The Debtor filed BK at 9:21 a.m. to prevent the foreclosure sale which took place at 10:28 a.m.. At the time of the foreclosure sale, the Borrowers were 42 months (more than 3 years!!) in default and owed over $2 million on the loan. The Creditor filed a motion to annul the stay retroactively. The Court affirmed the Bankruptcy Court decision.
The Court found that the Debtors engaged in unreasonable or inequitable conduct that showed that they were utilizing the bankruptcy process to delay or hinder the creditor.
The moral of the story is don't wait 42 months to file, don't file about an hour prior to the sale and don't be perceived to be greedy.
In re Mendaros
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