Burr Alert: Rent Assignments in Bankruptcy: An Eleventh Circuit Analysis

August 28, 2012

The Bankruptcy Code1 is designed to protect a debtor from creditor actions while the debtor reorganizes its financial affairs or makes a fresh start. To assist the debtor in its efforts to reorganize, the Code also generally prohibits the creation of any new liens,2 and allows the debtor to acquire new property without the imposition of existing liens.3 A creditor cannot generally attach a pre-petition lien to property acquired after the petition date, which property should be available to the debtor to fund the reorganization. However, Congress carved out an exception to this rule for proceeds, products, offspring, profits, and rents.4 Section 552(b)(2) of the Bankruptcy Code allows a creditor with a perfected security agreement in pre-petition property to also have a security interest in any “amounts paid as rents of such property” after the filing of the bankruptcy petition. If the debtor executed an assignment of rents in conjunction with a mortgage on the property, the lender may have a lien interest or other entitlement in the rents generated from the property during the bankruptcy case, in addition to its mortgage interest in the property.

To read more about this topic, please see full alert below

Download PDF



Legal Disclaimer:
No representation is made that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.
send article

TESTIMONIALS

  • “Ed is good at learning your business and tailoring their work to your need. He is a business-minded lawyer – definitely a leader in our business. If anyone asked me to recommend a firm I’d send them to Ed. He’ll do whatever you need him to do – he works till ten at night and jumps on a place with no notice. He’s just great.”

    -Chambers 2012

  • “Probably the smartest human being to whom I can honestly refer to as a friend. His practice covers securities, banks, investment banking transactions, anything remotely financially related, personal financial investments as well. He is just smart as hell and has a mastery of a fairly wide array of disciplines which is a little unusual. He has the mental capacity to go beyond that. He is also one of the first guys I call.”

    -Chambers 2012

  • “A strong lawyer…"

    -Chambers 2012

  • "Burr & Forman has a good knowledge of the law and application to business situations."

    -Best Lawyers 2012

  • "...An effective lawyer, a good and smart guy…"

    -Chambers 2012