Banking & Financial Services Industry Legal Blog

The Supreme Court of Florida in Bartram v. U.S. Bank Nat. Ass’n, 2016 WL 6538647 (Fla. 2016) held that prior acceleration in a foreclosure action that was involuntarily dismissed was revoked by the involuntary dismissal, and therefore did not trigger the statute of limitations to bar future foreclosure actions. Additionally, the Court held in Singleton v. Greymar Assoc., 882 So. 2d 1004 (Fla. 2004) that the res judicata analysis applies equally to statute of limitations defenses and doesn’t prohibit the re-filing of a foreclosure action that was previously dismissed so long as the second foreclosure action is predicated on a subsequent default. At first glance, this decision appears to have broad application to any type of secured installment debt. If Bartram is broadly applied it could breathe life into ancient debt that was long ago considered time barred by commercial lenders. However, there are distinctions that may limit the application of Bartram to residential mortgage foreclosures. Future appellate decisions will address how broadly Bartram should be applied. This article addresses the best argument for narrow application and the best argument for broad application. If Bartram is applied broadly it could serve as a basis for commercial lenders to re-evaluate mortgages in default in which they previously declined to foreclose. It could also serve as a basis for commercial lenders to re-evaluate corporate policy directed toward secured property that currently has little value or corporate policy directed toward junior mortgages with current value that is insufficient to cover the senior lienholder.

In a perfect world, all loans would be performing, and the lead bank and participant would share in the profits of a loan participation with minimal risk of loss. In the real world, a promising participation loan easily becomes a problem loan, and the lead bank and participant bank can find themselves embroiled in litigation against each other. Such litigation puts a substantial strain on the lead bank’s resources to enforce the loan documents against the defaulted debtor, at a time when the parties should be sharing resources for loss mitigation. One common reason a participant may sue a lead bank after borrower default is based upon the participant’s assessment of collectability. If the participant determines that the collateral is worthless or the borrower is otherwise judgment-proof, the participant may look to the lead bank to recover its share of participation in the failed loan.

Many creditors are aware that Florida’s Uniform Fraudulent Transfer Act (“FUFTA”) is a powerful remedy used to avoid and unwind transfers of assets that debtors may make to hinder, delay and defraud their creditors. But what if you (the creditor) discover that your debtor made a transfer, and you didn’t know it was actually fraudulent under FUFTA until a year later? Your fraudulent transfer claims may be forever extinguished as being time barred, without a tolling period to account for the time that elapsed before the fraudulent nature of the transfer was discovered.

In order to state a cause of action in Florida for breach of fiduciary duty, there must exist a fiduciary duty, a breach thereof, and resulting damages. Gracey v. Eaker, 837 So. 2d 348, 353 (Fla. 2002). In Doe v. Evans, 814 So.2d 370 (Fla. 2002), the existence of a relation of trust and confidence between parties was sufficient to establish the presence of a fiduciary relationship. Id. at 374, quoting Quinn v. Phipps, 113 So. 419, 421 (Fla. 1927).

What to Do if You Face the Threat of Sanctions Jeb Hensarling, chairman of the House Financial Services Committee, amusingly described the CFPB as the “single most powerful and least accountable federal agency in all of Washington.” The broad power and authority of the CFPB places the agency in a […]

CFPB Regulation Enforcement The CFPB is authorized to conduct investigations to determine whether any person is, or has, engaged in conduct that violates federal consumer financial law. The investigations often include subpoenas and other investigative demands for testimony, responses to written questions, documents, or other materials. Once a potential violation […]

What is the CFPB? The financial crisis of 2007-08 triggered a substantial adjustment in the federal government’s regulation of the banking and lending industry; one notable result being the establishment of the Consumer Financial Protection Bureau (CFPB) under the Dodd-Frank Act (the Act) in 2010. The general goal of the […]

This is the first of three follow up blogs to our earlier publication Assignment for the Benefit of Creditors: General Overview. This blog explores ABC’s lack of statutory automatic stay and whether there is a functional and practical equivalent. The next blog will discuss whether a creditor may file a claim after the statutory 120-day deadline. The third blog will examine whether a creditor may file a claim of fraudulent transfer against the estate.

Many vendors have had the unfortunate experience of a customer filing for bankruptcy. If it hasn’t happened to you yet, it probably will at some point in the future. There are certain steps a vendor should (or must) take to protect itself and maximize its opportunity to collect any debts owed by the customer. Vendors that take advantage of these protections can maximize recoveries, better preserve their positions in their dealings with the debtor, and avoid pitfalls inherent in the bankruptcy process. Vendors, and their attorneys, should use this checklist and take immediate action when a customer files for bankruptcy.

An involuntary bankruptcy case is typically commenced by a petition joined by at least three petitioning creditors. However, an involuntary petition may be filed by a single petitioning creditor if the debtor has 11 or fewer “qualified” creditors. This is often called the “numerosity” requirement. The Bankruptcy Code, in Section 303(b)(2), expressly defines which creditors count in the numerosity requirement. In determining whether there are 11 or fewer creditors, certain creditors are ignored, including (a) any employees of the debtor who are also creditors, (4) any “insiders” of the debtor who are creditors, and (3) any creditors who received voidable transfers under §§ 544, 545, 547, 548, or 724(a) of the Bankruptcy Code.