Banking & Financial Services Industry Legal Blog

Quite often a creditor discovers that one of its debtors has avoided satisfying a liability by fraudulently transferring assets to another individual or entity. This is a frustrating discovery, but the creditor is not without remedies. Under Florida Statutes fraudulent transfers can be attacked and unwound through two methods. The popular method is filing a lawsuit to include a statutory cause of action to invalidate the fraudulent transfer under Chapter 726, Florida Statutes. A lesser used approach is through a post-judgment procedure known as proceedings supplementary under Section 56.29, Florida Statutes. This blog post discusses these two differing approaches for unwinding fraudulent transfers, when proceedings supplementary is the preferable approach, and a related doctrine of Florida common law known as the Diligent Creditor Rule.

Lenders should be aware of a new Florida law, which requires lenders to provide existing tenants with at least thirty days to vacate the property after the foreclosure sale. Florida Statute § 83.561, titled “Termination of Rental Agreement Upon Foreclosure”, became effective on July 1, 2015. The law replaces a recently expired federal law titled Protecting Tenants at Foreclosure Act. As such, the implementation of this new Florida statute may come as no surprise to lenders. However, lenders should understand their statutory rights and responsibilities prior to evicting tenants after foreclosure.

In a post-housing crisis economy, many homeowners, facing a plummet in home values, found themselves trapped in homes that are worth less than the amount they owe bank. Those homeowners have sought refuge in Chapter 7 bankruptcy proceedings, attempting to strip down the first mortgage and leaving many junior lienholders holding nothing but the bag—until now. In a big win for lenders, the U.S. Supreme Court recently ruled that a debtor in a Chapter 7 bankruptcy proceeding cannot void a second mortgage, when the debt owed on the first mortgage exceeds the current value of the collateral. See Bank of America, N.A. v. Caulkett, 135 S. Ct. 1995 (2015). The decision reverses an interpretation of the Bankruptcy Code in Florida bankruptcy courts—an interpretation further affirmed by the Eleventh Circuit—which allowed a Chapter 7 debtor to strip off and void a mortgage lien that is wholly underwater.

Occasionally a borrower’s counsel or counsel for an institution that has served as a lending partner in some capacity will get crafty in trying to shift the blame for bad business transactions to the originating and lead lending institution by asserting claims against the original lender for not performing like a reasonable and prudent bank can be expected to perform in the administration of a loan. The claims come in many forms, but they are all predicated on the same fundamental premise: if the bank had performed a better/reasonable underwriting or processing of the original loan, then the losses that ultimately occurred would have been prevented. Fortunately for banks, these types of claims are unsustainable in Florida law. There is no tort duty for banks to process loans competently. See Silver v. Countrywide Home Loans, Inc., 760 F. Supp. 2d 1330, 1339 (S.D. Fla. 2011).

When a customer deposits a check the bank customarily credits the customer’s account in a practice known as a “provisional settlement.” Under a provisional settlement customers are allowed to draw on the deposited funds even though the bank has yet to present the check to the drawee bank and receive […]

This blog is related to the previous blog post of “Setting Aside Fraudulent Transfers” as it relates to a creditor’s efforts to recover from a dissolved corporation or dissolved LLC.  Setting Aside Fraudulent Transfers Part I: What to look for when going after officers or successor company discussed how a […]

You have a claim against a corporation and/or its officers, but you find out that the corporation is dissolved and there is a successor corporation in its place that appears to be essentially the same corporation. Now what? In Bernard v. Kee Mfg. Co., Inc., Florida’s Supreme Court adopted the […]

By: Brandon C. Meadows, Esq.

Lenders take heed: the Florida Supreme Court recently amended the Florida Rules of Civil Procedure governing mortgage foreclosures. Additionally, the high court promulgated several standard forms, which reflect the amended rules. The recent rule amendments and forms are in response to the recent legislation regarding mortgage foreclosures, including the new Section 702.015, Florida Statutes, which set forth the new pleading requirements for foreclosure complaints. The purpose of the statute is to “expedite the foreclosure process by ensuring initial disclosure of a plaintiff’s status and the facts supporting that status, thereby ensuring the availability of documents necessary to the prosecution of the case.”

By: Brandon C. Meadows

When purchasing assets from a bankruptcy estate, purchasers often rely on the protections of 11 USC 363(f) of the Bankruptcy Code, which allows property to be sold “free and clear of any interest in property” if one of five statutory conditions are met. Those conditions are:
1.Applicable non-bankruptcy law permits a sale free and clear of interests;
2.The interest holder consents to the sale;
3.The interest is a lien and the sale price exceeds the aggregate value of all liens on the property;
4.The interest is in bona fide dispute; or
5.The holder could be compelled in a legal or equitable proceeding to accept money satisfaction of its interest in the property.

By Austin B Calhoun

Vendors are sometimes presented with customers going into bankruptcy. Vendors experienced in this dilemma are aware of preference actions pursuant to 11 U.S.C. § 547(b), whereby the trustee seeks to recover from the vendor all payments received from the debtor within the 90 day period prior to petition. There are various mechanisms and defenses a vendor can employ to block preference action recovery. One such tool is the critical vendor doctrine. This blog examines the steps a vendor must take to successfully implement the critical vendor doctrine in Florida bankruptcy courts.