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Summarizing by Amir Shachmurove

In re Censo, LLC

Case Type:
Case Status:
Ninth Circuit Bankruptcy Appellate Panel Case No. NV-20-1240-FLT (9th Circuit, May 28,2021) Not Published
Debtor's Notice of Appeal only attached the order denying Debtor's motion for reconsideration. Therefore, the BAP's ruling was limited to only the reconsideration order and not the prior stay relief order. The bankruptcy court did not abuse its discretion in denying Debtor's motion for reconsideration.
Procedural context:
Servicer, on behalf of the first position lien holder, filed a motion for stay relief to pursue its foreclosure rights. The day prior to the hearing on the motion for relief, Debtor commenced an adversary challenging the validity of the lien on the property and offered $1,000 monthly adequate protection payments. The bankruptcy court determined that the subject property lacked any equity, there had been no progress toward a reorganization, and Debtor had failed to present any evidence that the property was necessary to an effective reorganization. The bankruptcy court granted the Servicer's request to terminate the automatic stay. Debtor's filed a motion for reconsideration on the basis of new evidence to support its opposition. After the hearing, the bankruptcy court denied Debtor's motion for reconsideration on the basis that nothing presented in the motion for reconsideration was new or otherwise could not have been raised in Debtor's prior opposition. Debtor filed a notice of appeal, but only attached the order denying its motion for reconsideration. Therefore, the appeal was limited only to the denial of reconsideration and not the bankruptcy court's prior order granting stay relief.
The appeal relates to a single-family residence in which, prior to the bankruptcy filing, the homeowners' association (HOA) pursued a judicial foreclosure of its statutory lien. A third party purchased the property at the HOA sale. The property was transferred to different entities all managed by a single person. The prior owner commenced a suit seeking to set aside the HOA sale; and, the current purchaser sought a determination whether the HOA's foreclosure sale extinguished the first position purchase money mortgage lien. The court determined that the purchaser took the property subject to the 1st position mortgage lien. A few weeks prior to this ruling, the Debtor filed Chapter 11; and, identified the then-servicer as a "contingent" and "disputed" claim. The Debtor further sought an extension of the exclusivity period, but as of the time in which the motion for relief had been filed, the Debtor had not filed a disclosure statement or Chapter 11 Plan. The Servicer asserted that the property does not have any equity, there had been no adequate protection payments, and the property was not income producing. Therefore, it was not necessary for an effective Chapter 11. The Debtor filed a motion for reconsideration and included a declaration in support that asserted that the property was in the process of being leased and affirmation that the property was necessary.
Honorable Faris, Lafferty, and Taylor, Bankruptcy Judges

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