News + Insights

Wire-Fraud, Data Breach, and Phishing: A Live Action Role Play for In House Counsel

Written By Angela P. Doughty, CIPP/US, AIGP and X. Lightfoot

What the "Biggest Holiday Inn in the World" Can Teach Us About Default Interest in Bankruptcy

Written By Lance P. Martin

When a borrower triggers a monetary default under a loan by failing to make required payments, most loan documents allow the lender to accelerate the loan and invoke a default interest rate and penalties. But what happens…

Ward and Smith: Our Highlights of 2023

Written By Laura V. Hudson

As we reflect on the past year, it's evident that 2023 has been remarkable for Ward and Smith. We've welcomed new team members, launched new practice groups, and been recognized in some pretty rare air, if we do say so ou…

Economic Growth and Disclosure Laws: Financial Insights From the Annual Factoring Conference

Written By Thomas C. Wolff

Recently, I had the privilege to attend the 29th Annual Factoring Conference in New Orleans. This annual conference is a unique event presented by the International Factoring Association (IFA), which caters to lenders and …

Seeking Shelter: Recession Implications for your Organization

Written By Matthew A. Jones

In an interactive discussion led by Hank Harris, Director of Consulting for Ward and Smith Business Consulting, three attorneys shared their thoughts on the current state of the economy and how business owners can prepare …

The Case of the Inexcusably Ignorant Refinance Loan

Written By Lance P. Martin

A recent decision from the North Carolina Court of Appeals illustrates the wrong way to refinance a loan.  In Midfirst Bank v. Brown, a refinancing lender cancelled a deed of trust that should have been assigned to i…

Cyber Threats, Creativity, and Growth: Recapping the 2022 Annual Factoring Conference

Written By Thomas C. Wolff

Last month, I attended the 28th Annual Factoring Conference presented by the International Factoring Association (IFA) in Boston.  This is the world's largest conference of its kind, dedicated solely to banks, l…

A Paradigm Shift in Consumer Collections: How the CFPB's Final Rule is Certain to Affect Creditors and Debt Collectors

Written By Thomas C. Wolff

The Fair Debt Collection Practices Act (FDCPA) is a dense federal statute that governs debt collection.  If you have read some of my previous articles on the topic, you will recall that this set of laws, in conjuncti…

Pushing the Limits: Nielson v. Schmoke Clarifies the Outer Limits of Domesticating Foreign Judgments

Written By Thomas C. Wolff

The North Carolina Court of Appeals issued a decision recently, providing clarity on how much time creditors have to domesticate a foreign judgment to North Carolina.  While the current statutory framework may appear…

So You Have A Judgment… Now What?

Written By Tyler J. Russell and Thomas C. Wolff

In North Carolina, many lawsuits result in the entry of a judgment that establishes one party's right to collect payment of a certain amount of money from another party.  It may be easy to view the entry of judgment …

To Encourage Landlords to Work with Struggling Tenants, Congress Removes a Powerful Weapon Wielded by Bankruptcy Trustees

Since the COVID-19 pandemic began, many tenants have seen their revenues plummet or disappear entirely as a result of state and local regulations on whether they could operate, when, and at what capacity.  Many comme…

Supreme Court to Secured Creditors: "Hold on Loosely, But Don't Let Go."

Written By Lance P. Martin

Filing a bankruptcy petition automatically halts efforts to collect prepetition debts from the debtor outside of bankruptcy.  This "automatic stay" is a command to halt action, and creditors violate it at their own p…

The North Carolina Commercial Receivership Act: What Creditors Need to Know About the New Statute

Written By Thomas C. Wolff

On July 1, 2020, Governor Cooper signed the North Carolina Commercial Receivership Act (the "Act") into law.  The Act, spearheaded by the Bankruptcy Section of the North Carolina Bar Association, takes effect on Janu…

Executives Explore the Ins and Outs of Managing Vendors and Vendor Risk in Compliance-Intensive Industry

Written By Hayley R. Wells

Three executives from First Citizens Bank explained how they manage vendor and supplier relationships, including issues such as risk management and compliance, during a panel discussion at the 2019 Ward and Smith In-Hous…

Economic and Financial Uncertainty: How a Homeowners Association Can Protect Itself

Written By Tyler J. Russell and Thomas C. Wolff

In a short period of time, COVID-19 has changed the way we live and conduct business.  Sadly, the pandemic seems as though it will cause (or already has caused, depending on who you ask) a devastating impact on our l…

The CARES Act Provides Additional Relief to Consumer Debtors in Bankruptcy

Written By Thomas C. Wolff

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020.  The CARES Act provides relief for the widespread economic hardship caused by the coronavirus ("COVID-19").  Al…

For Existing SBA Loans, the SBA Will Make Your Payments for Six Months

Written By Lance P. Martin

While much of the focus of the CARES Act has been on the Paycheck Protection Program, which allocates $349 billion for new SBA loans to cover qualified expenses, the Act contained a key provision related to existing SBA lo…

CARES Act Raises Small Business Bankruptcy Debt Ceiling to $7,500,000

Written By Lance P. Martin

We previously informed you that if you are a small business that needed to file bankruptcy to save your company, then you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.  The new s…

SBA Allows Scanned Copies of Documents During COVID-19 Crisis

Written By Lance P. Martin

The SBA permits SBA Lenders to use electronic signatures on SBA forms and other documents requiring signatures on 7(a) and 504 business loans provided they comply with Standard Operating Procedure 50 10.  But with so…

Understanding the New "Fast-Pass" Small Business Bankruptcy Process

Written By Lance P. Martin

With COVID-19 and the attempts to contain it causing cataclysmic business interruption, many small businesses may find themselves on the brink of insolvency.  While we hope that lenders, landlords, suppliers, and fed…

Servicing SBA Loans During the COVID-19 Crisis

Written By Lance P. Martin

With COVID-19 shutting down whole swaths of the economy, the SBA has issued a notice to SBA 7(a) Lenders and 504 Certified Development Companies (CDCs), reminding them of their unilateral authority to provide borrowers wit…

Federal Regulators Urge Banks to Work with Borrowers Affected by the Coronavirus

Written By Lance P. Martin and Thomas C. Wolff

In the last week, COVID-19 has upended the normal routines of daily life in America.  While the health and safety of all Americans is the paramount concern, the economic impact is a reality that cannot be ignored. On…

Can a Creditor Violate the Automatic Stay in Bankruptcy by Doing Nothing?

Written By Lance P. Martin

Filing a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.  If a creditor wants to continue a lawsuit against a debtor outside of bankruptcy, reposse…

Supreme Court Rules "Now or Never" to Appeal Stay Relief Denials

Written By Lance P. Martin

Under the Bankruptcy Code, filing a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.  This is the "automatic stay," and it is a command, not a sugge…

Harley-Davidson Dealer Violates Automatic Stay, Goes from Creditor to Judgment Debtor

Written By Lance P. Martin

If you lend money, you know – or should know – it is a cardinal sin to collect a debt or repossess collateral after a borrower files bankruptcy.  Bankruptcy triggers the automatic stay – a command, …

Finishing the Job: The Importance of Domesticating a Foreign Judgment

Written By Thomas C. Wolff

How does a creditor enforce a judgment against a debtor who either relocates to another state, or owns property in another state?  If the judgment is not paid and satisfied, can the creditor follow the judgment-debto…

Is it Time to Re-Write Your Attorney's Fees Provision?

Written By Lance P. Martin

Bankruptcy court is not the first place that comes to mind when a lender thinks about full recovery on a loan.  Usually, debtors file bankruptcy because they can't pay all their creditors in the ordinary course of bu…

How to Write an Effective SBA Litigation Plan

Written By Lance P. Martin

When an SBA loan goes into default, the SBA requires a lender to commence litigation when the lender concludes that (1) defensive action is necessary to protect the collateral or ability to collect from the obligor or (2) …

New Law More than Doubles Chapter 12 "Family Farmer" Debt Limit

Written By Lance P. Martin

On Friday, August 23, 2019, the President signed into law the Family Farmer Relief Act of 2019.  The Act increases the debt limit used to determine whether a family farmer is eligible for relief under Chapter 12 of t…

What Happens to My Lease in Bankruptcy?

Written By Lance P. Martin

Suppose you own farmland or retail commercial space and you lease your property.  What happens to your lease if the lessee files bankruptcy?  And what must be done if your lessee wants to continue to honor your …

Supreme Court: Rejection of a Trademark License by a Bankrupt Licensor Doesn't Terminate the License

Written By Norman J. Leonard

What happens if you are a trademark licensee and your licensor files for bankruptcy protection?  Can the licensor unilaterally terminate your license and prohibit you from using the license – even if you're in …

Supreme Court Sets Standard for Bankruptcy Discharge Violations

Written By Lance P. Martin

When your customer is in bankruptcy, there are two major no-nos that you must remember.  First, don't violate the automatic stay, which prevents a creditor from attempting to collect a debt while the debtor is in ban…

Fourth Circuit Provides Relief to Chapter 13 Debtors for Some Underwater Mortgages

Written By Lance P. Martin

In a victory for Chapter 13 debtors, the United States Court of Appeals for the Fourth Circuit recently issued a major decision that changes the way bankruptcy courts in North Carolina will deal with certain home mortgages…

Bankruptcy Discharge of Debts for Willful and Malicious Injury

Can a debtor discharge a debt arising out of a deliberate or intentional act that causes injury to you?  A recent article addressed the general issue of discharging debts in bankruptcy and various grounds for excepti…

Will My Judgment Get Discharged in Bankruptcy?

Written By Lance P. Martin

Bankruptcy is meant to provide a fresh start for the honest but unfortunate debtor.  A debtor who files Chapter 7 does so with the presumption that all his or her debts will be forgiven or "discharged." But what abou…

Can I Get Sued Over a Court-Authorized Foreclosure?

Written By Lance P. Martin

If a Clerk of Court authorizes a foreclosure sale and the trustee sells the property, can a borrower or other aggrieved party later sue to nullify the foreclosure sale or recover damages caused by the foreclosure?  I…

Are the Bankruptcy Courts Available for the Cannabis Industry?

Written By Lance P. Martin

Since 2012, ten states and the District of Columbia have legalized marijuana for adult recreational use.  Another 23 states have legalized some form of medical marijuana use.  At the federal level, the Agricultu…

Can I Recover Attorneys' Fees in Bankruptcy?

Written By Lance P. Martin

The United States Court of Appeals for the Fourth Circuit — which covers federal courts in North Carolina — recently handed a big victory to lenders whose borrowers file for bankruptcy protection.  In Sum…

When a Chapter 11 Plan is Absolutely Dead on Arrival

Written By Lance P. Martin

Recently, we discussed In re CHL, a case involving a real estate developer in Chapter 11. We focused on the importance of the Disclosure Statement as a prerequisite to a debtor's ability to move forward with a plan of reo…

You Can't Play Hide-And-Go-Seek in Chapter 11

Written By Lance P. Martin

In a Chapter 11 bankruptcy, the debtor attempts to reorganize its affairs in a Chapter 11 Plan.  When the debtor files its proposed Plan, it must also file a Disclosure Statement providing creditors and claimants wit…

Will Bankruptcy Courts Treat Bitcoin as a Commodity?

Written By Lance P. Martin

What is virtual currency?  Is it money?  Is it a commodity?  Is it a hybrid of the two or something else entirely?  The answer to the question has profound implications for lenders seeking to secure lo…

I Want to Foreclose But I Can't Find My Note. Do I Have a Problem?

Written By Lance P. Martin

In my last article, I discussed whether inconsistent dates on a promissory note and deed of trust could cause problems in foreclosure. But what if you can't even find the original promissory note?  Perhaps it was ina…

Lenders: Take a Hint! Forbearance or Modification Agreements Should Contain Specific Waiver Language To Protect Against “Regulation B” Claims

Written By Michael J. Parrish

Lenders must comply with a constantly changing series of State and Federal laws and regulations. When loan relationships sour, and lenders seek to collect, borrowers and guarantors may allege the lender has violated some …

Should You Bank a Virtual Currency Business?

Written By Lance P. Martin

Virtual currencies like Bitcoin and Ethereum have spawned many types of businesses that need banking services.  Many banks "de-risk" -- do not provide banking services -- to these businesses.  Many virtual curre…

My Note and Deed of Trust Have Different Dates. Do I Have a Problem?

Written By Lance P. Martin

Consider this scenario:  You loan money to a borrower. You intend to secure the loan with a deed of trust encumbering real property.  Your borrower signs a promissory note dated November 7, 2006.  But your …

In Chapter 7, Oral Lies Are Safer Than Written Lies

Written By Lance P. Martin

In my last article, I discussed how the Fourth Circuit Court of Appeals affirmed the denial of a Chapter 7 debtor’s discharge because the debtor intentionally lowballed the value of his interest in a real estate inve…

In Chapter 7, Lowballing Your Assets Can Cost You Your Bankruptcy Discharge

Written By Lance P. Martin

The United States Court of Appeals for the Fourth Circuit—which covers North Carolina—recently decided a case that will have bankruptcy debtors thinking twice about how they complete their bankruptcy Petition a…

Can I Secure a Loan with Bitcoin? Part III

Written By Lance P. Martin

In my previous articles, I discussed the challenges of using Article 9 of the Uniform Commercial Code ("UCC") to create and perfect a security interest in virtual currency like Bitcoin, Ethereum, or Litecoin. I also discus…

Look Before You Sign … the Pitfalls of Personal Guaranties

Written By Thomas C. Wolff

Limited liability protections afforded by various corporate, limited liability, or limited partnership laws normally insulate business owners from personal liability for their business's debts. However, lenders routinely …

Can I Secure A Loan with Bitcoin? Part II

Written By Lance P. Martin

In my previous article, I discussed the challenges of using Article 9 of the Uniform Commercial Code ("UCC") to create and perfect a security interest in virtual currency like Bitcoin, Ethereum, or Litecoin. (I use &ldquo…

Can I Secure a Loan with Bitcoin? Part I

Written By Lance P. Martin

Each day seems to bring another story about Bitcoin, Ethereum, Litecoin, or another virtual currency. If virtual currencies continue to grow in popularity, it's only a matter of time before borrowers offer to pledge virtu…

Winning While Losing with Attorneys' Fees Provisions

Written By Lance P. Martin

The United States District Court for the Middle District of North Carolina recently issued a decision that demonstrates the power of attorneys’ fees provisions in promissory notes and guaranty agreements. In TD Bank …

Individual Chapter 11 Plans Also Are Just About Written in Stone

Written By Lance P. Martin

In an article last year, we informed you about a ruling from the United States Bankruptcy Court for the Eastern District of North Carolina, in In re Royal, holding that debtors seeking modification of a confirmed Chapter 1…

New Bankruptcy Rules that Creditors Need to Know and Follow

Written By Lance P. Martin

On December 1, 2017, several changes to the Federal Rules of Bankruptcy Procedure took effect. The changes involve consumer cases under Chapter 13 and affect creditors with secured claims, unsecured claims, and judgment li…

In Bankruptcy, a Lease Isn't Always a Lease

Written By Lance P. Martin

In In re Price, the United States Bankruptcy Court for the Eastern District of North Carolina recently explored the difference between a “true” lease of personal property and “disguised” financing.&…

Your Foreclosure Hearing Just Got More Crowded

Written By Lance P. Martin

On August 30, 2017, an amendment to North Carolina’s foreclosure statutes took immediate effect.  The amended statute, Section 45-10, concerns substitute trustees under a deed of trust.  As amended, Section…

600,000 Reasons to Comply with the Fair Credit Reporting Act

Written By Lance P. Martin

The United States Court of Appeals for the Fourth Circuit—which covers federal courts in North Carolina—recently affirmed a borrower’s victory against a loan servicer under the federal Fair Credit Reporti…

The Section 363 Sale Process: Buying Assets from a Bankrupt Company

Written By Paul A. Fanning and Tyler J. Russell

Businesses struggle and bankruptcies are filed for a number of reasons, regardless of the economic climate.  While unfortunate, this provides opportunities for others to purchase assets of distressed companies through…

Federal Tax Liens In Foreclosure Proceedings

Written By Lance P. Martin

Henkel v. Triangle Homes is a North Carolina Court of Appeals case with dueling tax foreclosure proceedings involving the same property.  One foreclosure proceeding was for unpaid municipal taxes and the other for unp…

North Carolina Supreme Court Holds That Liberal Standard of Notice Pleading Applies to Judicial Foreclosure Actions

Written By Lance P. Martin

In an important decision for creditors, the North Carolina Supreme Court recently clarified the distinction between judicial foreclosure and non-judicial foreclosure by power of sale.  In U.S. Bank v. Pinkney, the Sup…

What NC Community Associations Need to Know about Fair Debt Collection

Written By Norman J. Leonard

Nearly all Community Associations ("Associations") must cope with owners who fail or refuse to pay their periodic assessments (also known as "Dues").  When this happens, the Association, typically acting through its p…

North Carolina Supreme Court Adopts "Substantial Competent Evidence" Requirement for Borrowers Asserting "True Value" Defense in Foreclosure Deficiency Actions

Written By Lance P. Martin

On Friday, May 5, 2017, in a major victory for lenders, the North Carolina Supreme Court reversed the North Carolina Court of Appeals’s decision in United Community Bank v. Wolfe.  In July 2015, the Court of App…

Supreme Court Absolutely Affirms the Absolute Priority Rule

Written By Lance P. Martin

The United States Supreme Court recently decided a case that impacts lenders and other creditors in Chapter 11 bankruptcy proceedings.  The Supreme Court held that a bankruptcy court may not approve a “structure…

Fourth Circuit Hands Victory to Lenders in Chapter 13 Mortgage Case

Written By Lance P. Martin

The United States Court of Appeals for the Fourth Circuit—which covers federal courts in North Carolina—recently handed a victory to residential real estate lenders dealing with borrowers who file for Chapter 1…

Lenders Seeking Loan Modification After Bankruptcy, Beware!

Written By Paul A. Fanning and Norman J. Leonard

LENDERS CANNOT REVIVE A GUARANTY OBLIGATION DISCHARGED IN BANKRUPTCY WITH A SUBSEQUENT MODIFICATION OR FORBEARANCE AGREEMENT, EVEN WITH NEW CONSIDERATION; AND ATTEMPTING TO DO SO MAY LEAD TO LENDER LIABILITY EXPOSURE. …

Flipping the Script: Court holds that a Lender can sue a Borrower for Unfair and Deceptive Trade Practices

Written By Lance P. Martin

Recently, in Makadia v. Continental Waste Management, LLC, the United States District Court for the Eastern District of North Carolina considered a matter that may have caused a double-take.  The case involved a dispu…

Like Brangelina, a Promissory Note and Guaranty May Be Separated

Written By Lance P. Martin

Recently, in the case of Emerald Portfolio, LLC v. Outer Banks/Kinnakeet Associates, LLC, the North Carolina Court of Appeals issued an opinion that reaffirms the independent nature of personal guaranty agreements. &n…

North Carolina Court Clarifies Deadlines to Set Aside Fraudulent Conveyances

Written By Lance P. Martin

  Recently, the North Carolina Court of Appeals, in the case of KB Aircraft Acquisition, LLC v. Berry, et al., clarified the time limit for bringing claims under the North Carolina Uniform Voidable Transactions Act (…

Chapter 13 Plans are Just About Written in Stone

Written By Lance P. Martin

Recently, a bankruptcy judge in the United States Bankruptcy Court for the Eastern District of North Carolina issued a ruling that should help lenders dealing with borrowers in Chapter 13.  In a case entitled In re Ro…

A Win for Creditors: Supreme Court Expands the Meaning of Actual Fraud for Bankruptcy Discharge

Written By Lance P. Martin

The United States Supreme Court recently decided a case that will be a powerful tool for lenders dealing with borrowers who engage in schemes to avoid payment of their debts, such as an improper transfer of their assets be…

54,000 Reasons Not to Violate the Automatic Stay

Written By Lance P. Martin

Recently, in In re Johnson, a bankruptcy judge in the United States Bankruptcy Court for the Western District of North Carolina issued a ruling that reminds lenders of the trouble that can befall them if they violate the a…

North Carolina Supreme Court Issues a Reminder on the Scope of a Lender's Duty to a Borrower

Written By Lance P. Martin

Recently, in Arnesen v. Rivers Edge Golf Club & Plantation, Inc., the North Carolina Supreme Court issued a welcome opinion for lenders that reaffirmed the limited scope of a lender’s duties to a borrower.  …

North Carolina Supreme Court Upholds Boilerplate Waiver and Release Language to Defeat Lender Liability

Written By Lance P. Martin

Recently, in Ussery v. BB&T, the North Carolina Supreme Court issued an opinion that provides a powerful weapon for lenders.  The North Carolina Supreme Court held that standard language in a loan modification agr…

A Blueprint for Damage Control for Bankruptcy Code Violations

Written By Lance P. Martin

Recently, a bankruptcy judge in the United States Bankruptcy Court for the Eastern District of North Carolina issued a ruling that reminds lenders of the trouble that can befall them if they violate—even inadvertentl…

Secured Creditors Entitled to Contract Interest Rate in Chapter 13 Plans

Written By Lance P. Martin

Recently, a bankruptcy judge in the United States Bankruptcy Court for the Middle District of North Carolina issued a ruling that should help lenders dealing with borrowers who file for Chapter 13 bankruptcy protection, at…

North Carolina Supreme Court Extends "Offset Defense" to Guarantors in Foreclosure Deficiency Actions

Written By Lance P. Martin

On September 25, 2015, the North Carolina Supreme Court handed down a landmark decision that will radically alter the process by which lenders pursue post-foreclosure deficiency actions against guarantors.  In a victo…

Another Blow to Lenders in Foreclosure Deficiency Actions in North Carolina

Written By Lance P. Martin

On July 7, 2015, the North Carolina Court of Appeals handed down a decision that, if not reversed by the North Carolina Supreme Court, could eliminate the ability of lenders to obtain post-foreclosure deficiency judgments …

New Default Allows New Foreclosure: Erosion of the Two-Dismissal Rule

Written By Lance P. Martin

On June 2, 2015, the North Carolina Court of Appeals issued an opinion that provides some protection for lenders foreclosing on real property collateral.  In the case of In re Foreclosure of Beasley, the Court of Appe…

Supreme Court Protects Junior Mortgages From "Lien Stripping" in Chapter 7

Written By Lance P. Martin

On June 1, 2015, the United States Supreme Court issued a ruling that is a victory for lenders dealing with borrowers who file Chapter 7 bankruptcy.  In Bank of America v. Caulkett, the Supreme Court held that Chapter…

Spousal Guaranties—Clarifying the Rules Governing Personal Guaranties from Spouses of Borrowers

Written By Norman J. Leonard

When lenders make a loan to a closely-held company, they frequently require one or more of the company's principals to personally guarantee repayment of the loan.  Sometimes a lender will also request (or require) tha…

Are Deficiency Actions Now Dead In North Carolina?

Written By Lance P. Martin

On February 17, 2015, the North Carolina Court of Appeals handed down a decision that, if not reversed by the North Carolina Supreme Court, will radically alter the process by which lenders pursue post-foreclosure deficien…

1.5 Billion Reasons To Be Careful With Your UCC Termination Statement

Written By Lance P. Martin

The Uniform Commercial Code ("UCC") contains important rules that creditors must understand and follow if they want to create and maintain perfected and enforceable security interests in personal property collateral.  …

Please Release Me: How To Obtain Or Prevent Third-Party Releases In Bankruptcy

Written By Lance P. Martin

Bankruptcy protection—particularly a Chapter 11 reorganization—can be a powerful tool for a company in financial distress.  But can a debtor company go even further and use its plan of reorganization to se…

Prove It Or Lose It: How Not To Botch A Foreclosure

Written By Lance P. Martin

If you are a lender with real estate-secured loans in your portfolio that you acquired from another institution, or if you routinely buy commercial paper secured by real estate for investment purposes, then you need to be …