Month: April 2012

Bankr. M.D.N.C.: In re Salon America- Date of and Requirement for Termination of Lease

Summary:

Because of the language of the lease, the bankruptcy court held that a lease had terminated (and consequently could not be assumed in a later bankruptcy case) following default and written demand by  the Leasor of payment of past due rent within 10 days.  Specific notice of termination of the lease was not required.

For a copy of the opinion, please see:

Salon America- Date of and Requirement for Termination of Lease.pdf Read More

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Bankr. M.D.N.C.: In re Whitley- Extent of Discover under Rule 2004 in connection with Bank Suspicious Activity Report Privilege

Summary:

The Trustee sought a 2004 Exam and documents from First Citizens Bank (“FCB”), based on a belief that the Debtor had used a checking account at FCB in connection with a Ponzi scheme.  FCB sought to quash this discovery, arguing that the Trustee was on a fishing expedition to establish claims against FCB in relation to the alleged scheme.

The bankruptcy court rejected the argument of FCB, holding that Rule 2004 is “unfettered and broad” in scope.  As the type of information that would be revealed relates to the “act and conduct” of the Debtor in using his bank accounts, it was permissible.… Read More

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Bankr. M.D.N.C.: In re Depriest- Dismissal under § 707(b)(3) looks to circumstances at the time of the hearing

Summary:

Despite testimony from the Debtors that they anticipated a substantial decrease in income due to loss of overtime, the court found that it was the circumstances at the time of the hearing that controlled.  Taken with the Debtors’ retention of a boat, their failure to disclose tax refunds,  overtime and bonuses, and continued 401k contributions, dismissal was appropriate.

For a copy of the opinion, please see:

Depriest- Dismissal under § 707(b)(3) looks to circumstances at the time of the hearing.pdf Read More

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Bankr. E.D.N.C.: In re Croatan Surf Club- Chapter 11 Plan for Single Asset Real Estate must be Filed within 90-days, but can be amended

Summary:

Croatan Surf Club filed a single asset real estate Chapter 11, with such real estate subject to a lien by Royal Bank America (“RBA”).  In compliance with 11 U.S.C. § 362(d)(3), Croatan filed a Second Amended Plan within 90-days of filing the bankruptcy, but RBA sought relief from stay, arguing that such plan was patently unconformable and was also nullified by the filing of a Third Amended Plan, outside of the 90-day window.

The bankruptcy court, however, held that te Second Amended Plan was not patently unconformable.  § 362(d)(3) only require filing of such a plan, not actual confirmation of the plan. … Read More

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Bankr. E.D.N.C.: In re Swartville, L.L.C.- Good Faith Filing of Chapter 11 “Dirt for Debt” Plan to Protect Guarantors

Summary:

Swartville owed TD Bank $1,615,000, secured by real property and guaranteed by the three principals of the company.  Following default and rather than foreclosing on the property, TD Bank brought suit against the guarantors.  Swartville then filed Chapter 11, proposing to surrender the real property in satisfaction of the debt.  TD Bank objected that such plan was not filed in good faith, as it was intended solely to benefit the guarantors by forcing TD Bank to take the real property in reduction of the debt.

Applying the two-prong good faith test developed by the 4th Circuit in Carolin Corp. v.… Read More

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Bankr. E.D.N.C.: In re Dickerson- Settlement of Civil Lawsuit by Trustee

Summary:

Dickerson filed Chapter 7 pro se, initially failing to disclose and exempt a pending lawsuit against Bell Partners for personal injuries and pecuniary losses.  The Debtor eventually claimed the lawsuit as fully exempt, but the Trustee objected to the exemption of an pecuniary losses

Dickerson, the Trustee and Bell Partners subsequently agreed, both on the telephone and in emails, to settle the lawsuit for $15,000, consisting of $10,000 in exempt personal injury proceeds and $5,000 for pecuniary losses, that would be available for the bankruptcy estate.  Dickerson then withdrew her consent to this settlement, partly on the basis of her own alleged mental incompetency.… Read More

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Bankr. W.D.N.C.: In re Waterson- Exemption of IRA Funds Following Equitable Distribution

Summary:

The Debtor sought approval of the settlement of an Equitable Distribution, conducted in Maine, that would have allowed her to transfer funds into exempt IRAs, arguing that an Equitable Distribution  rights are not property rights and therefore not an asset of the bankruptcy estate.  The Trustee objected.

As a result of  a recent amendment to the Maine Revised  Statutes, the bankruptcy court found that the debtor had an inchoate equitable ownership interest in the individual retirement accounts of her estranged husband and that  this inchoate equitable interest in the retirement accounts is property of the debtor’s estate pursuant to § 541(a)(1).… Read More

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4th Circuit: Rawlinson on v. Rudlow- FDCPA Applies to Secured Debts and Collection Against Third Parties

Summary:

Rudlow, the attorney for WFS, brought a replevin action against Rawlinson and her nephew, for a vehicle which the nephew owned, subject to a lien held by WFS.  Rawlinson was not a party to the note, but Rudlow believed Rawlinson either had possession of the vehicle or knew its location, since her nephew lived with her.  Rawlinson brought a FDCPA claim in response.

The 4th Circuit began by holding that, just as, following Wilson v. Draper & Goldberg, PLLC, 443 F.3d 373, 375-76 (4th Cir. 2006), it applies collection of debts related to real property,  the FDCPA does apply to replevin actions specifically and to debts secured by personal property more generally.… Read More

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N.C. Court of Appeals: Finch v. Campus Habitat- No Attorneys’ Fees without Five Days Notice of Intent to Seek Attorneys’ Fees

 Summary:

Finch leased a room from Campus Habitat and asserted that Campus Habitat breached their lease, causing her to move out.  Campus Habitat responded and counterclaimed, receiving judgment for damages and, pursuant to the lease, attorneys’ fees.

Finch appealed, arguing that pursuant ton N.C.G.S. § 6-21.2, Campus Habitat was required to provide five(5) days notice and opportunity to pay any outstanding balance, before seeking attorneys’ fees.   The Court of Appeals disagreed, finding that since Finch had initiated the lawsuit.  The Court of Appeals did find that the attorneys’ fees in excess of 15% of the outstanding balance owed was not authorized.… Read More

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N.C. Court of Appeals: In re Pugh- Arbitration Cannot Be Ordered in Foreclosure Proceeding

Summary:

At the foreclosure hearing before the New Hanover County Clerk of Court, the Pughes filed an Election of Arbitration.  The Clerk of Court did not act on this, instead finding that the Substitute Trustee had meet the six statutory requirements to proceed with foreclosure.  The Pughes appealed to Superior Court, where the judge again found that the requirements for foreclosure had been met and declined to rule on the request for arbitration.

The Court of Appeals affirmed, finding that both the Clerk of Court and, on appeal, the Superior Court had scope only to review the six criteria for allowing foreclosure. … Read More

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