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June 12, 2015
7th Circuit Court of Appeals holds that auctioning off a lawsuit owned by a Debtor in Bankruptcy placed the claim-buyer ahead of other creditors; it also found that the claim-buyer had not been a "good faith" purchaser, and that no valid interest was impaired by rescinding the sale so the Debtor could pursue its suit...
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The Court stated conclusively that a Debtor in a Chapter 7 Bankruptcy may not void a junior mortgage lien under §506(d) even when the value of the senior mortgage lien exceeds the value of the Debtor's home if the junior claim is secured by a lien and allowed under §502 of the Code.
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