On May 16, the bankruptcy world of “actual fraud” got larger. In an opinion delivered by Justice Sotomayor, the Supreme Court addressed what it recognized was a deepening circuit split regarding the interpretation of “actual fraud” in 11 U.S.C. § 523(a)(2)(A). After analyzing the history and structure of the code section, the Court rejected a narrower interpretation of the statute requiring that the debt be procured by a false representation at the time of inducement and clarified that “actual fraud” included traditional forms of fraud, such as a fraudulent transfer or similar wrongdoing.

Chapter 56 of the Florida Statutes provides the framework for judgment creditors to collect on money judgments. Section 56.29 governs the process by which a judgment creditor may seek to recover property transferred to, or concealed by, third parties.  However, the lack of procedural clarity in the statute led to conflicting decisions and uncertainty. Amid due process concerns, courts often erected significant procedural hurdles to cost-effective collection efforts against third parties.  The new amendments to Section 56.29, which become effective on July 1, 2016, provide practitioners with some much needed clarity. (more…)

Good faith is generally understood to mean honesty or sincerity of intention. But in the law, things are often not as straightforward as that. It has been called an intangible and abstract quality and said to include such concepts as an honest belief, the absence of malice and the absence of fraud. It has also been said that good faith is an individual concept borne from the minds of men as derived from their inner spirit such that it may not be evidenced by words alone. (more…)

Although the news is filled with stories of falling oil and gas prices and suggestions that a third of the exploration and production companies may file for bankruptcy, this most recent downturn may not produce the bankruptcy filing boom many anticipate. True, some overleveraged E&Ps  will likely file, if for no other reason than to provide an orderly transfer of their reserves and their attendant plugging and abandonment liabilities. These cases will likely involve quick Section 363 sales, or now more likely, debt for equity transactions, but service providers such as vessel operators, rig operators and other suppliers will likely not find filing petitions for relief particularly useful – nor might their lenders. (more…)

The holiday shopping season has long been the most important time of the year for many retailers. In the past, it has been common for troubled retailers to file for bankruptcy protection in the months following the holiday season. The difficult retail environment in 2015 was reflected in bankruptcy filings by prominent retailers such as Radio Shack, American Apparel, Cache and Quiksilver, and by numerous shopping mall closures. Many commentators anticipate that one or more significant retailers will file for bankruptcy in early 2016. Recognizing these risks, commercial and retail landlords should consider taking measures to help minimize disruption and losses from troubled tenants and potential bankruptcy filings. (more…)

While there are many factors that can lead a business or individual to file a chapter 11 bankruptcy petition seeking to reorganize a business, often times, particularly in a single-asset real estate case, the primary impetus for the filing is a two-party dispute between a debtor and its primary secured lender.  The debtor’s goal will often be to restructure its loan(s) with that lender based on changed economic circumstances such as decreased occupancy or changing interest rates.  In some cases, the debtor and lender will be able to negotiate mutually acceptable modifications to the loan(s), and incorporate them into a consensual chapter 11 bankruptcy plan.  In most cases, if the debtor and its primary secured creditor in the case can agree on a plan, unsecured creditors received a reasonable dividend, and there are no “absolute priority rule”1 issues, a bankruptcy court will approve the consensual plan. (more…)

In an update to Kevin Stine’s June 6, 2014 article explaining the Georgia Court of Appeals decision to bid adieu to select foreclosure confirmation hurdles, the District Court for the Northern District of Georgia recently posed inquiries seeking to possibly reverse the precedent that preserved post-foreclosure liability of personal guarantors. In PNC Bank, N.A. v. Kenneth D. Smith, et. al, Judge Eleanor Ross asks the Supreme Court of Georgia the precise limitations and conditions precedent of O.C.G.A. § 44-14-161 as it impacts the necessity of confirming a foreclosure sale prior to seeking a deficiency judgment against obligors, despite the existence of affirmative case law on the topic. (more…)

Legislation liberalizing Louisiana foreclosure law was signed by Louisiana’s governor on June 5. House Bill 697 becomes effective on August 1, 2015.

One particular area where lenders strive to use technology involves the creation of electronic records containing electronic signatures.  Thus, the original documents are created on a computer and signed using an electronic signature; there is no original paper document with a handwritten signature. (more…)