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  • In significant cases including Tribune (representing nearly 200 retirees holding over $100 million in claims), The 1031 Tax Group (representing approximately 18 individuals defrauded by Ed Okin), Suntech Power (representing bondholders as petitioning creditors), Nirvana Water (special counsel to the Chapter 11 debtor retained to effect a Chapter 11 sale of the Debtors’ business operations)
  • Jay Teitelbaum has been appointed as mediator in the Kodak bankruptcy case in connection with hundreds of avoidance active disputes.
  • Teitelbaum Law Group represents bondholders against Suntech Power Holdings Inc. Teitelbaum Law Group obtained district federal court judgements against Suntech and is counsel to bondholders as petitioning creditors in an involuntary chapter case commenced against Suntech in the S.D.N.Y.
  • Teitelbaum Law Group represents St. Francis Medical Center as special council in the bankruptcy cases pending in the S.D.N.Y.
  • Teitelbaum Law Group represents approximately 200 retirees with claims of over $100 million in The Tribune Bankruptcy cases.
  • Teitelbaum Law Group represented clients holding over $9 million of claims in connection with the Bankruptcy Case of the 1031 Tax Group, et al., filed in the United States Bankruptcy Court for the Southern District of New York on May 14, 2007.
  • Teitelbaum Law Group represents financial institutions on a variety of commercial litigation and restructuring matters.
  • Teitelbaum Law Group represents numerous individuals and small businesses in connection with bankruptcy and workout related matters.
  • Teitelbaum Law Group has represented the Securities Industry Financial Markets Association (SIFMA) in a variety or matters in the United States Bankruptcy Court for the District of Delaware and in connection with proposed New York State legislation regarding foreign sovereign immunity.
  • Teitelbaum Law Group has represented AMGeneral (maker of the Hummer) in connection with a contract dispute.
  • Teitelbaum Law Group is local counsel to numerous out of state law firms involved in bankruptcy matter and commercial litigation.
  • Teitelbaum Law Group represents and advises various financial institutions in connection with Bankruptcy and State Court litigation concerning the home mortgage industry.
  • Jay Teitelbaum is an active mediator in the United State Bankruptcy Court for the Southern District of New York.
  • Jay Teitelbaum is a regular speaker for Judicial Title in connection with real estate bankruptcy related matters.

Recent Case Developments

The Meaning of Surrender:

We have previously circulated emails concerning the meaning and effect of a Chapter 7 or 13 debtor “surrendering” an interest in collateral in satisfaction of the secured creditor’s claim. For the most part, the cases hold that such a statement of intention in a Chapter 7 petition or a confirmed Chapter 13 plan binds the debtor such that the debtor cannot oppose a motion for relief from the automatic stay with respect to the collateral or oppose a subsequent foreclosure proceeding.

A recent case from the United States District Court for the Northern  District of Illinois, In re Booker, appears to take the binding effect a decision to surrender one step further.

The debtor’s chapter 13 plan provided that the debtor surrendered her interest in real property secured by a mortgage in full satisfaction of the claim.  The plan was confirmed by order of the bankruptcy court. Post confirmation, but while the Chapter 13 plan was being administered, the secured creditor continued its foreclosure and sent the debtor a notice of foreclosure sale. The secured creditor did not first file a motion for relief. In response, the debtor filed a federal action under the FDCPA, alleging that the continued prosecution of the foreclosure violated the automatic stay. While it is correct that the automatic stay remains in place during the term of the confirmed plan, the District Court held that the debtor’s statement of intent to surrender in the confirmed plan divested the debtor of any interest in the property such that the automatic stay was no longer applicable. The District Court dismissed the claims.

Practical suggestion. Lenders should not be too quick to embrace this pro-creditor case- other than under the specific facts of the case and in the Northern District of Illinois. We suggest that the meaning and effect of surrender is far from clear and is not consistently applied nationally. Thus, the more prudent and cost effective approach would be to wait for the plan containing the surrender provision to be confirmed and then (i) try to obtain a consent order from the debtor as to the modification of the stay on terms which allow the debtor time to vacate; or (ii) move for relief from the automatic stay based upon the confirmed plan.

 

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