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| vol 19, num 2 | July 2022 |
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| In Divided Opinion, Fifth Circuit Confirms Secured Lenders May Not Reform Security Instruments Post-Petition |
| If a mortgage is ambiguous or contains a mistake, a lender may generally reform the mortgage under state law. But what if a borrower files a bankruptcy petition before a lender does so? In a divided opinion, the U.S. Court of Appeals for the Fifth Circuit confirmed that a lender may not reform a mortgage post-petition. The dissent, however, offers lenders a potential pathway around this prohibition in future cases.
Michael Worley was the sole member of W Resources, LLC. NCC Financial, LLC extended an $8 million loan to Worley individually. Nonetheless, NCC secured the loan by taking a mortgage on W Resources’s real property.
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| Enforcing Motion-to-Dismiss Deadlines in Subchapter V Cases |
| Creditors that file motions to dismiss or convert pursuant to 11 U.S.C. § 1112 to reduce delay by debtors must generally avoid continued hearings in subchapter V cases. The § 1112 motion requires the debtor to show, in part, that “there is a reasonable likelihood that a plan will be confirmed ... within a reasonable period of time....” On its face, the motion can be a time-saving tool, but its effectiveness to reduce delay is often negated if (1) the creditor waives the right to strict adherence to the statutory deadlines or consents to a continuance, (2) the court extends the time limits under the statute, or (3) the creditor fails to
overcome any inclination for continued hearings on the motion in a subchapter V case. |
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| Secured Credit Committee Leadership for 2022 |
| For your reference, below is a full roster of the Secured Credit Committee leadership. Please consider them a resource for getting more involved in ABI volunteer activities.
You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.
The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.
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Alexandria G. Lattner
Communications Manager
Sheppard Mullin
Costa Mesa, Calif. |
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Andrea Chase
Education Director
Spencer Fane
Kansas City, Mo. |
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