund litigation on behalf of the bankruptcy estate, where the order would not have a direct, adverse, financial effect on the debtor. Dean v. Seigel (In re Dean), No. 21-10468 (5th Cir. Dec. 7, 2021).
Lacking funds to pursue litigation on behalf of the bankruptcy estate, the chapter 7 trustee entered into an agreement with one of the debtor’s creditors, Reticulum Management, LLC, under which Reticulum supplied the funds for the litigation in exchange for a percentage of any recovery the trustee might make. The debtor objected on the grounds that the arrangement unfairly altered distribution of the estate in favor of Reticulum to the detriment of other creditors. The bankruptcy court approved the agreement and the district court affirmed. The debtor appealed to the Fifth Circuit. Read More
Posted by NCBRC - August 14th, 2020
The Bankruptcy Appellate Panel for the Tenth Circuit found that the bankruptcy court erred when it declined to exercise its exclusive jurisdiction to determine whether state causes of action raised by investors in the debtor’s pre-bankruptcy Ponzi scheme belonged to the Debtor’s bankruptcy estate: an issue which the panel found was “central to whether the investors had standing to pursue those claims and whether they violated the discharge injunction” by doing so. Hafen v. Adams (In re Hafen), No. 19-31 (B.A.P. 10th Cir. July 30, 2020). Read More
Posted by NCBRC - July 30th, 2020
In a lengthy decision addressing a challenge to its order reopening the debtor’s chapter 13 case, a Bankruptcy Court for the District of South Carolina found that the debtor had no duty under the Bankruptcy Code or Rules to disclose a lawsuit that accrued and was filed post-confirmation. In the face of a judicial estoppel defense raised by the Defendants in the debtor’s state personal injury lawsuit, the court stated, “[w]ithout such a duty or knowledge that one existed, Debtor cannot be found to have acted intentionally to mislead this Court.” In re Boyd, No. 13-2924 (Bankr. S.C. July 17, 2020). Read More
Posted by NCBRC - April 10th, 2019
In an unpublished opinion, the Ninth Circuit reached the alarming conclusion that plaintiffs alleging inaccuracies on credit reports that lowered their credit ratings, had no constitutional standing to sue the credit reporting agencies under the FCRA because they could not show “that they had tried to engage in or were imminently planning to engage in any transactions for which the alleged misstatements in their credit reports made or would make any material difference.” Jaras v. Equifax, No. 17-15201(9th Cir. March 25, 2019) (unpublished). Read More
Posted by NCBRC - February 14th, 2019
A bankruptcy court recently expunged a claim of Ditech Financial LLC (Ditech) asserting that it was the creditor and the servicer of a note secured by an investment property (the “Property”) owned by the Debtors. Ditech filed a petition for bankruptcy in Case No. 19-10414 (Bankr. S.D.NY February 11, 2019). The order was entered in another proceeding before a different judge after Ditech’s bankruptcy was filed.
In this case the Debtors filed a chapter 11 and sought to sell the Property free and clear of all liens pursuant to 11 U.S.C. § 363. Ditech filed its claim. The Debtors successfully objected to Ditech’s claim because Ditech had not demonstrated it had standing. Ditech then filed a motion to reconsider which was granted. Meanwhile the court granted the motion to sell the Property but kept the proceeds in escrow pending the new hearing on the standing issue.
Ominously, the court’s opinion began with “Throughout this case Ditech Financial LLC (“Ditech”) has shown disdain for this Court and for [the] debtors…”
To read more and get the opinion click here.
Posted by NCBRC - June 26th, 2018
Where the evidence showed assignment of the mortgage to U.S. Bank, but did not show that the underlying promissory note was likewise assigned, U.S. Bank was not a party-in-interest in the debtor’s chapter 7 bankruptcy and its servicer was not entitled to relief from stay. In re Garcia, No. 18-10229, 2018 Bankr. LEXIS 1352 (Bankr. S.D. N.Y. May 8, 2018).
In this case, Bankruptcy Judge Martin Glenn bemoaned the sloppy work of both Miguel Garcia’s chapter 7 counsel and the counsel for U.S. Bank’s servicer, Rushmore Loan Management Services (Rushmore). But it was Rushmore’s failure to include sufficient evidence in its motion that ruled the day. Read More
Posted by NCBRC - July 17th, 2017
The debtors were “parties in interest” for purposes of establishing standing to compel abandonment of their residential property. Jahn v. Burke (In re Burke), No. 16-6603 (6th Cir. July 14, 2017).
After Philip and Nekolia Burke filed chapter 7 bankruptcy, the trustee sought to evict them from their residence and sell the property for the benefit of creditors. The trustee tendered a check to the Burkes representing their homestead exemption. The Burkes refused the money and moved to compel the trustee to abandon the property as being of inconsequential value to the bankruptcy estate. In the alternative, the Burkes moved to convert to chapter 13. At the evidentiary hearing, the parties offered competing valuations with the Burkes presenting testimony of two appraisers that the residence had a value of approximately $108,000 and was security for a mortgage in the amount of $91,581. The trustee countered with the testimony of a realtor, a home inspector and himself that the value was approximately $200.000. The bankruptcy court resolved the valuation issue in favor of the Burkes and granted the motion to compel abandonment. The district court affirmed. Read More
Posted by NCBRC - January 18th, 2017
The City of Philadelphia lacked standing to object to the debtor’s plan provision under which he proposed to redeem over the life of the plan property sold in a tax sale. In re Wilson, No. 15-6385 (E.D. Pa. Dec. 28, 2016)
Earl Wilson failed to pay his city property tax. As a result, the property was sold at auction and sold again to a “subsequent purchaser” in accordance with Pennsylvania’s Municipal Claims and Tax Lien Act (“MCTLA”). That law permits a tax debtor to redeem property within nine months of sale. Mr. Wilson filed for chapter 13 bankruptcy in which his revised Fifth Amended Plan proposed to pay the redemption amount over the course of the plan. The bankruptcy court confirmed the plan over the City’s objection specifically finding that the City lacked standing to object to that portion of the plan providing for redemption of the property. Read More
Posted by NCBRC - April 7th, 2016
The City of Philadelphia lacked standing to object to the debtor’s chapter 13 plan and lacked standing to appeal confirmation of the plan. City of Philadelphia v. Minor (In re Minor), No. 15-3562 (E.D. Pa. March 30, 2016). Read More
Posted by NCBRC - February 24th, 2016
The Supreme Court of California held that a borrower on a home loan secured by a deed of trust has standing to base an action for wrongful foreclosure on allegations that defects in the purported assignment of the note and deed of trust renders the assignment void. Yvanova v. New Century Mortgage Corp., No. S218973 (Cal. Feb. 18, 2016). Read More
