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

  • "...He’s terrific to work with – a very good negotiator. He is outstanding and not aggressive, which is one of the things I like about him. He is calm, factual, extremely sharp, and observant. He doesn’t miss a beat. On a very complex negotiation, we made a lot of headway due to him."

    -Chambers 2012

  • “They are all excellent attorneys; exceptionally bright, decisive and creative."

    -Chambers 2012

  • “Dwight is a very knowledgeable corporate lending attorney. He seems to have specific competencies around multi-bank and syndicated loans, and is fair and practical. He has a good awareness of not only legal aspects of representing a bank in a commercial loan transaction, but also an awareness of the distinction between legal and business issues and the practical implications of each."

    -Chambers 2012

  • “Our firm has used Burr & Forman, and particularly Logan Hinkle, for our retirement plan and many employment law issues over the years.  I have always found their entire staff of lawyers, paralegals and assistants to be knowledgeable and just as importantly prompt in their response to our questions or concerns.  They have always kept us abreast of changes in the law and suggest changes that we should make in our employment practices, or our retirement plan, to keep current and compliant.  Our relationship has always been professional but at the same time very cordial and respectful.  Our association with Logan and his partners, associates and colleagues has been outstanding.”

    -John D. Humber, Tuscaloosa Radiology

  • “I have had the pleasure of working with Jay Price since 1997.  Over the years, he has provided outstanding representation for the banks I have worked for and continues to make the loan closing process a good experience for both the bank and our borrowers.  Even with the growth of Jay’s practice over the years, he always makes me feel as if I am his only client and always provides me top notch service.”

    -Anonymous