Justia Bankruptcy Opinion Summaries

Village Green owes FNMA $8.6 million under loan agreements executed when it purchased a Memphis apartment building. Village missed its $55,000 payment in December 2009; four months later it filed for Chapter 11 bankruptcy. The bankruptcy court stayed creditor actions, 11 U.S.C. 362(a), preventing FNMA from foreclosing on the building, which is worth $5.4 million and is Village’s only bankruptcy. Village’s only other creditors are its former lawyer and accountant. (minor claims) Village’s proposed reorganization plan called for paying down FNMA’s claim slowly, leaving a balance of $6.6 million after 10 years (foreclosure would reduce its balance to $3.2 million immediately) The plan would strip FNMA of protections in the loan agreements: requirements that Village properly maintain and insure the building. Village would pay the minor claims in full, but in two payments ($1,200 each) over 60 days. That 60-day delay, the court held, meant that those claims were “impaired,” so that the minor claimants’ acceptance would satisfy the requirement that “at least one class of claims that is impaired under the plan has accepted the plan,” 11 U.S.C. 1129(a)(10). The bankruptcy court confirmed the plan. The district court vacated. Following a second remand, the bankruptcy court dismissed the case and lifted the automatic stay. The Sixth Circuit agreed that the plan was an artifice to circumvent the Code requirement and was not proposed in good faith. View "Village Green I, GP v. Fed. Nat'l Mortgage Assoc." on Justia Law

Martin filed a chapter 7 bankruptcy petition on January 28. On April 9, the Pecks sought relief from stay to continue state court litigation against Martin. On April 29, the Pecks filed an adversary proceeding seeking nondischargeability of a debt stemming from the same litigation. The court indicated that it would grant relief from stay, noting that the state court discovery process was further along; additional parties are involved in that case; and the Pecks had requested a jury trial. On July 7, the bankruptcy court granted relief from the stay, holding the adversary proceeding in abeyance. On July 17, Martin timely filed notice of appeal. On July 22, Martin sought a stay pending appeal in the bankruptcy court. The Pecks filed opposition. On October 5, Martin filed his appellate brief. The Pecks filed their brief on November 5. Martin filed his reply brief on November 23, requesting oral argument. On November 19, before obtaining a ruling from the bankruptcy court and before completion of briefing, Martin moved, in the Bankruptcy Appellate Panel, for stay pending appeal. On November 30, the Pecks filed a response and the bankruptcy court denied a stay. On December 11, Martin filed an “Emergency” second motion for stay pending appeal. The Panel declined oral argument and affirmed relief from the automatic stay. View "In re: Daniel Martin, Sr." on Justia Law