Page 8 - Corporate Restructuring & Bankruptcy

S8 | MONDAY, MARCH 3, 2014 | Corporate Restructuring & Bankruptcy | NYLJ.COM

CK
TO
BIGS

Delusions
Debtors’ of Bankruptcy

and minimize the misuse of the reorganiza- county tax authority held the tax deeds to the original redemption date (under Bank-
BY LESLIE BERKOFF
tion process.2
the parcels and was the legal owner of the ruptcy Code §108 it is the later of the time
Several cases that have crossed the under- same. See In re Plover Development, Bank- periods). However, for some unknown rea-
B ankruptcy is intended to provide debt- signed’s path (directly or by word of mouth) ruptcy Case No. 12-35579, District of New son the debtor never even attempted to
ors with the opportunity of a fresh start have simply been remarkable wastes of time Jersey (Newark). There were no other real work within these deadlines, instead they
by modifying their debt obligations, but
for our judiciary and generated unnecessary creditors in the case. Undoubtedly, it was iled an order to show cause to effectuate a
the downturn in the economy and the real legal fees that needed to be paid by the credi- the impending expiration of the redemp- sale of the property, but all of the hearings
estate market has spurred a number of il- tors. These examples manifest at their core a tion period (governed by state statute)—as were scheduled after all of the original and
ings that can only be described as desperate misunderstanding of how the process should opposed to an honest intent and genuine extended redemption periods had expired.
4
bankruptcy petitions iled by entities hoping work and when bankruptcy truly can assist belief that a restructuring under Chapter Arguably, once the period expired, the coun-
for a “miracle.” See In re RYYZ, 490 B.R. 29, a debtor. What follows is a highlight of just a 11 of the Bankruptcy Code was likely—that ty could no longer even accept payment for
33-34 (Bankr. E.D.N.Y. 2013). While not every few cases that demonstrate how the failure precipitated the debtor’s iling of that case. the parcels under the state statute.
case can be successfully restructured, despite to appreciate the law and the impact of a The redemption period for 10 of the parcels In Plover Development, the debtor’s only
the good intent of many debtors, ilings must iling can lead to nothing more than delay, was set to expire on the date of the iling saving grace was that, based upon the rep-
still be made in good faith.1 However, these wasted resources and, at times, disaster for of the bankruptcy case and the redemp- resentation that the debtor had a buyer that
baseless and ultimately futile bankruptcy il- the debtor.
tion period for the remaining three parcels would pay the full redemption amount, the
ings continue to occur despite the previous In late 2012, a filing took place in New was set to expire a short time thereafter. Bankruptcy Court offered the debtor a few
attempts by Congress to set some parameters
Jersey by a debtor that owned no assets in By virtue of Bankruptcy Code §108(b)(ii), days respite to consummate the sale (which
New Jersey,3 and instead owned (at best) an a short extension of two months of the irst admittedly would have been to the beneit
interest in a right to redeem 13 parcels of land redemption period was effectuated, while of the creditor). Unfortunately, this dead-
is a partner of Moritt Hock & Hamrof.
located in the Midwest for which the local
the remaining three parcels maintained
line also came and no deal transpired. The
LESLIE BERKOFF