Month: March 2012

Bankr. E.D.N.C.: In re Robert Youngblood Construction Co.- No Co-debtor Stay under 11 U.S.C. § 362

Summary: The Youngbloods are guarantors of several loans between Youngblood Construction and BB&T.  Following the filing of the Chapter 11, Youngblood Construction brought a Motion to Extend Stay for the Youngbloods individually.

The Bankruptcy Court recognized that in “unusual circumstances” the Debtor and a third party may share such common identity that judgment against one may “in effect be a judgment or finding against the debtor.” Kreisler v. Goldberg, 478 F.3d 209, 213 (4th Cir. 2007) (citing A.H. Robins Co., v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)).

In this case, however, the stay should not be extended to the Youngbloods, who could file their own bankruptcy and obtain the requested relief. … Read More

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Bankr. E.D.N.C.: In re Edwards- Escrow Shortage as Pre-Petition Arrearage

Summary: Relying on In re Beaudet, 455 B.R. 671, 673 (Bankr. M.D. Tenn. 2011), the bankruptcy court held that while Ocwen was entitled to include future escrow amounts in the on-going monthly payment, the pre-petition escrow shortage should instead be included in the arrearage claim.     Commentary: If a pre-petition escrow shortage is included in the monthly payment, that will require a 12-month cure.  If, however, it is included in the arrearage claim paid through the Chapter 13 plan, this allows for a cure of up to 60 months.

For a copy of the opinion, please see:

Edwards- Escrow Shortage as Pre-Petition Arrearage.PDF Read More

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Bankr. E.D.N.C.: In re Carroll- Evidence of Default necessary for Motion for Relief From Stay

Summary: Vericrest sought relief from the automatic stay and the Chapter 7 Trustee objected.  In the present case, the note contains two allonges purporting to transfer the Note by indorsement.  The first purports to transfer the Note from Flagstar Bank, F.S.B.  To LSF7 Bermuda NPL V Trust.  The second allonge is blank indorsement from Bermuda Trust.

To prevail on a Motion for Relief from Stay where there is no issue as to the sufficiency of equity to adequately protect it interests, the moving party must  show “[t]he [d]ebtor owes a debt to it, that it possesses a valid security interest securing the debt, and that the collateral securing the debt is declining in value while the [d]ebtor has failed to provide [the creditor] with adequate protection of its interest” to establish a prima facie case it is entitled to relief for lack of adequate protection. Read More

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E.D.N.C.: In re Winslow and In re Joe Denning & Sons Farms- Non-Statutory Insiders

Summary: 11 U.S.C. § 101(31) has a list of third-parties with a statutorily defined relationship with the Debtor, which are called “statutory insiders”.  This definition, however, use the word “includes”, which makes the list non-exclusive, with such being considered “non-statutory insiders.”  (The District Court notes the oddity of the Bankruptcy Code statutorily providing for  non-statutory insiders.)

In the present independent cases, the Debtors had applied to retain Douglas Gurkins as its chief restructuring officer (“CRO”) and also sought to retain Country Boys Auction & Realty to sell assets.  The Bankruptcy Administrator objected on the grounds that Gurkins had previously been the president and principal owner of Country Boys, prior to his sale of that company to his son in 2005.… Read More

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