In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides insight into the bankruptcy process and its impact on foreclosure auctions.
Article Link: https://commercialobserver.com/2020/03/foreclosure-halted-on-grace-kellys-former-upper-east-side-home/
Summary
The historic Upper East Side townhouse once inhabited by Grace Kelly faced a foreclosure auction due to unpaid debts by its owners, the Silberman family. However, the auction was halted when Monique Ender Silberman filed for Chapter 11 bankruptcy. The property, which has been owned by the family since 1973, had a $15 million loan taken out in 2015 for renovations but fell into default in 2017. Adam Stein-Sapir, not involved in the case but experienced in bankruptcy and claims trading, commented that the bankruptcy filing not only stops the foreclosure auction but also allows for a potential 363 sale, which could provide the owners with more control over the sale process.
- The Silberman family filed for Chapter 11 bankruptcy to prevent the foreclosure auction of their property.
- The property has been owned by the family since 1973 and was once home to Grace Kelly.
- Adam Stein-Sapir noted that bankruptcy can offer a more controlled asset sale process compared to foreclosure auctions.
Q&A
What happens when a property owner files for Chapter 11 bankruptcy in the face of foreclosure?
When a property owner files for Chapter 11 bankruptcy, it immediately halts any foreclosure auctions and may provide the opportunity to reorganize debts and propose a plan to keep the property. This can include a 363 sale, which allows the sale of assets free and clear of liens and interests, potentially offering more control and higher value for the asset. For more information on bankruptcy proceedings, visit Pioneer Funding LLC.
How does a 363 sale differ from a foreclosure auction?
A 363 sale, which can occur as part of a Chapter 11 bankruptcy process, allows the sale of assets under court supervision and can be structured to maximize the value of the assets by selling them free of liens and other encumbrances. In contrast, a foreclosure auction is typically a quicker process that may not yield the highest possible price for the asset, as it can be more chaotic and less appealing to buyers.
Can a lender challenge a bankruptcy filing to proceed with a foreclosure?
Yes, a lender can challenge a bankruptcy filing if they believe the filing was made in bad faith or if the debtor does not have a viable plan to reorganize and pay off debts. If the challenge is successful, the property could potentially be brought back to auction. However, this process involves legal proceedings and the outcome would depend on the court’s decision. For insights into the risks involved in selling and buying bankruptcy claims, one can refer to Pioneer Funding LLC’s overview on the topic.
