Real Estate

GGI Distinguishes BPF PDQ

When the U.S. Supreme Court decided BFP v. Resolution Trust Corp.,[1] holding that a mortgage foreclosure sale regularly conducted pursuant to state law could not be avoided as a fraudulent transfer under 11 U.S.C. § 548, it expressly left open the question of whether a tax foreclosure by the holder of a tax lien certificate could be avoided as a fraudulent transfer under that same statute.[2]

Sixth Circuit: Properly Perfected Assigned Rents Are Not Estate Property

In In re Town Center Flats LLC,[1] the Sixth Circuit Court of Appeals addressed the extent of a debtor’s interest in an assigned stream of rents. The court held that the debtor did not retain sufficient rights in the assigned rents under Michigan law such that the rents were not included in the bankruptcy estate.

Ninth Circuit BAP Holds Recording of Tax Deed Not a Ministerial Act Excepted from the Automatic Stay

In In re RW Meridian LLC,[1] the Ninth Circuit Bankruptcy Appellate Panel considered whether the pre-petition expiration of the Debtor’s right of redemption for unpaid taxes permitted the tax authority to complete a tax sale post-petition without obtaining relief from the stay. The BAP held that the automatic stay applied, voiding the sale.

Bankruptcy Relief Is Unavailable to a SARE Debtor That Leases Space to a Marijuana-Related Business

The increasing relaxation of state laws regulating both the medical and recreational use of marijuana has led to a boom in marijuana-related businesses (“MRBs”). Because MRBs are not exempt from economic forces, however, courts are increasingly being confronted with bankruptcy filings by and against MRBs.

Are Foreclosure Sale Purchases Protected from Avoidance Under § 547? It Depends.

A recent decision out of the Western District of Pennsylvania, In re Veltre,[1] added to the split among courts about whether a non-collusive foreclosure sale can be avoided as a preferential transfer under § 547. Judge Carlota Böhm, joining other judges in her district, held that the sale cannot be avoided as a preferential transfer, primarily relying on the reasoning from Supreme Court decision BFP v. Resolution Trust Corporation.[2]

Circuit Split Widening on Application of the Anti-Modification Clause to Mixed-Use Properties

Recently, the United States Bankruptcy Court for the Eastern District of New York joined a growing list of courts that have disagreed with the First and Third Circuits and interpreted §1322(b)(2)[1] to prohibit a debtor from modifying a second lien secured by the debtor’s personal residence that is also an income-producing rental property.

Time Is on Your Side: Timing Considerations in Application of 11 U.S.C. § 1322(b)(2)

The Bankruptcy Code allows a chapter 13 debtor to propose a plan that bifurcates undersecured claims into secured and unsecured claims except where the claim is one secured “only by a security interest in real property that is the debtor’s principal residence”.[1] If the sole collateral securing the claim is the debtor’s principal residence, then the Code prohibits the bifurcation of the claim and the plan must provide for payment in full.

Committee Call: Section 363(h), Surrender of Collateral, and More!

Authors of the most recent Real Estate Committee newsletter recently held a committee call to discuss their respective articles and take participant questions. Topics included: application of section 363(h) of the Bankruptcy Code, “surrender” of collateral in Chapter 7 and 13 cases, and attorneys’ fees as “cure costs".

Real Estate March 2017

Section 363(h): An Oft-Forgotten, Yet Powerful Tool for Co-Owners of Commercial Real Estate

While lawyers and trustees in individual debtor bankruptcy cases are likely familiar with § 363(h) of the Bankruptcy Code, many commercial bankruptcy lawyers often forget its existence. Today, creative real estate investment structures, like tenant-in-common (TIC) structures, are used by individuals to own portions of significant income-producing commercial properties, including office buildings, nursing homes and apartment complexes. These ventures often involve numerous owners with divergent backgrounds, financial means and interests.

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