July 23, 2011
Bankruptcy Mortgage Project Website
Subject: [Bankr-L] new Bankruptcy Mortgage Project website
Date: Fri, 22 Jul 2011 07:55:01 -0400
From: John Rao <jrao@NCLC.ORG>
The National Consumer Law Center has set up a website that collects and makes available for download a variety of documents (local rules, forms, orders, etc.) dealing with mortgage issues in consumer bankruptcy cases. Copied below is an information sheet on the new website, and the link for the site is here.
If there are documents from your district that we did not find and you would like added to the site, please let me know.
National Consumer Law Center?
7 Winthrop Square, 4th Floor
July 22, 2011
Governor Brown Signs Bill Protecting California Homeowners from Claims by Junior Mortgage Holders Following Consent to and Completion of a Short Sale
July 22, 2011
Dear Insolvency Law Committee Constituency List members:
The following is an EBulletin prepared by Insolvency Law Committee member Robert G. Harris:
Governor Brown signs bill protecting California homeowners from claims by junior mortgage holders following consent to and completion of a short sale
On July 11, 2011, Governor Brown signed SB 458 into law. Click [HERE] to read the text of the bill. SB 458 amends section 580e of the California Code of Civil Procedure (enacted in 2010) to apply certain limitations on first mortgage holders who accept short sales to junior mortgage holders. In order to mitigate the impact of the ongoing foreclosure crisis and to encourage the approval of short sales as an alternative to foreclosure, the bill was passed with an urgency provision and became effective on July 15, 2011, when it was filed with the Secretary of State.
Code of Civil Procedure section 580e, as amended, prohibits a deficiency judgment on a note secured solely by a deed of trust or mortgage for a dwelling of not more than 4 units should the trustor or mortgagor sell for less than the remaining debt with the written consent of the holder of the deed of trust or mortgage if title has been voluntarily transferred to a buyer by grant deed or by other document that has been recorded and the proceeds of the sale are tendered as agreed.
SB 458 clarifies an ambiguity in the original wording of Code of Civil Procedure section 580(e). With respect to a multiple collateral loan made for business purposes, a short sale conducted pursuant to section 580(e) might arguably have been interpreted to extinguish the entirety of a debt obligation secured by a 1-4 unit dwelling and other residential, commercial, or vacant land property, or other personal property related to or used in connection with the property. Such an interpretation would have left commercial lenders with multiple collateral no choice but to foreclose and reject any short sale in order to protect their security and ability collect the loan balance. In order to resolve the issue, SB 458 replaced the words "fully discharge" in section 580(e) with language treating the deficiency as though the 1-4 unit dwelling had been sold through foreclosure under a power of sale under Code of Civil Procedure section 580d.
Other important provisions of SB 458 are as follows:
● A holder of a note shall not require the trustor, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale.
● Exceptions to the new law include a lender asserting damages for a borrower's fraud or waste, a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state, and liens secured by a public bond, as well as by public utility liens;
● Any purported waiver of the provisions of section 580e is void and against public policy.
Second mortgages are generally, unless the mortgage was used to purchase a home, recourse as to the borrower. As a result, a second mortgage holder can usually sue the homeowner for the balance of debt owing following a foreclosure by senior lien holder or a short sale in which liability is not explicitly released. Typically, the threat of suit has been used to extract a cash payment from the homeowner as consideration for consent to a short sale.
Now that requiring payment to a mortgage holder to accept a short sale is illegal, there is a valid concern that, unless the first and second mortgage holders are the same entity, there may be little incentive for the second mortgage holder to accept a short sale. If a lender thinks a borrower may recover financially and wants to preserve its right to go after him or her, it may refuse to consent to a short sale and seek a judgment for the loan balance, sell the debt, or assign it to a collection agency. It is worth noting that the new law does not prohibit a mortgage holder from negotiating for a contribution from someone other than the borrower, such as another lender, an agent, a relative, or some other third party.
These materials were prepared by Robert G. Harris of Binder & Malter, LLP in Santa Clara, California.
Thank you for your continued support of the Committee.
Insolvency Law Committee
The Insolvency Law Committee of the Business Law Section of the California State Bar provides a forum for interested bankruptcy practitioners to act for the benefit of all lawyers in the areas of legislation, education and promoting efficiency of practice. For more information about the Business Law Standing Committees, please see the standing committees web page.
Judge Forces Dodgers to Negotiate with MLB for Financing
Judge Gross rejected the Dodgers' request to get its financing from Highbridge Corp, saying that “a comparison of the Highbridge loan and the proposed MLB loan clearly shows the substantial economic superiority of the MLB loan.” The order requires the team to negotiate with the MLB in good faith to attempt to get the best possible rates for its DIP financing.
Poor old Frank McCourt.
July 21, 2011
Borders to Seek Approval of Deal to Sell 30 Stores to Books-A-Million
"Borders Group Inc., the bankrupt bookstore chain, may avoid a total wind-down by selling as many as 35 stores to Books-A-Million Inc. (BAMM) in a deal involving liquidators, Borders lawyer Andrew Glenn said."
KOBO COMMENTS ON BORDERS’ LIQUIDATION
KOBO COMMENTS ON BORDERS’ LIQUIDATION
TORONTO – July 19, 2011 – The management of Kobo, a global leader in eReading with over 4.2 million users in more than 100 countries worldwide, has issued comments relating to the ongoing liquidation of Borders to clarify misconceptions about Kobo that have been inaccurately reported by the media and misunderstood by consumers.
Kobo management provides the following facts regarding the company:
• Kobo is a privately-held company that offers over 2.4 million eBooks, newspapers, and magazines -- one of the largest eReading catalogues in the world.
• Readers from over 100 countries across the globe download and read using Kobo’s top-ranked eReading applications for iPad, iPhone, BlackBerry, Android, Windows and MacOS. Kobo is the eReading application of choice for leading tablet OEMs.
• While Borders is one of the early investors in Kobo, it holds only a minority stake in Kobo, approximately 11 percent. The Borders shares are subject to the terms of the Kobo shareholders’ agreement which, among other things, restricts their transfer or disposition.
• Borders serves as part of Kobo’s distribution in the U.S. along with Best Buy, Walmart, Sears and other top retailers.
• Kobo does not rely on Borders for content. Kobo owns the publishing agreements and has direct relationships with all major publishers, including Random House, Simon & Schuster, HarperCollins, St. Martin’s Press and many more. Kobo is solely responsible for payment to publishers for eBooks sold through the Kobo platform and publishers will continue to be paid on time as usual.
• For some time, Kobo and Borders have been in the process of transitioning Borders' customers' eBook accounts to Kobo, in order to provide such customers direct access to the most up-to-date eReading functionality, apps and devices. All Borders customers that have transitioned to Kobo shall enjoy uninterrupted access to their e-Reading accounts. Kobo shall continue to work with Borders to transition customer accounts to Kobo.
• For those Borders customers who haven’t transferred their eBook libraries to Kobo, the process is quick and easy. Borders customers can visit kobo.to/bmigrate to transfer their Borders eBook library to Kobo. No additional steps are required to continue reading on your Kobo eReader. For those Borders customers that are using Borders apps to access their eBook libraries, visit kobo.com to download a free Kobo eReading app for your computer, smartphone or tablet.
• Owners of Kobo eReaders will continue to use their Kobo eReader as usual, and be able to browse and shop for new titles in the Kobo Store with no interruption or change in service.
• Kobo continues to grow in the U.S. and around the world. Kobo is very pleased with progress of the launch of the new Kobo eReader Touch Edition which is available at leading retailers including Indigo, Walmart, Best Buy and WH Smith.
• Kobo continues to build international growth with the successful launch of Kobo in Germany, the first rollout of several planned international launches.
As an interested party in the Borders bankruptcy proceedings, Kobo has made certain filings with the court to preserve its legal rights moving forward.
Kobo offers their support to the Borders’ community of employees, families and friends.
Statement from Michael Serbinis, CEO, Kobo, Inc:
“As one of the early investors in Kobo, Borders has a minority stake in our company and serves as part of our distribution in the U.S. along with Walmart, Best Buy, Sears and other leading retailers. As a member of the broader book publishing and retailing community, we are watching Borders' story and will offer our support to Borders and their employees. Kobo will continue to serve Borders customers – in this time of transition as well as moving forward – to provide the ultimate eReading experience and one of the widest selection of eBooks available to the eReading community worldwide.”
About Kobo, Inc.
Kobo is a global eReading service with more than 2.4 million eBooks, magazines and newspapers – one of the largest eReading catalogues in the world. Kobo believes consumers should have the freedom to read any book on any device and has attracted millions of readers from over 100 countries across the globe. Kobo has top ranked eReading applications for iPad, iPhone, BlackBerry, Android, Windows and MacOS, and is the eReading application of choice for leading tablet OEMs. The Kobo Wireless eReader and the new Kobo eReader Touch Edition are available at leading retailers, including Indigo, Walmart, Best Buy and WH Smith. Kobo's innovative Reading Life is an industry-first comprehensive social eReading experience – Kobo users can earn awards simply for time spent reading and encouraging others. Kobo is backed by majority shareholder Indigo Books & Music Inc, Cheung Kong Holdings, and institutional investors.
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July 20, 2011
Dodgers, MLB lock horns over bankruptcy loan
"The Los Angeles Dodgers fought on Wednesday to keep control of their finances while in bankruptcy, arguing Major League Baseball's offer to provide a $150 million loan was a 'deal with the devil.' "