In a win for secured creditors, the Ninth Circuit Court of Appeals recently held that a debtor who sought to cure a pre-petition default of its loan through its Chapter 11 plan must pay the default rate of interest set forth in the note. In Pacifica L 51 LLC v. New Investments Inc., the debtor proposed to pay the outstanding amount due under the note at the pre-default interest rate. This proposal was in accordance with law in the Ninth Circuit, which held that even if a loan agreement provided for a higher post-default interest rate, a debtor who cured a default was entitled to repay at the lower, pre-default rate.
As an attorney in the firm’s Litigation Department, Meredith Burns represents clients in the areas of commercial litigation, bankruptcy and creditors’ rights. Her commercial litigation practice focuses on business disputes, financial workouts, collections, and foreclosures. She also represents municipalities and corporations in property tax appeals. Meredith’s bankruptcy practice includes representing creditors’ committees, trustees and liquidating custodians in reorganization proceedings.
On January 1, 2015, Connecticut adopted an additional method of foreclosure known as foreclosure by market sale. This method permits an owner-occupant of a 1-4 family residential property who is in default of the first mortgage to obtain the lender’s consent to market and sell the property in order to avoid a judicial foreclosure.
Imagine that you are an unsecured lender who has learned that a borrower has filed for bankruptcy and has little to no assets available to pay creditors. Is there any way to prevent your debt from being extinguished? This is a common question and often the answer unfortunately is no; however, if the debtor is an individual and the debt meets certain requirements established by the Bankruptcy Code, the court may declare the debt nondischargeable (in other words, the debt will remain with the debtor after the bankruptcy case is closed).
On February 23, 2016, in the case of MERSCORP Holdings, Inc. et al. v. Dannel P. Malloy et al., the Connecticut Supreme Court upheld the constitutionality of certain state statutes which impose higher fees for mortgage nominees, such as MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. (“MERS”), for recording documents in the public land records.
A brief history shows that back in 2013, the Connecticut legislature created a two-tiered system by which town clerks collect recording fees with the effect that mortgage nominees were obligated to pay up to three times more for recording documents than other filers.
In response, MERS commenced an action against state officials.