Recent Blog Posts

• Stark & Stark Shareholder Discusses Rise of Bankruptcies for NJN News
  Timothy P. Duggan, Shareholder of Stark & Stark's Bankruptcy & Creditor's Rights group, was interviewed for an NJN News story discussing Governor Corzine's economic stimulus bill and the recent rise of unemployment and personal bankruptcies in New Jersey. As the number of Chapter 7 bankruptcies more than doubled from 7,200 in 2006 to 16,955 in 2008, Mr. Duggan states that people are just not able to make mortgage payments in addition to their every day living expenses, and are therefore forced into bankruptcy.   You can watch the full story here. ....
• Deficiency Actions After Foreclosure Judgements
  Deficiency actions to recover balances owed after a consumer foreclosure action are not favored in New Jersey Courts.  Although, such actions are permitted under New Jersey law, it is in very limited circumstances and may be difficult to obtain.  Under New Jersey law, a judgment for deficiency may not be brought in the same action to foreclosure the residential mortgage (a separate action must be brought); this preclusion also includes claims on any personal guarantees. Foreclosure deficiency actions can be brought only once the mortgage is foreclosed; must be brought within three (3) months from the date of the sale and can not be brought against any party who was not a party to the foreclosure action.  The deficiency balance sought must be the difference between the foreclosure judgment amount and the fair market value of the property at the time of the sale. The public policy behind the legislation was to protect the homeowners from losing their homes and then to have ....
• The Next Shoe - Private Mortgage Insurance Policy Rescissions
  It is hard to know when the proverbial “next shoe” will drop in the current economic crisis but recently credit lenders in my practice have experienced attempted policy rescissions for their mortgage insured accounts where suddenly and without any notice the private mortgage insurer  (the “Company”) has attempted to rescind its insurance policy on specific accounts. This is especially true for policies issued on mortgage accounts closed during 2005-2006, the peak years of residential real estate values. Their letter often contains language to the effect that the application’s underlying appraisal was “false, incorrect or incomplete” and was “material to the decision to insure” or something similar thereto. The reality is that private mortgage insurers now realize that they are likely to be hit with a rash of claims on loans they have underwritten since the real estate bubble has burst and home values in many geographic regions ....
• Insolvency in Franchise Businesses: Minimizing Risk and Maximizing Recovery Under the Bankruptcy Code
  Timothy P. Duggan, Shareholder and member of Stark & Stark's Bankruptcy & Creditor's Rights group, will present a seminar entitled Insolvency in Franchise Businesses: Minimizing Risk and Maximizing Recovery Under the Bankruptcy Code in conjunction with the Legal Publishing Group of Strafford Publications. The 90-minute tele-seminar will be held Thursday December 4, 2008 from 1:00 PM - 2:30 PM. The seminar will feature a discussion of the weakening economy and it's effects on many franchises, ranging from restaurants to convenience stores to staffing services who are now seeking bankruptcy protection. The Bankruptcy Code addresses how franchise agreements are treated in bankruptcy; however, the Code does not resolve all of the unique issues that arise for franchisors and franchisees. It is critical that franchise counsel develop strategies to anticipate and protect against the fallout from bankruptcy. This teleconference will highlight key legal issues that arise during a ....
• Protecting Commercial Landlord's Rights - Eviction, Collection and Beyond
  Commercial landlords need to be vigilant in protecting their interests in these uncertain economic times.  Getting and keeping paying commercial tenants is the name of the game.  However, its not always that simple.  Sometimes, landlords have to make the difficult decision of whether to evict and try to collect against a non-paying tenant. The commercial landlord could be left with the tough choice of evicting a tenant and have a "dark store" until a new tenant can be found or working with their tenant by offering more favorable terms or concessions.  Whatever business decision a commercial landlord makes, its advisable to know what your rights are, and what steps you have to make, before you proceed with a litigation strategy.  A clear strategy for dealing with non-paying tenants can help determine the success of your commercial property with existing, new and potential tenants.  Following is a quick primer of questions to ask your attorney ....
• Adding Insult to Injury - Kara Homes Sues Contractors and Suppliers for the Return of Hard Earned Money
  The rise in bankruptcy filings has heightened the angst of contractors and suppliers working with residential builders who are worried that more companies will follow the path of Kara Homes and Elliot Builders and seek bankruptcy protection. The Fed’s proposed $700 billion bailout may jump start the residential real estate market and help some smaller builders avoid bankruptcy, however, for those contractors and suppliers tied-up in the Kara Homes case, lookout for the recently filed preference lawsuits.   On October 1 and 2, 2008, the Liquidating Trust formed in the Kara Homes bankruptcy case filed numerous complaints seeking to compel contractors and suppliers to return money they received during the 90 days before the filing of the bankruptcy case. In the end, many contractors and suppliers will be searching far and wide to understand why they have to return money to a company who stiffed them by filing for bankruptcy. This seemingly unfair consequence is the result of ....
• How to Handle a Chapter 11 Bankruptcy Filing
  Thomas S. Onder, member of Stark & Stark's Bankruptcy & Creditor's Rights group, was featured in the article How to Handle a Chapter 11 Bankruptcy Filing for the August 25, 2008 edition of NJ Biz.   In the wake of the recent high profile bankruptcies of companies such as Linens 'n Things and Boscov's more and more companies are feeling the need to file for bankruptcy protection. Mr. Onder discusses the steps companies can take in order to retain key suppliers and employees in uncertain economic conditions. You can read the full article here. (PDF) ....
• What Franchisors Can Expect in Bankruptcy
  In light of the recent high profile bankruptcy filings of dining establishments such as Bennigans and Steak N Ale, Adam Siegelheim leads a discussion with Bankruptcy & Creditor’s Rights Attorneys Timothy Duggan and Thomas Onder to outline what franchisors need to understand about the bankruptcy process. In this podcast the franchise and bankruptcy attorneys discuss: what happens to the franchise’s intellectual property assets; what are the responsibilities of the franchisees; how does the bankruptcy filing impact the restrictive covenants which exist and how do potential third-party purchasers of the system come into play. You can download the full podcast here. (10.3 MB)   ....
• Boscov's Bankruptcy And What Their Suppliers Should Understand
  The bankruptcy filing today of Boscovs Department Stores further demonstrates how consumers have been hurt by the housing downturn, job losses and higher costs for food and fuel. Following on the heels of Linens N Things and The Sharper Image, Boscov's cited decreased consumer spending and will immediately close 10 of its 49 stores, most of which are in New Jersey and Pennsylvania. Suppliers to these and other similarly situated retail outlets have substantial rights to reclaim merchandise shipped to a debtor prior to their bankruptcy filing. Today's podcast on Boscov's Bankruptcy will explain those rights. ....
• Linens-N-Things Bankruptcy
  Three Critical Issues for Suppliers On May 2, 2008, Linens-N-Things and its affiliated entities filed for Chapter 11 bankruptcy protection in the District of Delaware. Linens-N-Things has a number of different suppliers that are effected by this bankruptcy filing. Following are three (3) very important issues that suppliers should know about to ensure their rights in the bankruptcy proceeding. RECLAMATION Certain suppliers have the right to reclaim goods that they have shipped a bankrupt debtor. A creditor may attempt reclamation of their goods sold in the ordinary course under Bankruptcy Code § 546 (c). However a supplier must move quickly on their right to reclaim any of these goods that are lost. The supplier must make a demand in writing for reclamation of the goods no later than 45 days after delivery. If the 45 day period has not expired as of the date of the filing of the bankruptcy petition, the supplier will be provided an additional 20 days to demand reclamation of the ....
• Five Things You Should Know About Bankruptcy
  Bankruptcy filings increased in February 2008 by 18% from January, and by 28% from a year earlier. In fact, February was the busiest month for filings since Congress overhauled bankruptcy law in October 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA").  This increase in filings also increases the chance that you will be faced with bankruptcy issues. Some of the revisions contained in BAPCPA that you may encounter are set forth below.   Pre-Petition Shipments Of Goods. BAPCPA created substantial additional rights for suppliers that sold goods to a debtor prior to the bankruptcy filing.  Section 503(b) of the Bankruptcy Code allows administrative-expense status to all claims for "the value of any goods" received in the ordinary course of business by a debtor within 20 days before the bankruptcy filing. The supplier must request administrative-expense status. By doing this, the supplier is in a better position than ....
• Stark & Stark Attorney to Present at 10th Annual William H. Gindin Bankruptcy Bench Bar Conference
  Timothy P. Duggan, Shareholder and Chair of Stark & Stark's Bankruptcy & Creditor's Rights Group will present at this year's 10th Annual William H. Gindin Bankruptcy Bench Bar Conference and will discuss the sale of assets in bankruptcy cases. The conference will take place Friday May 2, 2008 at the Bunswick Hilton, in New Brunswick, New Jersey. Additional information, registration forms and CLE credit information can be found here. ....
• Enforcing Liens on Real Estate Projects
  Jeffrey S. Posta, Shareholder and member of Stark & Stark's Bankruptcy & Creditor's Rights Group authored the article, Enforcing Liens on Real Estate Projects: Creditors must be diligent to protect their rights, for the January 14, 2008 edition of the New Jersey Law Journal. The article discusses the dramatic decrease in home sales over the past few years and the consequential downturn in homebuilding. The increased number of companies subsequently filing for bankruptcy, slashing prices, and selling assets only indicates that those still in the business need to be more aware of what the short, or possibly, long-term effects of a decrease in homebuilding can mean for their business. You can read the full article here. ....
• What to Do When You Receive A Bankruptcy Preference Demand Letter
  Many businesses are receiving “preference” demand letters directing the return of money received from bankrupt debtors. Among the more notable bankruptcy cases in New Jersey from where such preference demands may arise include: Best Manufacturing Group, New Jersey Affordable Homes, Rockaway Bedding, Marcal Paper Mills, Kara Homes, Elliot Building Group and Ash Holdings. Although this may seem an odd demand - return money for perfectly delivered goods or services -  the practice of recovering “preferences” in bankruptcy is allowed under the Bankruptcy Code.  However, before you go writing a check to return hard earned money, you should consult with a bankruptcy attorney to find out if the transaction qualifies for defenses, as well as your best possible negotiating position.     What is Preference? A potential preference is a payment received from a debtor, made within 90 days of the bankruptcy filing.  Bankruptcy Code section 547(b) ....
• Timothy Duggan Featured on The American Law Journal
  Timothy P. Duggan, Chair and Shareholder of Stark & Stark's Bankruptcy & Creditor's Rights Group, will be a guest on the November 12, 2007 episode of The American Law Journal. The show will air tonight at 8:00 PM on WFMZ-TV CHANNEL 69. The episode will feature Mr. Duggan, and weekly host Christopher Naughton, Esq., as they discuss bankruptcy filings and the recent increase in foreclosures. Mr. Duggan will focus on the important issues creditors will face due to the recent increase in foreclosures, how the increase can impact their company, and what this will mean for the future of their business. ....
• A new battle of Waterloo is under way
  Timothy P. Duggan, Shareholder and member of Stark & Starks Bankruptchy & Creditor's Rights group was quoted in the October 12, 2007 Star Ledger article, A new battle of Waterloo is under way. You can read the full article here. ....
• Recall forces NJ meat firm to close doors
  Timothy P. Duggan, Chair of Stark & Stark's Bankruptcy & Creditor's Rights Group, was quoted in the article, Recall forces NJ meat firm to close doors, in the October 6, 2007 issue of the Star Ledger. You can read the full article here.  ....
• Domino-Like Bankruptcies Offer Lessons
  Timothy P. Duggan, Shareholder and Chair of Stark & Stark's Bankruptcy and Creditor's Rights Group was quoted in the article Domino-Like Bankruptcies Offer Lessons, in the September 17, 2007edition of NJ Biz. You can read the full article here. ....
• Tenants Allowed to Maintain Almost "No Deductible" For Commercial Insurance Coverage
  When was the last time you reviewed the insurance provision of your tenant’s commercial lease?  Do you know if the lease prohibits a high deductible for the tenant? It is probably a good time to take a look at the lease in light of the New Jersey Appellate Division’s decision on August 20, 2007 in Boston Market Corporation f/k/a Golden Restaurant Operations, Inc.  v. Myrus Hack, docket No. A-0182-05T20182-05T2 27-2-8272 (unpublished). The Appellate Court held that a commercial tenant was not in default under a lease because it’s maintained insurance with an extremely high deductible. The Appellate Court characterized this issue as: “The simple question posed here is whether or not the insurance arrangements made by [plaintiff] comply with the lease provisions respecting the tenant’s insurance obligation.”  The lease did not expressly prohibit insurance with a high deductible. The Appellate Court focused on whether the insurance ....
• Landlord's Beware: Fair Debt Collection Practices Act Applies to Eviction Actions
  SEQ CHAPTER \h \r 1 Recently, the Appellate Division of the State of New Jersey in Hodges v. Feinstein, Raiss, Kelin & Booker, LLC declared that law firms that regularly file summary dispossess action (aka “evictions”) for non-payment of rent are subject to the Fair Debt Collection Practices Act (“FDCPA”). Additionally, the Appellate Division held residential evictions for failure to pay rent must now be made by verified complaint.  This decision is very important for landlords and their attorneys since failure to comply with the FDCPA’s collection procedures could subject the landlord and the law firm to attorneys fees, costs and damages. Hodges involved two sisters, Renita Hodges and Rochelle Hodges. The sisters resided in separate apartments in Newark’s Sotnas Garden Apartments operated by the Sasil Corporation. The ....