New Debtor Syndrome

Our firm represented a major secured creditor, a large financial institution, in a debtor’s single asset Chapter 11 bankruptcy case. Our client held a first priority lien on a parcel of commercial real property that was transferred to a newly formed LLC. The LLC shortly thereafter filed a Chapter 11 bankruptcy petition in an attempt to halt our client’s foreclosure sale. We successfully prepared and prosecuted a Motion To Dismiss the debtor’s bankruptcy case based on the New Debtor Syndrome theory, successfully proving that the Debtor LLC was formed in bad faith to isolate the debt owed to our client and to stall the foreclosure sale. Following our successful motion, the Debtor’s bankruptcy case was dismissed and our client was able to exercise its rights and remedies against the real property.