Monday, May 05, 2008

New Southern District Bankruptcy Order on Motion for Relief from the Automatic Stay in real estate cases

Most of our readers probably think of Shenwick & Associates as a debtor bankruptcy firm, but we also have a substantial creditor rights practice. In that area of our practice, the most common motion that creditors use to protect their interests in the debtor's estate is a motion to lift the automatic stay. This is a motion to alter the automatic stay under Bankruptcy Code section 362 to allow the creditor to act against the debtor or the debtor's property, and the filing fee is $150.00. An example of this is a creditor seeking permission to foreclose on a lien because its security interest is not adequately protected.

Effective as of February 7, 2008, the Board of Judges for the Southern District of New York have promulgated General Order M-347, which requires that all motions for relief from the automatic stay under section 362 in cases filed by individuals concerning real property and cooperative apartments must include a completed copy of the "Relief from Stay- Real Estate and Cooperative Apartments" worksheet annexed as an exhibit to the motion. The fillable worksheet can be found on our website here and on the U.S. Bankruptcy Court for the Southern District of New York website here.

The five page worksheet asks for background information, including the address of the property, the name of the lender, the date of the mortgage and post-petition address for payment. Then it continues to ask for debt/value representations, including the total indebtedness of the debtor to the creditor at the time of the motion, the estimated market value of the property and the source of the valuation. It then asks the movant for more detailed information about the debt-a breakdown of the pre-petition and post-petition debt, which includes attorney’s fees, amounts applied to principal, interest, escrow and late fees.

The worksheet also requires exhibits to the motion for relief from the automatic stay:

1. Copies of documents that indicate the movant's interest in the subject property. For example, a complete and legible copy of the promissory note or
other debt instrument together with a complete and legible copy of the mortgage and any assignments in the chain from the original mortgagee to the moving party.

2. Copies of documents establishing proof of standing to bring the motion.

3. Copies of documents establishing that the movant's interest in the real property or cooperative apartment was perfected. For example, a complete and legible copy of the Financing Statement (UCC-1) filed with either the Clerk’s Office or the Register of the county the property or cooperative apartment is located in.

The worksheet closes with a declaration by the moving party that the foregoing information is true and correct based on personal knowledge of books and business records.

In our prior Cooler e-mails, we've written about abuse of the foreclosure process by secured creditors. This order by the Judges of the U.S. Bankruptcy Court for the Southern District of New York appears to be a response to these abuses. Whether you’re looking at bankruptcy from the creditor's or debtor's side, please contact Shenwick & Associates and let us know how we can be of service.

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