1756 W. Lake Street LLC v. American Chartered Bank

(7th Cir. May 15, 2015)

The Seventh Circuit affirms the order granting summary judgment to the defendant lender in the adversary proceeding. The debtor sought to avoid the lender’s affiliate’s recording of a deed following the debtor’s default on the loan. The debtor had agreed to place the deed in escrow in exchange for the lender forbearing on its right to foreclose on the property. When the debtor defaulted again, the deed was recorded. The debtor argued that the property was worth $1.7 million, while the loan balance was only $1.5 million. Thus, the debtor argued it did not receive reasonably equivalent value. The Court disagrees, finding the additional security served as consideration for forbearance. Opinion below.

2015-05-15 – 1756 w lake street llc v am chartered bank

Author: Matt Lindblom

Baxter v. Sarmadi

(6th Cir. Apr. 22, 2015)

The Sixth Circuit affirms the bankruptcy court’s annulment of the automatic stay, ratifying a foreclosure sale that took place post petition. The debtor filed a chapter 13 petition on the day before the foreclosure sale, and the bankruptcy court found that the debtor intentionally withheld the filing from the creditor. The court found that the debtor’s behavior constituted “cause” sufficient to annul the automatic stay. Opinion below.

2015-04-22 – baxter v sarmadi

Author: Matt Lindblom

Schlarman v. Nageleisen (In re Nageleisen)

(Bankr. E.D. Ky. Mar. 6, 2015)

The bankruptcy court holds that the debtor’s right of redemption, following a postpetition foreclosure sale, is property of the estate. The debtor filed bankruptcy prior to the foreclosure sale of her real property. The court then granted stay relief (but not abandonment) to allow the foreclosure sale to proceed. No lienholders bid at the sale, and the property sold for $5,000, which was far less than the appraised value. The debtor than transferred the right of redemption to an entity she controlled. The trustee filed an adversary proceeding seeking a judgment declaring the right of redemption property of the estate. The court first determined under Kentucky law that the right of redemption did not arise prepetition but instead arose at the time of the foreclosure sale. Thus, it was not property of the estate at the time the petition was filed. The court then concluded that the right of redemption constituted proceeds of property of the estate (the real property) and thus under § 541(a)(6) it was now property of the estate. Opinion below.

2015-03-06 – schlaman v nageleisen

Author: Matt Lindblom

Edwards v. Deutsche Bank Nat’l Trust Co.

(N.D. Ind. Dec. 15, 2014)

The district court affirms the bankruptcy court’s order granting summary judgment in favor of the defendant bank. The debtor filed her chapter 7 petition after the bank had commenced state court foreclosure proceedings. The debtor received a discharge and the bankruptcy was closed. The bank then dismissed the state court action and filed a second action seeking only an in rem judgment. The bank obtained an in rem judgment, which was appealed by the debtor. After the Indiana Court of Appeals affirmed, the debtor moved to re-open the bankruptcy and filed an adversary proceeding against the bank, alleging violations of the discharge injunction. The bankruptcy court granted summary judgment, finding no evidence of a violation. The bank was permitted to seek the in rem judgment following the debtor’s discharge (despite the debtor’s arguments to the contrary). The district court affirmed on the same grounds. Opinion below.

2014-12-15 – edwards v deutsche bank

Rugiero v. Nationstar Mortgage, LLC

(6th Cir. Sep, 15, 2014)

The Sixth Circuit affirms the district court’s dismissal of the plaintiff’s claims against the lender, asserted in his complaint filed after the foreclosure sale, after the statutory right of redemption lapsed, and after filing a chapter 13 bankruptcy petition. The alleged acts supporting the claim occurred prior to the bankruptcy filing and thus any claims would have to have been brought by the bankruptcy trustee. Opinion below.

2014-09-15 – rugiero v nationstar