October 18, 2008
More on Lam Motions
from my friend Steve Fox, a bankruptcy attorney in Los Angeles:
I removed liens belonging to IndyMac, EMC and Wilshire Credit in the past month, easily more than 1.2 million dollars in a chapter 11 case. No one is responding.
Steven R. Fox
Law Offices of Steven R. Fox
Bankruptcy & Related Matters
17835 Ventura Blvd., Suite 306
Encino, CA 91316
818. 774. 3545
FAX 818. 774. 3707
October 15, 2008
"Lehman Brothers, Sharper Image, Bennigan's, and Beyond: Is Chapter 11 Bankruptcy Working?"
Prof. Jay Westbrook, Prof. Barry Adler and Lawrence Gottlieb testified before the House Subcommittee on Commercial and Administrative Law recently discussing the challenges facing retail chapter 11 cases since the BAPCPA amendments in October, 2005. You can access the transcript here. You can watch the hearing by clicking here.
October 13, 2008
Halloween This Year
Home Mortgage Stripdown in Chapter 13
In the 9th Circuit, a chapter 13 debtor is allowed to avoid the lien of a mortgage on his home if the mortgage is entirely "underwater" notwithstanding Section 1322(b)(2) which provides that the debtor may modify the rights of a secured creditor unless the collateral is the debtor's residence. These are called "Lam Motions." In re Lam, 211 B.R. 36 (9th Cir. B.A.P. 1997)(Bankruptcy debtors entitled to treat wholly unsecured deed of trust as unsecured lien); In re Zimmer, 313 F.3d 1220 (9th Cir. 2002)(approving Lam).
I happened to be looking at the calendar of a local judge yesterday and I noticed she had a number of these motions on calendar one particular day this week. Per her self-calendaring memo, she hears these motions only once a month. Of the 11 motions, her tentative was to grant 10 of them and continue one for better notice. The 10 motions avoided a total of $985,000 in liens. I'm no fan of banks, but I did not realize the enormity of the problem. The amount of the loans avoided ranged from $20,000 to $167,000. Two were Countrywide and two were Wilshire Credit and the others were scattered among other lenders but included B of A, Wells Fargo, WaMu, and GMAC.
The ruling in each case was to avoid the lien only if the chapter 13 plan was completed and a discharge was entered. The debtor however was permitted to treat the debt as unsecured and pay with the other unsecured creditors. One bit of good news on this, at least the debtors intend to try to keep their homes and pay the senior mortgages.
October 12, 2008
Circuit Court of Appeals Cases from Last Week
1st Circuit Court of Appeals, October 03, 2008
Ameriquest Mortgage Co. v. Nosek, --- F.3d ---, 2008 WL ------ (1st Cir. 2008)(award of $250,000 for emotional distress and $500,000 in punitive damages for mortgage company's violations of 11 U.S.C. section 1322(b) is reversed where there was no violation of either the Bankruptcy Code or defendant's plan)
9th Circuit Court of Appeals, October 02, 2008
Espinosa v. United Student Aid Funds, Inc., --- F.3d ---, 2008 WL ------ (9th Cir. 2008)(unpaid portion of student loan in chapter 13 may be discharged per plan without adversary proceeding)
11th Circuit Court of Appeals, September 29, 2008
DaimlerChrysler Financial Servs. Ams. v. Barrett, --- F.3d ---, 2008 WL ------ (11th Cir. 2008)(creditor may pursue an unsecured deficiency claim under the contract and state law when the debtor surrenders a 910 vehicle)