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Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized pre-petition or may hold such property until such time as the debtor seeks, and obtains, an order of turnover. In June, the U.S. Court of Appeals for the Seventh Circuit weighed in and decided four appeals involving chapter 13 debtor filings following the City of Chicago’s seizure of vehicles based on unpaid fines. See, In re Fulton, 2019 U.S. App. LEXIS 18393 (7th Cir. 2019). In Fulton, the Seventh Circuit ruled that the City of Chicago must comply with the automatic stay by returning impounded cars immediately after being notified of a chapter 13 filing. (The Fulton decision is not the first time the Seventh Circuit decided the issues presented. In 2009, the court held that a creditor must comply with the automatic stay and return a debtor’s vehicle upon her filing of a bankruptcy petition. See, Thompson v. General Motors Acceptance Corp., 566 F.3d 699 (7th Cir. 2009)).
By Jun Kwon
The Financial Accounting Standards Board released a new set of lease accounting standards, ASC 842, which went into effect earlier this year. Most significantly, publicly traded companies are now obligated to list all leases of 12 months or longer on their balance sheets as both assets and liabilities. Large private companies will follow suit in 2020.
By Howard A. Levine
Further comment and analysis is warranted on the three-judge dissent, which, if adopted by the majority, would have fundamentally altered the very foundation of New York contract law.
By Janice Inman
Defense Based on Federal Law Cannot Confer Federal Jurisdiction
By James O’Brien
Part Two of a Two-Part Article
Part One of this article outlined the basic elements of a subordination, non-disturbance and attornment agreement (SNDA), which regulates two competing interests in the same property — tenant’s right to possess its premises pursuant to its lease and mortgage lender’s security interest in that same premises. Part Two explains the differences between the concepts of “non-disturbance” and “recognition,” while contending that lease recognition is more important to the tenant than not having its possession disturbed.