Gordon Rees Scully Mansukhani San Francisco attorney Miguel Saldaña authored an article in The American Bankruptcy Institute's Journal May 2018 issue titled "Buyer's Remorse: How Section 362(d)(4) Facilitates Fraud."
The 2005 amendments to the Bankruptcy Code sought to reduce abusive filings, but one of the new provisions inadvertently created a loophole that facilitates fraud. Section 362(d)(4) grants secured creditors the ability to obtain in rem relief from the automatic stay. However, when a mortgage company, or a third-party buyer, acquires a property after a foreclosure they are the legal owner of the property and as such do not qualify for Section 362(d)(4) relief. The express limitations of Section 362(d)(4) leaves owners in statutory purgatory and conversely allows determined debtors to remain in property they no longer own during the pendency of their bankruptcy case(s). This article analyzes the approach that bankruptcy courts have taken in order to close the loophole.
To read the article in full, please click here.
Miguel Saldaña is an associate in the San Francisco office of Gordon & Rees. His practice is devoted to bankruptcy law, commercial litigation, and drug and medical device litigation. He represents corporate clients in all aspects of litigation.