by Herb Wiggins | Aug 13, 2021 | bankruptcy, creditors, debt relief, Preferential Transfer, Real Estate
Whether a non-judicial foreclosure sale, carried out under State law in the 90 days to 1 year before bankruptcy, will be considered a “preferential transfer,” and therefore invalid, will depend upon many factors. The court must hear evidence regarding whether or not the foreclosing creditor received more in the pre-bankruptcy foreclosure sale than it would have received through the bankruptcy. The court cannot say, as a matter of law, that such creditors always receive more in a pre-bankruptcy non-judicial foreclosure than they would have received in the bankruptcy. Therefore, whether a particular sale is barred as a preferential transfer will be determined on a case-by-case basis.
In re: Buckskin Realty Inc., Case No. 1-13-40083-nhl, Adv. Pro. No.: 15-01004-nhl
United States Bankruptcy Court, E.D. New York filed March 26, 2021, interpreting 11 USC Sec. 547 and BFP v. Resolution Trust Corp., 511 U.S. 531 (1994).
by Herbert Wiggins | Jul 30, 2021 | bankruptcy, creditors, debt relief, Preferential Transfer
BANKRUPTCY LAW (Preferential Transfer): The bankruptcy court abhors, and will seek to undo, what it considers a preferential transfer.
A debtor who paid off serial overdrafts to his bank within 90 days of filing bankruptcy made preferential transfers. The court reasoned that the bank already had the deposits, and was effectively receiving extra money, that it would have been barred from receiving HAD the bankruptcy already been filed. The trustee was entitled to receive reimbursement for the amount of the overdraft payments.
In re Agriprocessors, Inc., 859 F.3d 599, 8th Circuit 2017
by Herbert Wiggins | Jul 16, 2021 | bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Discharge): A Chapter 7 Petition, and accompanying discharge, provide relief from pre-petition debts. The 9th Circuit Court of Appeal has stated:
A Chapter 7 bankruptcy discharge releases the debtor from personal liability for her pre-bankruptcy debts. . . . A discharge is the “legal embodiment of the idea of the fresh start; it is the barrier that keeps the creditors of old from reaching the wages and other income of the new . . .” If the debtor receives a discharge, the creditor will receive only its pro-rata share of the distribution of the property of the bankruptcy estate . . . . [Para.] Specifically, § 727 of the Bankruptcy Code ;. . . “discharges the debtor from all debts that arose before the date of the order for relief.” 11 U.S.C. § 727(b). The Code defines “debt” as “liability on a claim.” § 101(12). “Claim” is defined as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” § 101(5)(A). “This `broadest possible definition’ of `claim’ is designed to ensure that `all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case . . . .'” Boeing N. Am., Inc. v. Ybarra (In re Ybarra), 424 F.3d 1018, 1022 (2005).
by Herbert Wiggins | Jul 9, 2021 | bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Discharge): A Chapter 7 Petition, and accompanying discharge, provide relief from pre-petition debts. The 9th Circuit Court of Appeal has stated: A Chapter 7 bankruptcy discharge releases the debtor from personal liability for her pre-bankruptcy debts. . . . A discharge is the “legal embodiment of the idea of the fresh start; it is the barrier that keeps the creditors of old from reaching the wages and other income of the new . . .” If the debtor receives a discharge, the creditor will receive only its pro-rata share of the distribution of the property of the bankruptcy estate . . . . [Para.] Specifically, § 727 of the Bankruptcy Code ;. . . “discharges the debtor from all debts that arose before the date of the order for relief.” 11 U.S.C. § 727(b). The Code defines “debt” as “liability on a claim.” § 101(12). “Claim” is defined as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” § 101(5)(A). “This `broadest possible definition’ of `claim’ is designed to ensure that `all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case . . . .’” Boeing N. Am., Inc. v. Ybarra (In re Ybarra), 424 F.3d 1018, 1022 (2005).
by Herbert Wiggins | Jul 2, 2021 | bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Attorney’s Fees): Where Trustee brought, and lost, a claim for fraudulent transfer against the debtor, the debtor could be reimbursed its attorney’s fees under state (Alaska) law. The Trustee would have to pay the fees out of the bankruptcy estate. The case was decided in the Ninth Circuit Court of Appeal, but looked for guidance to the state law and the US Supreme Court. In re Good Taste, Inc., 317 B.R 112 (Bankr. D. Alaska 2004). This case apparently continues to reflect the law in the Ninth Circuit.
by Herbert Wiggins | Jun 25, 2021 | bankruptcy, creditors, debt relief
BANKRUPTCY LAW (Fraudulent Transfer): In the Delaware Bankruptcy Court, the court limited the US Trustee’s attempt to recover a pre-petition transfer. The Chapter 7 trustee tried to recover the full amount of the property as a fraudulent transfer, but the court limited the Trustee to the amount of the creditor’s claim. The court reasoned that the creditor would not receive a benefit by obtaining an amount in excess of its claim; that would instead be a windfall. The Trustee is therefore limited to the amount of the claim. Court construed 11 USC Sec. 550(a) and 11 USC Sec. 726(a)(1)–(5). Giuliano v. Schnabel (In re DSI Renal Holdings, LLC), No. 14-50356, 2020 WL 550987 (Bankr. D. Del. Feb. 4, 2020)
