Delta financial liquidating trust
Sections 365(g) and 502(g), the court emphasized, do not actually affect the substance of a claim, but only specify when a given rejection damages claim arises.
Therefore, the court concluded, section 553's preclusion of any Bankruptcy Code provision "affecting" a setoff right under applicable nonbankruptcy law is not meant to apply to sections 365(g) and 502(g).
District Court for the District of Oregon dismissed a borrower's lawsuit against MERSCORP Holdings, Inc., Delta Financial Liquidating Trust, Ocwen Loan Servicing, and HSBC Banks.
In the plaintiff's complaint, the borrower alleged that none of the defendants held an interest in the his property because none of the defendants recorded the transfer of his promissory note in county records when his mortgage was sold by the original lender.
[IMAGE] ""MERS"": the announcement Wednesday for the case _Oliver v. The borrower in the case was actually not in default.
Under the same distribution agreement and the USE Notes, ICX gave TVC a 25-cent discount for each unit it sold.
This discount was credited against the principal owed by ICX under the USE Notes.
In the court ruled that the setoff was appropriate, adopting the majority view on the issue and repudiating a competing (and widely criticized) approach taken by a New York bankruptcy court in its 2006 ruling in In . ." Acreditor is precluded by the automatic stay from exercising its setoff rights without bankruptcy court approval.
Section 553 of the Bankruptcy Code provides, subject to certain exceptions, that the Bankruptcy Code "does not affect any right of a creditor to offset a mutual debt owing by such creditor to the debtor that arose before the commencement of the case under this title against a claim of such creditor against the debtor that arose before the commencement of the case . The stay, however, merely suspends the exercise of setoff pending an orderly examination of the respective rights of the debtor and the creditor by the court, which will generally permit the setoff if the requirements (including mutuality) under applicable law are met, except under circumstances where it would be inequitable to do so. the same as if such claim had arisen before the date of the filing of the petition." This concept is sometimes referred to as the "relation-back rule." Even so, at least one court has determined that section 553 prohibits setoffs involving executory contract rejection damage claims.
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No other court has followed Delta's pronouncements concerning the invalidity of setoffs involving contract rejection claims.