bankruptcy beach blog

Creating a Blanket Lien – A New Case Shows the Importance of Syntax

How should collateral be described in a “blanket” security agreement? The goal is to include all of the debtor’s personal property. But using the term “all assets” or a similar phrase in a collateral description can be either a disaster; or a lifesaver for lenders and their counsel. Matter of Sterling United, Inc., 2016 WL 7436608 (2d Cir 12/22/16) is an object lesson on how language which is legally necessary to expand the term “all assets” can create controversy if carelessly drafted. Some background:  Uniform Commercial Code Article 9 defines a list of generic types of collateral which, if all of them are used in a collateral description, … Continue reading

Posted in Uniform Commercial Code |

HEY HO! TRUSTEES MAY NOT BE “DEBT COLLECTORS” UNDER THE FAIR DEBT COLLECTION PRACTICES ACT

The Ninth Circuit Court of Appeals, in a split decision subject to a dissent, has held that the trustee under a California deed of trust does not, by performing the statutory foreclosure requirements, become a “debt collector” subject to the federal Fair Debt Collection Practices Act (FDCPA). The decision in Ho v. ReconTrust Company, NA, 840 F.3d 618 (9th Cir. 2016) is still subject to being reconsidered en banc, i.e., by an expanded panel of eleven Ninth Circuit judges. If it is not altered by the Ninth Circuit en banc, the decision will likely be the subject of a petition for review by the United States Supreme Court. … Continue reading

Posted in FDCPA, Foreclosure |

Alternative A v. Alternative B – Can the Imperfect Attain Perfection?

California’s current legislative session has just gotten under way, and coming soon will be a bill to amend Article 9 of the Uniform Commercial Code, which governs security interests in personal property.  This package of amendments was promulgated by the Uniform Law Commission (ULC) in 2010.  For the most part it consists of technical fine-tuning, with one important and controversial, exception.  This has to do with how to list the name of an individual debtor on a form UCC-1 Financing Statement. Presently, Article 9 provides that in order to perfect a security interest in the personal property of a “registered organization” such as a corporation, limited partnership, or … Continue reading

Posted in Uniform Commercial Code |

Can’t We All Just Even Give Up?

Bankruptcy Judge Wallace of the Central District of California (Riverside Division), recently entered a Memorandum Decision which declined to approve the settlement of a dischargeability action filed by a finance company against a pro se debtor.  The Memorandum Decision in First Mutual Sales Finance v. Cacciatori, 2012 WL 539783, (C.D. Cal. 2/15/2012) should give pause to creditors who bring flimsy dischargeability actions against penniless pro per debtors, counting on the fact that the cases “can always be settled for something.”  The case should also be disconcerting to lawyers on both sides of the fence whose clients need to settle legitimate dischargeability disputes. First Mutual’s dischargeability action was based on an allegedly … Continue reading

Posted in Dischargeability, Fraud, Settlement |

The Salazar Saga Continues

Bankruptcy and foreclosure lawyers everywhere have been vitally interested in the fate of In re Salazar, 448 B.R. 814 (Bankr. S.D. Cal. 2011), which denied the lender’s motion for relief from the automatic stay to complete an eviction after a pre-bankruptcy foreclosure sale. The trust deed in Salazar named MERS as the beneficiary, but the foreclosure notices and trustee’s deed referred instead to US Bank. The opinion in Salazar concluded that California Civil Code section 2932.5, which states that the power of sale under a mortgage “may be exercised by the assignee if the assignment is duly acknowledged and recorded.” was not satisfied by off-record assignments under the MERS system.  Since the assignment to US Bank was … Continue reading

Posted in Foreclosure, Jurisdiction, MERS |