You are here

Property Ventures, LLC, Ch. 11 Sub. V, BK20-80750-BSK (Dec. 11, 2020)

The bankruptcy court granted the debtor’s objection to the claim of a creditor holding a promissory note signed by a member of the debtor in his personal capacity. The creditor had also obtained summary judgment against the individual in a state court lawsuit, where the automatic stay prevented the state court from considering the allegations against and defenses of the debtor.

The bankruptcy court found that affidavits filed with the register of deeds and construed as mortgages under Nebraska law did not encumber the debtor’s real estate because they were signed by the borrower in his individual capacity at a time when he was not a member of the debtor. Therefore, the liens are avoidable by the debtor pursuant to § 544.

The state court ruling finding the promissory note secured by the affidavits to be an obligation of the individual borrower is not preclusive on the issue of whether the note was an obligation of the debtor because the debtor’s liability on the note was not litigated or decided, due to the automatic stay. Moreover, the debtor was not a party to the judgment, nor was it in privity with the individual.

Finally, even if the debtor were found to owe the claimant a general receivable, the creditor has not taken timely steps to collect on it, nor has it been acknowledged and reinstated. The claim is stale and unenforceable.

Friday, December 11, 2020
Judge Brian S. Kruse