LEAN ENFORCEMENT ANALYSIS & NEWS
New Requirements for Proofs of Claim in Bankruptcy By: David H. Leigh
Generally speaking, and with limited exceptions, a creditor wishing to receive a distribution in a bankruptcy case must timely file a proof of claim in that case. A proof of claim is a written statement that sets forth and documents the basis for and the amount of a creditor’s claim. A creditor’s proof of claim must conform substantially to Official Form B10 of the Federal Rules of Bankruptcy Procedure.
Recently, the Judicial Conference recommended changes to the Federal Rules of Bankruptcy Procedure pertaining to proofs of claims. The changes are designed, in part, to try and prevent creditors from filing undocumented, poorly documented, or inaccurate proofs of claim by requiring creditors to provide additional information with their proofs of claim. The proposed changes have been approved by the United States Supreme Court and became effective December 1, 2011.
Among those amendments, Federal Rule of Bankruptcy Procedure 3001, which has always required that a creditor produce a writing to support its claim, now requires that a ...
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The UCC's Public Policy Favors the Lessor, Come Hell or High Water By: John Sinodis and Chris Stovall
A recent federal court decision from Pennsylvania provides an important reminder that the public policy advanced by statutory recognition of finance leases under U.C.C. Article 2A, reinforced by statutory and contractual hell or high water protection for the lessor, directly undermines defenses commonly raised by lessees attempting to fend off collection.
In late July 2011, the U.S. District Court for the Eastern District of Pennsylvania published a 37-page long decision granting summary judgment for an equipment lessor on various defenses and counterclaims raised by three business lessees of telephone equipment. De Lage Landen Fin. Services, Inc. v. Rasa Floors, LP, 792 F. Supp. 2d 812 (E.D. Pa. 2011) (“De Lage”). In the course of the opinion, the court reviews the established law on finance leases under U.C.C. Article 2A, noting that finance leases are statutorily sanctioned, well-recognized in case law, have standard lease provisions integral to their existence (including the hell or high water clause), and draw special protections for lessors under Article 2A, because they provide an important alternative method for businesses to acquire needed equipment. The court’s emphasis on these affirmative elements of the law and policy concerning finance leases undergirds its rejection of the lessees’ defenses.
The De Lage court begins the U.C.C. analysis with the important recognition that U.C.C. Article 2A gives parties the right to make a binding stipulation that a lease is a finance lease governed by the Article, even when the lease would not meet the test for such ...
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Proofs of Claim: Hot Topics and Filer Beware! By: Diane P. Furr
Preparing and filing a Proof of Claim in a bankruptcy case is not always as simple as one might think considering that the form is a simple document with instructions attached. However, there are potential pitfalls involved in preparing and filing a Proof of Claim. Creditors who fall victim to these pitfalls have been the subject of unpleasant surprises in recent bankruptcy cases. In addition, new bankruptcy rules regarding requirements for creditors in the claims they make in bankruptcy cases in general become effective on December 1, 2011. Please note that all references to Section numbers in this article refer to specific Sections of the Bankruptcy Code.
• Be sure to file where directed: Proofs of Claim generally are filed with the Clerk of Court in the district and division of the bankruptcy court where the debtor’s bankruptcy is filed. Often in large Chapter 11 cases, though, claims are directed to be filed with a claims agent instead of the Clerk. In addition, some debtors obtain detailed court orders setting forth specific procedures for filing which differ from traditional instructions and may require sending copies of the Proof of Claim to additional parties in order to have the claim considered properly filed. If you receive an order setting bar dates filing a for Proof of Claim, read carefully! If you are in a Chapter 13 case, be aware that many districts require a Chapter 13 claim to be filed with the Chapter 13 Trustee instead of the Clerk.
• Who is the debtor? In bankruptcy cases where there are multiple debtor affiliates and corporations, the creditor should make proper inquiries and verify that it is filing its Proof of Claim in the proper corporate debtor bankruptcy case and not in the bankruptcy case of a ...
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LEAN Expands with New Members in Philadelphia, Montreal and Atlanta By: Eve Hundt
To meet the growing need for effective enforcement counsel, the Lease Enforcement Attorney Network continues to add experienced, reputable law firms in cities across the nation. Founded in 1999, the professional network is comprised of carefully selected law firms distinguished by their long and broad experience in leasing and an excellent reputation in the industry. Now in 38 locations, LEAN is pleased to announce the addition of three new members located in Philadelphia, Pennsylvania; Montreal, Canada; and Atlanta, Georgia.
Deeb Blum Murphy Frishberg & Markovich
Peter J. Deeb - Philadelphia, PA
For more than 20 years, Deeb Blum Murphy Frishberg & Markovich, PC has served as legal advocate for the interests of equipment leasing companies. The firm handles lease transactions of all types and sizes, specializing in the representation of the small-ticket leasing industry. Led by Managing Partner Peter J. Deeb, the firm’s equipment leasing ...
Lavery, De Billy, LLC
Benjamin Gross - Province of Quebec, Canada
Lavery is a leading full-service law firm with 175 lawyers. A respected member of Quebec's legal community for more than 90 years, we are our province's largest independent law firm. In particular, Lavery has always been at the forefront of new developments in financing and financial services. Our highly experienced team of commercial and litigation lawyers is ...
Sicay-Perrow, Knighten & Bohan, P.C.
David Sicay-Perrow - Atlanta, GA
Sicay-Perrow, Knighten & Bohan, P.C. was established in 1999. Together, the attorneys in our office have 67 years of experience between them. Our firm’s practice is concentrated in the areas of creditor's rights in bankruptcy, personal and real property foreclosure proceedings, and litigation recovery. We specialize in assisting institutional lenders ...
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Data Mining Disasters: What Lessors Need to Know By: Rebecca Teale Balint, Esq.
By now, most people probably know that there are ways to retrieve information from the memory of a computer or cell phone, even after that information has been deleted. But did you know that the same goes for most modern printers, faxes and copiers? Businesses scan, copy, print and fax driver’s licenses, social security numbers, medical records, trade secrets, financial information and other sensitive data everyday--- information which is stored on the hard drives of those copiers, printers, faxes, and scanners long after the working day is done. What happens to that information when a copier is retired, returned, surrendered or repossessed?
The Concern: Privacy, Security and Competitive Edge
Frequently, the information is still stored on the hard drives and memory cards of these devices when they are released, scrapped, or sold, leaving open the very real possibility that these devices are being purchased and mined for the value of the information stored on them. In fact, CBS News investigated this very phenomenon and reported that unknown buyers in foreign countries were purchasing shipping containers packed with ...
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Pitfalls in Seeking Deficiencies By: Howard Toland
It is clear that many commercial portfolios containing secured assets, from real estate to personal property, have declined in value. As a result, deficiencies will exist after the collateral has been repossessed, remarketed and sold. The balances remaining due must be established over the defenses of the borrower or guarantor.
Post repossession sales are on an as-is where-is basis, without any warranties or representations. However, a creditor is still required to adhere to the burden of obtaining an appropriate value for the collateral. The Courts have uniformly required that the debtor and the guarantor must receive notice of the sale. Florida statute 679.613(1) modeled after the UCC section 9-313 requires (a) a description of the debtor and secured party, (b) a description of the collateral, (c) the method of the intended disposition, (d) notification that the debtor is entitled to a accounting for the unpaid indebtedness, and (e) states the time and place of the disposition or the time after which other dispositions is to be made. In Florida the courts have held that notice is an integral aspect of whether the disposition is commercially reasonable under chapter 679. Landmark First National Bank of Fort Lauderdale Geppetto's Tale of the Whale of Fort Lauderdale, Inc 498 So 2d 920, 922 (Fla 1986).
The burden is on the creditor to establish the disposition of the repossessed collateral was conducted in a commercially reasonable manner. Under Article 9 of the Uniform Commercial Code, codified in chapter 679, Florida Statutes, a creditor can take possession of collateral after a default by the debtor. Fla 679.609. The secured party "may see, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercial reasonable preparation or processing, 679.610(1). However if the secured party wishes to preserve its right to seek a deficiency judgment, the secured party is not
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What Do You Mean the Lessee Sold My Equipment? It's Mine! By: Harry W. Greenfield and Jeffrey C. Toole
“What do you mean that my equipment was sold?” “Can’t I sue the seller for conversion?” “Why don’t we seize the equipment from the company that bought it, because they haven’t paid me for it?” These are some of the frantic questions you might ask your attorney if you do not pay close attention to bankruptcy court papers you get in the mail and find out (after-the-fact) that a lessee filed bankruptcy and sold the equipment it leased from you to somebody else -- and then paid all or most of the proceeds to other creditors, and only some (or none) of the proceeds to you.
By now, almost every sophisticated commercial lessor is familiar with Section 363(f) of the Bankruptcy Code, and understands the broad power it gives for “debtors-in- possession” in chapter 11 reorganization cases, or trustees in bankruptcy cases generally, to sell property “free and clear” of other persons’ liens or “interests.” Many business bankruptcy cases are filed primarily to sell the debtor’s assets and operations as a going concern. Section 363(f) enables debtors in possession or bankruptcy trustees to convey clear title, via court order ...
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Everything an Equipment Lessor Should Know About Chapter 9 of the Bankruptcy Code By: Kirk B. Burkley, Esq. and Robert S. Bernstein, Esq.
This article sets forth everything an equipment lessor should know about Chapter 9 bankruptcy and is designed to guide a lessor through the municipal bankruptcy process. 11 U.S.C. § 365 applies to unexpired leases and executory contracts and the provisions of Section 365 are incorporated in Chapter 9 through Section 901(a). However, unlike Chapter 11, the debtor in Chapter 9 maintains control over its property and there is no “property of the estate.” Thus, it is the municipal debtor and not a trustee that has the power to assume or reject contracts. See In re Mount Carbon Metropolitan District, 242 B.R. 18 (Bankr. D. CO 1999). Because there is not “estate” property the municipal debtor is free to use, lease or sell without regard to normal restrictions on estate property. It is crucial that every equipment lessor familiarize themselves with the provisions set forth in 11 U.S.C. § 365 in order to efficiently mitigate losses and maximize recoveries.
First and foremost, the entity seeking shelter under Chapter 9 must have express state authorization to file bankruptcy and must actually be a municipality. A municipality is defined by the Bankruptcy Code as a "political subdivision or public agency or ...
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Local Counsel's Evolving Role in E-Discovery Litigation By: Bari Gambacorta
Will there come a time when every file referred for collection, replevin or work out will require a “litigation hold”? In this e-mail driven commercial world it is hard to imagine accounts monitored by collection personnel that do not contain significant discoverable material stored in a lender’s data network. My purpose in authoring this article is to inform clients of the types of concerns their local council could and should have in this regard. Counsel’s decision to request a “litigation hold” is often difficult but the failure to do so and then monitor its progress may be calamitous.
Spoliation
Spoliation is the concept that a litigant deliberately destroys, modifies or conceals evidence for strategic advantage. In the current commercial e-mail environment where it is customary to maintain e-mails for a specific period pursuant to a corporate policy, it is extremely difficult to explain the premature elimination of e-mails. At the point the opposition establishes that communications are missing and that they relate to the litigation at hand, the burden shifts and the other party (known as the “spoiling party”) must go forward and show why the documents were lost or destroyed. Should the deleting party be found guilty of spoliation, sanctions will apply which could include dismissal of the
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Steps to Recover Property from a Debtor By: Deborah S. Ashen
There is a lot of emphasis on obtaining a Judgment against a Lessee or Personal Guarantor who has defaulted on a Lease. But getting the Judgment is really only half the battle. The ultimate goal is of course collecting the money once you obtain the Judgment. If your Judgment Debtor will not make voluntary payment on the Judgment, and owns Real or Personal Property, the Creditor has certain remedies that it can use to attach and obtain title to the Judgment Debtor’s Property.
Use of Judgment Liens on Real Property
Any outstanding Judgment can become a lien on real estate by filing a Memorandum of Judgment with the County Recorder of Deeds where the property is located. A Memorandum of Judgment is a separate document that is signed by the Court after the Judgment becomes a final order (usually 30 days after the Judgment is entered). If you are recording the Judgment against Real Property, you need to include the tax identification number and
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