Adam Leitman Bailey, P.C., Wins Rare Order Barring Debtor from Interfering with Competition of Foreclosure Action after only Two Bankruptcy Filings
Adam Leitman Bailey, P.C. was retained by a lender to foreclose a business purpose loan. After successfully prosecuting the foreclosure action and obtaining a judgment of foreclosure and sale, the property was scheduled for auction. On the eve of the foreclosure sale, the borrower filed for bankruptcy, thus invoking an automatic stay on proceedings and preventing the lender from moving forward with the auction.
Adam Leitman Bailey, P.C. is fully familiar with this delay tactic. When a borrower files for bankruptcy for the first time, particularly when a corporate borrower files a bare bones petition, with no schedules or summary of assets and liabilities, the best course of action is generally to wait for the Court to dismiss the petition on its own accord. That is exactly what happened in this case. And, upon dismissal, Adam Leitman Bailey, P.C. re-noticed a foreclosure sale. Like clockwork, the borrower refiled another skeleton petition, without counsel, and Adam Leitman Bailey, P.C. immediately jumped into action.
Adam Leitman Bailey, P.C. brought a motion for in rem stay relief, seeking an order not only vacating the automatic stay to permit the lender to proceed with its foreclosure sale, but also ordering that any future bankruptcy filings would not affect the lender’s rights to the property. In rem stay relief is notoriously difficult to obtain, and the bankruptcy courts typically requires that a lender prove that the borrower has a lengthy history of abusing the bankruptcy process – in rem stay relief is nearly impossible to obtain on a borrower’s second filing.
However, Adam Leitman Bailey, P.C. was not deterred by this high standard. In its motion, Adam Leitman Bailey, P.C. demonstrated to the Court that the borrower’s history of filing bankruptcy petitions on the eve of foreclosure sales and then completely ignoring even basic requirements of the Bankruptcy Code, lead to only one conclusion: the sole purpose of the borrower’s filings was to prevent the lender from lawfully selling the property at a foreclosure auction, thus establishing the bad faith necessary to obtain in rem stay relief.
In opposition to Adam Leitman Bailey, P.C.’s motion and at argument, the borrower had no explanation for Adam Leitman Bailey, P.C.’s detailed documentation of the borrower’s abuse of the bankruptcy process. As a result, the Court had no choice but to grant Adam Leitman Bailey, P.C.’s motion, thus preventing the borrower from filing a future bankruptcy to prevent the lender from holding a foreclosure sale of the property.
Adam Leitman Bailey, P.C. ’s bankruptcy expertise allowed it to achieve a favorable result for its client. Jackie Halpern Weinstein, Esq. and Courtney J. Lerias, Esq. at Adam Leitman Bailey, P.C. incredibly secured this result for the client.