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Banking Focus Newsletter
Chuhak & Tecson Banking Focus

Basketball Hoop

 

Creditors force March Madness icon into settlement using involuntary bankruptcy

We will soon face the daunting challenge of completing our brackets for the NCAA tournament. This requires predicting which teams will advance through each round, based on a combination of loyalty to alma maters, blind guessing and deciding which team has the superior mascot. The completion of one’s bracket is closely followed by moments of joy, heartbreak and shock, as underdogs prevail, Goliaths fall and games are decided in the final seconds. Tournament coverage will undoubtedly include a flashback to Christian Laettner’s 1992 iconic buzzer-beater that catapulted Duke into the Final Four. From there, Laettner went on to play in the NBA and earned over $60 million. By June 2016, however, Laettner’s creditors were forcing him into a Chapter 7 bankruptcy after he failed to repay $14 million in soured real estate loans.

Just four months later, Laettner reached a settlement with his creditors and the parties agreed to dismiss the bankruptcy. The success of Laettner’s creditors illustrates how involuntary bankruptcy can be a valuable tool. To read more about the requirements for filing an involuntary bankruptcy, the ensuing process, the advantages of doing so and the circumstances that may warrant such an action, click here.

Creditors must file a proof of claim by the deadline in order to be included in Chapter 13 bankruptcy plans

Gavel

When an individual files for a Chapter 13 bankruptcy protection, she is allowed to repay her debts over a period of time up to five years through a court-approved payment plan. During the bankruptcy, her creditors are barred from attempting to collect on their respective debts unless first granted permission by the bankruptcy court.

Generally speaking, in order to be included in a Chapter 13 payment plan, a creditor must file a proof of claim, which sets forth both the amount due and owed and the arrearage owed to the creditor as of the date she filed for bankruptcy protection. Unless the debtor successfully objects to the proof of claim (i.e., convinces the court of some legal reason why the money is not owed or should not be paid through the bankruptcy), the creditor should be included in the plan to receive payments.

The Federal Rules of Bankruptcy Procedure provide a deadline for filing a proof of claim if a creditor wishes to be included in a Chapter 13 plan. While it is generally accepted that unsecured debts such as credit card debt will not be paid through the plan unless the creditor files a proof of claim by the deadline, there has been some confusion over whether this deadline applies to creditors holding secured claims.

To continue reading, click here.
It’s not just residential buildings—commercial and industrial buildings are now subject to the Chicago Vacant Property Registration Ordinance

On Jan. 1, 2017, the City of Chicago passed an amendment to the Chicago Municipal Code Section 13-12-126 pertaining to the obligations of mortgagees of loans secured by vacant buildings. Falling in line with the City of Chicago’s rapid expansion of the scope of regulations for lenders and mortgage servicers over the past several years, the changes to Section 13-12-126 will act to increase the fees and costs associated with commercial real estate lending in Chicago.

The provisions of Section 13-12-126, which formerly applied solely to residential buildings, were amended to include commercial and industrial buildings. Read more about these changes here.

Featured Attorneys
Michael Debre
Michael W. Debre,
Associate

mdebre@chuhak.com
Paulina Garga-Chmiel
Paulina Garga-Chmiel,
Associate

pgarga@chuhak.com
Kevin R. Purtill
Kevin R. Purtill,
Principal


kpurtill@chuhak.com
Meet the rest of our Banking team
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