Debtor’s Alleged Ownership Interest in Cannabis-Related Companies Did Not Compel Dismissal of Bankruptcy Case, Rather Than Conversion to Chapter 7

In In re Roberts, the Bankruptcy Court of the District of Colorado held that a debtor’s alleged ownership interest in cannabis-related companies did not require a dismissal of the case and that a Chapter 7 trustee could administer the debtor’s assets. This represents a significant change from prior decisions from this court, which has usually dismissed any bankruptcy case involving cannabis. The decision may be a signal that an alleged investment in cannabis-related companies alone is not an automatic death knell to a debtor seeking bankruptcy relief or prevent a Chapter 7 trustee from administering estate assets.

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California Court of Appeal Invalidates Default Interest Provision on Nonconsumer Loan

The California Court of Appeal recently held that default interest and late fee charges are unlawful when they are assessed against the full outstanding principal balance on a partially matured note, regardless of whether the loan is a consumer or nonconsumer loan. At present, lenders operating in California should be prepared for borrowers to challenge the imposition of default interest applied against the entire unpaid principal balance in the event of a nonmaturity default.

To read the full text of this Duane Morris Alert, please visit the firm website.

Lender Liability Is Alive and Well, As Recent Bankruptcy Case Shows

In Bailey Tool & Mfg. Co. v. Republic Bus. Credit, LLC, the United States Bankruptcy Court for the Northern District of Texas clarified how aggressive a secured lender can be when enforcing its rights. The 145-page opinion details how a lending arrangement went “terribly wrong” and why awarding millions in damages was warranted.

To read the full text of this Duane Morris Alert, please visit the firm website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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