Home > Insights > Blogs > Credit Report

Credit Report

Credit Report

(By accessing, browsing or using the pages below, you agree to the Blog Conditions of Use/Disclaimer available under "Links.")


Chapter 12 family farmer cases in Missouri: A look inside the numbers

David Warfield September 27, 2016
father-son-farm-650x510 (2)

Many agriculture experts predict increased distress for farmers in the near term, so it is natural to speculate whether Chapter 12 will play an increased role in the future. In fact, Chapter 12 filings nationwide were about 28% higher in the first six months of 2016 than in the comparable period in 2015. READ MORE

Valuation of affordable housing projects in bankruptcy – a muddied landscape

Mark Bossi September 22, 2016
Credit Report_default blog

A divided panel of the 9th Circuit Court of Appeals recently held that rent restrictions should not be considered when valuing a secured creditor’s interest in an affordable housing project that the debtor proposes to retain under a plan of reorganization. READ MORE

Supreme Court’s discharge exception ruling gives creditors more options

Brian Hockett June 3, 2016

In Husky Int'l Elecs., Inc. v. Ritz, the U.S. Supreme Court recently determined that the nondischargeability of debts under 11 U.S.C. § 523(a)(2)(A), which prohibits discharge of debts “obtained by . . . false pretenses, a false representation, or actual fraud,” does not require a false representation. The “actual fraud” exception to a bankruptcy discharge includes other traditional forms of fraud, including fraudulent conveyances that do not necessarily include a representation by the debtor or reliance by the creditor. READ MORE

7 things you should know about the new Missouri Commercial Receivership Act


On May 10, 2016, the Missouri General Assembly passed the Missouri Commercial Receivership Act (MCRA), providing for significant changes to Missouri’s law on receiverships. Assuming that Governor Nixon signs the bill (which is almost certain), the law will become effective later this year. The significant changes to the Missouri receivership law in the MCRA are as follows, READ MORE

U.S. Supreme Court unable to decide whether ECOA protects spousal guarantors

Jeff Fink March 22, 2016

The United States Supreme Court was poised to finally resolve this issue, but the death of Justice Antonin Scalia prevented the Court from doing so. On March 22, 2016, the Supreme Court was divided 4-4 in a case where the lower appellate court had ruled that spousal guarantors are not protected by the ECOA. READ MORE

The government gets paid first: The surprising reach of the Federal Priority Act

Claire Schenk June 1, 2015

No matter your industry or line of business, insolvency is not a pleasant process. But it may surprise even a seasoned corporate attorney when one debtor in particular comes calling: The federal government. The law that makes it possible — and pushes Uncle Sam to the front of the creditor line — is the Federal Priority Act. READ MORE

Deprizio waivers in bankruptcy cases: Valid, or a sham?

May 15, 2015
Credit Report_default blog

The Ninth Circuit Court of Appeals in In Re Adamson Apparel, Inc. became the first appellate court to address the validity of “Deprizio waivers.” In Adamson, the court held that because the Deprizio waiver was not a “sham” provision, the insider was not a creditor of the debtor that could be subject to a preference action. The decision carved out a fact-based avenue for analysis that will likely lead to increased litigation across the country on the issue of Deprizio waivers. READ MORE

Reinstatement of a LIHTC LURA following foreclosure

Mark Bossi April 14, 2015

Often the lender would like to preserve the property as a LIHTC property and take advantage of the value of any remaining tax credits. The lender usually accomplishes this result by either reinstating the existing LURA following the foreclosure sale or encumbering the property with a new LURA. READ MORE

LIHTC exit strategies: Foreclosure

Mark Bossi April 7, 2015

A lender’s ultimate remedy for dealing with a distressed and over-leveraged LIHTC project is to foreclose on the project. Foreclosure is the primary unilateral remedy that may be undertaken by a lender and will generally be the remedy against which a negotiated restructuring will be measured and evaluated. READ MORE

LIHTC exit strategies: Right-sizing the loan

Mark Bossi March 30, 2015

The most logical long-term solution for a distressed and over-leveraged LIHTC project is a negotiated re-structuring or “right-sizing” of the debt owed to the lender. Such a right-sizing may be accomplished by a repayment of debt by the borrower and investors, a forgiveness of debt by the lender or a combination of both. While in theory this is the most logical solution, just like any settlement, it depends upon the parties’ positions. READ MORE

LIHTC exit strategies: Loan sale

Mark Bossi March 17, 2015

Because there is currently a very robust market for distressed debt, a lender's first option for dealing with any non-performing loan is often to look to sell the loan. This post addresses the unique considerations and difficulties involved in the sale of a loan secured by an LIHTC project. READ MORE

Eight things we learned from the Detroit bankruptcy

David Warfield February 10, 2015

At the beginning of the case, no one predicted that the city would emerge from bankruptcy so quickly — only about 18 months — or that the final Plan of Adjustment would enjoy such widespread support among creditors and politicians. What can we learn from the largest municipal bankruptcy ever? READ MORE

Getting the house in order: The early stages of a LIHTC workout

Mark Bossi February 4, 2015

While these ultimate outcomes are the same as those involving workouts of market-rate properties, there are unique issues that must be addressed and analysis that must be undertaken in determining which outcome is the most appropriate in a LIHTC workout. In this post, we will explore how a lender should use the early stages of a workout to better its position, analyze its alternatives and select the best workout or exit strategy. READ MORE

Debtor-trustees can run but they can’t hide behind the Fifth Amendment

February 2, 2015

Judgment debtors often try to use the Fifth Amendment’s privilege against self-incrimination to avoid post-judgment discovery of their assets and income. However, the U.S. District Court for the Eastern District of Missouri ruled last year that when the judgment debtor is a trust, neither the trust nor its individual trustees may invoke the privilege against self-incrimination, and the trust must comply with post-judgment discovery. The decision is important for banks and other creditors because individuals often hold their assets in trusts. READ MORE

The valuation process for LIHTC projects in financial distress: Part II

Mark Bossi January 14, 2015

Today, we’ll dive deeper into how an appraiser might approach a valuation, and some concerns that courts have raised about the valuation process for these types of redevelopment projects. What does a typical LIHTC appraisal look like? A comprehensive LIHTC appraisal covers four separate valuation scenarios. READ MORE

The valuation process for LIHTC projects in financial distress: Part I

Mark Bossi January 12, 2015

In any workout or bankruptcy, it is important to understand the value of a lender’s collateral, because the value of the collateral will largely determine the amount of the lender’s recovery. This is particularly true in a workout or bankruptcy involving an LIHTC project because under the federal LIHTC program, once a project is placed into service, all senior debt of the project owner must be non-recourse to the partnership and its partners. READ MORE

What are the unique dynamics of a low-income housing tax credit workout?

Mark Bossi December 2, 2014

In the still-developing area of low-income housing tax credit workouts and bankruptcies, secured lenders may feel relatively powerless. But armed with knowledge concerning several key leverage points, a lender can better protect its interests and negotiate an advantageous outcome of a troubled loan. READ MORE

Low-income housing tax credit workouts and bankruptcies: Understanding the basics

Mark Bossi November 14, 2014

This post is the first in a continuing series on the Credit Report Blog on the subject of workouts and bankruptcies involving low-income housing tax credit (LIHTC) projects. Our upcoming blog posts will discuss specific issues unique to LIHTC project workouts and bankruptcies. READ MORE

Sixth Circuit rules cows can be leased

David Warfield September 5, 2014

Can you really lease a cow? According to the Sixth Circuit, the answer is “yes.” In fact, the legal and practical issues of cattle leasing were clearly illustrated in a recent decision from the Sixth Circuit, Sunshine Heifers, LLC vs. Citizens First Bank (In re Purdy). READ MORE

Creditors: Delete a discharged debt from a credit report or face possible liability

July 29, 2014

A typical lender is often managing tens of thousands of accounts of all different types and in various states of financial health. So what happens when a lender, for whatever reason, fails to update credit reporting agencies about the status of a debt discharged in bankruptcy? In a recent case from the U.S. Bankruptcy Court for the Southern District of New York, a major creditor is now exposed to liability for violating a discharge injunction. READ MORE

U.S. Supreme Court’s decision in Clark won’t impact inherited IRAs of Missouri residents

David Warfield June 17, 2014

A debtor may shield from collection by creditors assets that the debtor holds in Individual Retirement Account (IRA). However, as more IRA owners die with substantial assets remaining in their accounts, a new question has arisen: Can a debtor exempt an IRA that she inherited from someone other than her spouse? READ MORE

New value defense preserved for three-party transactions

Brian Hockett April 4, 2014

New value is an important defense to preference liability under the Bankruptcy Code. In a very important decision, the Eighth Circuit recently addressed how the new value defense to preference liability should be applied in three-party payment arrangement. READ MORE

Fisker bankruptcy update: Should secured creditors really be concerned?

February 28, 2014

The opinion by the Delaware bankruptcy court in In re Fisker Auto. Holdings, Inc., raised alarm bells for secured creditors throughout the country. Many worry that it will diminish the valuable right of secured creditors to credit bid, READ MORE

Mortgage buyer’s thin paper trail sufficient to avoid summary judgment in borrowers’ favor

Jeff Fink January 16, 2014

Disastrous results can befall a financial institution that buys a mortgage loan but does not obtain or keep adequate documentation related to the purchase. Yet over the past several years, many mortgages have exchanged hands with little-to-no supporting documentation. As recent cases have shown, deficient documentation has often caused headaches for financial institutions when they try to foreclose. READ MORE

Missouri court rules jury waiver applies here, there, and everywhere

November 15, 2013

What happens when one loan document contains a jury waiver but another doesn’t? For the lender, all may not be lost. That was another important holding from the Missouri Court of Appeals Western District in Midland Property Partners, LLC v. Richard Watkins. READ MORE

Want to recover attorneys’ fees in Missouri? Make sure you use the magic words

November 8, 2013

It has been the longstanding rule in Missouri that a litigant may recover his attorneys’ fees and costs from the losing party if the underlying contract expressly authorizes the award of attorneys’ fees. But Missouri courts take very seriously the requirement that attorneys’ fees be expressly authorized. READ MORE

Lien for jointly-owned property may be invalid if only one spouse signs deed of trust

Jeff Fink October 23, 2013
Signing Documents

Occasionally mortgage lenders require only one spouse to sign a deed of trust (or mortgage) and allow the other spouse to sign a separate document consenting to the loan transaction. But, as a Missouri appellate court ruled recently, this practice could leave the lender with an invalid lien if both spouses own the property. READ MORE

Receivership reforms, part four: Borrowing from the Bankruptcy Code

David Warfield September 18, 2013

Bankruptcy cases frequently take too long and are too expensive, thereby delaying and reducing recoveries to creditors. By borrowing the best parts of the Bankruptcy Code and avoiding some of its more litigious parts, a new receivership statute will, in certain types of cases, permit a more efficient redeployment of distressed corporate assets to productive uses. READ MORE

Receivership reforms, part three: Creditors’ rights and priority of claims

David Warfield September 17, 2013

A receivership can affect the rights of many others who are not parties to the litigation, such as employees, creditors, and business partners. Although some old cases, recognize the ability of creditors to file claims against receiverships, there is no uniform procedure to account for the claims of creditors and otherwise protect the rights of non-parties. READ MORE

Receivership reforms, part two: Establishing and empowering receivers

David Warfield September 16, 2013

Many modern statutes recognize two basic types of receiverships. The first, called a “limited” or “custodial” receivership is one where the receiver is appointed to hold specific identified property pending a more complete resolution of the respective parties’ rights in the property. The second, called a “general” receivership, involves all assets of the entity with the stated purpose of selling or liquidating the entity. READ MORE

Why Missouri’s receivership law is due for reform

David Warfield September 13, 2013

Missouri receivership law, however, is largely unchanged from the 19th Century and is simply inadequate in several respects to address all the issues raised by the liquidation of a modern business. A few states around the country have recently updated their own receivership laws, and Missouri should follow suit. READ MORE

New Missouri law bans local efforts to mandate foreclosure mediation

Cheryl Kelly September 5, 2013

As a result of recent legislation, local Missouri governments are precluded from establishing procedures for servicing or enforcing mortgage loans that contradict state or federal laws governing these matters. READ MORE

New credit agreement language goes into effect in Missouri on August 28

David Warfield August 16, 2013

Lenders dealing with Missouri borrowers should be aware of a small, but very important, change in Missouri law regarding credit agreements that becomes effective on August 28, 2013. READ MORE

Consider litigating spousal guaranties in federal court to avoid the Equal Credit Opportunity Act

Jeff Fink April 30, 2013

If the Equal Credit Opportunity Act is violated, the spousal guaranty may be void or, even worse, the financial institution may face liability. In Missouri and Illinois, whether the ECOA applies to a spousal guaranty depends on whether the financial institution attempts to enforce the spousal guaranty in federal or state court. READ MORE

Keep rejected loan applicants in the loop or face possible punitive damages

Jeff Fink April 18, 2013

If a bank has approved a loan application but later changes its mind, it should promptly advise the loan applicant; otherwise, the bank may face liability for punitive damages. This was the lesson in Bailey v. Hawthorn Bank before the Missouri Court of Appeals Western District. READ MORE

Ownership of Chapter 11 debtors can’t be retained without competition and credit bidding

Jeff Fink April 15, 2013

Owners of Chapter 11 bankruptcy debtors have long devised schemes to try to hold on to their ownership interests while stiffing the debtors’ creditors. In the past, owners attempted to do this by proposing reorganization plans that paid creditors only a portion of what they are owed while selling all of the equity in the reorganized debtor to the owner for a nominal new investment. READ MORE

Internal bank documents can satisfy written credit agreement requirement of Missouri Credit Agreement Act

Jeff Fink April 9, 2013

In a recent case, the Missouri Court of Appeals ruled that the Missouri Credit Agreement Act’s requirements can be satisfied by internal bank documents that indicate that the bank has agreed to make a loan even if the documents are never shared with the loan applicant. READ MORE