Articles

Portrait of a Bad Faith Bankruptcy

Written By Lance P. Martin

You have to work really hard to file a Chapter 11 case that gets dismissed from the jump. Bankruptcy courts tend to bend over backwards to avoid smothering a case in the crib. A recent decision from the U.S. Bankruptcy Co…

Friend or Fraudster: How a Contractor Scam Artist Drove a Company Into Bankruptcy

Written By Lance P. Martin

Property owners beware: that friendly contractor who becomes "like family" might just set you up for financial ruin. A recent decision from the United States Bankruptcy Court for the Eastern District of North Carolina serv…

Depositor's Remorse: How a Million-Dollar Deposit Became Bankruptcy Estate Property

Written By Lance P. Martin

When a company files bankruptcy, you can generally assume that funds in its bank accounts will be property of the bankruptcy estate. Exceptions are rare. In Chapter 7, more money in the estate means more money for credito…

68 Ward and Smith Attorneys Honored by Best Lawyers® for 2026

Ward and Smith is proud to share that 68 attorneys have been recognized by Best Lawyers in America®. Of those honored, 55 were named to The Best Lawyers in America®, with three receiving the distinction of &l…

The Economic Loss Doctrine: A Valuable Shield for Lenders

Written By Lance P. Martin and Thomas C. Wolff

Lenders have likely encountered situations where borrowers push back against collection efforts. Sometimes, they may even accuse you of causing them harm through negligence, breach of contract, or even breach of fiduciary…

Ward and Smith and Attorneys Shine in 2025 Chambers USA Rankings

Ward and Smith has once again been recognized as one of North Carolina’s leading law firms in the 2025 edition of Chambers USA. The firm earned rankings in five key practice areas, with numerous individual attorneys…

Entitled to Stay Relief? Prove it.

Written By Jameson A.E. Doub and Lance P. Martin

Bankruptcy is a headache for lenders.  For example, you make a commercial real estate loan and record your deed of trust.  The borrower pays you for a time but then defaults.  You tried loan forbearance and…

Risky Business: Distressed Companies and Payments in the Shadow of Bankruptcy

Written By Lance P. Martin

Doing business with a customer in the shadow of bankruptcy is risky. A hallmark of bankruptcy law is equal treatment of similarly-situated creditors.  The Bankruptcy Code frowns upon a debtor who, while insolvent, pa…

25 Ward and Smith Attorneys Shine in 2025 Super Lawyers and Rising Stars Lists

Ward and Smith is thrilled to announce that 25 of its attorneys have earned spots on the prestigious North Carolina Super Lawyers and North Carolina Rising Stars lists for 2025. These accolades celebrate their exceptional…

Ward and Smith Attorneys Honored as 2025 Business North Carolina Legal Elites

Ward and Smith is proud to announce that 38 of its attorneys have been named to Business North Carolina’s 2025 Legal Elite, a testament to the firm’s dedication to legal excellence across North Carolina. …

Shocker! Fraudulent Transfer Leads to Judgment Against Transferee

Written By Lance P. Martin

The 16th Century gave plenty to the world – Leonardo da Vinci's "Mona Lisa," the Scientific Revolution, the Protestant Reformation, Michaelangelo's "David," and the Statute of Elizabeth.  That last one may be a…

The Perils of Over-Lawyering in Bankruptcy

Written By Lance P. Martin

For a lender in bankruptcy, the best situation is to be an over-secured creditor, meaning the value of your collateral exceeds your debt.  A creditor in this exalted category can recover principal, interest (includin…

67 Ward and Smith Attorneys Recognized by Best Lawyers® in America for 2025

Ward and Smith is pleased to announce that 67 attorneys have been recognized by Best Lawyers®. Fifty-four attorneys were chosen for inclusion in the 2025 edition of The Best Lawyers in America®, with four named "L…

Should I Care About the Purdue Pharma Decision?

Written By Lance P. Martin

On June 27, 2024, the United States Supreme Court decided the Purdue Pharma appeal. In a five-to-four decision, the Supreme Court held that a bankruptcy court may not extend to non-debtors the benefits of a Chapter 11 dis…

It Just Got More Difficult to Qualify For Subchapter V Bankruptcy

Written By Lance P. Martin

Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect four years ago, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors.  Popular from the jump, un…

Ward and Smith and Attorneys Shine in 2024 Chambers USA Rankings

Ward and Smith is pleased to announce that several of its practice areas and attorneys have been recognized in the 2024 Chambers USA Rankings. This year, the firm has been honored with new rankings in various categories…

Can I Require a "True Up" in a Subchapter V Plan of Reorganization?

Written By Lance P. Martin

For creditors, it can be difficult to navigate the financial difficulties of your customers. It seems like it would only get worse in bankruptcy, but that is not always the case.  Subchapter V of Chapter 11 of the Ba…

Making a Difference: Ward and Smith's Transformative Pro Bono Impact in 2023

Pro bono work is crucial in the legal arena to work towards the goals of justice and equality. Ward and Smith's attorneys made an impact with their pro bono contributions in 2023. Last year, 38 Ward and Smith attorneys co…

Charging Order Limitations – You Can't Charge What They Don't Own

Written By Lilian L. Faulconer and Lance P. Martin

In North Carolina, a creditor who obtains a judgment against an individual with an ownership interest in a limited liability company or limited liability partnership may enforce its unsatisfied judgment by petitioning the …

Don't Disrespect the Receivership

Written By Lilian L. Faulconer and Lance P. Martin

A recent decision by the North Carolina Business Court highlights the risks of interfering with property that is part of a receivership estate. The North Carolina Commercial Receivership Act celebrated its three-year anni…

740,000 Reasons to Think Twice Before Putting a Company in Bankruptcy

Written By Lance P. Martin

A recent decision from a bankruptcy court in Delaware provides a cautionary tale about the risks of involuntary bankruptcy.  In the Delaware case, the debtor managed a group of investment funds. The business was all …

Bankruptcy Destroyed My Perfect (Landlord-Tenant) Relationship!

Written By Joanne H. Badr and Lance P. Martin

February brings us Valentine's Day, and we bring you a tale as old as time. Two people meet, maybe online, maybe at a Chamber of Commerce mixer, maybe over lunch arranged by a broker.  They hit it off and commit to a…

A Discharge Lesson Courtesy of the Worst Person in the World

Written By Lance P. Martin

Alex Jones, the despicable, chest-thumping, conspiracy-peddling radio host, for years, blabbered on his radio show that the Sandy Hook Elementary School shooting was a hoax.  When the families of the murdered childre…

21 Ward and Smith Attorneys Honored by North Carolina Super Lawyers in 2024

North Carolina boasts an impressive array of legal talent, and this year, we're thrilled to announce that 21 of our attorneys have been recognized in the 2024 edition of North Carolina Super Lawyers and Rising Stars. Thir…

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…

36 Ward and Smith Attorneys Honored in Business North Carolina's 2024 Legal Elite

Ward and Smith proudly announced that 36 attorneys have been honored in Business North Carolina's 2024 Legal Elite. Five legal luminaries stand out as shining stars, having previously been inducted into the Legal Eli…

How to Get Your Own "Free" Private Investigator in Bankruptcy

Written By Lance P. Martin

Subchapter V of Chapter 11 of the Bankruptcy Code, which turned three earlier this year, created a more streamlined and less expensive Chapter 11 reorganization path for small business debtors. It also created a new posit…

Lance Martin Shares Insights from the National Association of Bankruptcy Trustees Annual Conference

Bankruptcy attorney Lance P. Martin recently attended the National Association of Bankruptcy Trustees Annual Conference held in Washington, DC, from August 16-19. The annual conference brings together bankruptcy judges, t…

52 Ward and Smith Attorneys Recognized by Best Lawyers in America® for 2024

Ward and Smith proudly celebrates an incredible achievement—over half of our esteemed attorneys have gained recognition from one of the nation's most respected legal publications. Best Lawyers® has selected 44 l…

Secured Lender Duffs Golf Course Valuation Hearing

Written By Lance P. Martin

In Chapter 11, value is king.  Secured creditors have rights in proportion to the value of their collateral.  When a secured creditor and the debtor can't agree on value, appraisals and appraiser testimony becom…

Lance P. Martin Named a Chapter 7 Bankruptcy Trustee

Bankruptcy attorney Lance P. Martin has been appointed as a Chapter 7 Panel Trustee for the United States Bankruptcy Court for the Western District of North Carolina. He started handling new cases effective June 26, 2023. …

Ward and Smith and Attorneys Flourish in 2023 Chambers USA Rankings

Chambers USA, the esteemed benchmark for legal excellence, is honoring Ward and Smith and several attorneys in its 2023 annual guide. The firm earned rankings in bankruptcy/restructuring, intellectual prope…

Attorneys, Paralegals Step Up to Make a Difference: Ward And Smith's 2022 Pro Bono Report

At Ward and Smith, we are committed to providing high-quality legal services not only for our clients, but also to those in our communities needing pro bono legal assistance.  Our firm's pro bono efforts in 2022 refl…

Fourth Circuit Says "Do the Math" For Attorneys' Fees Awards

Written By Lilian L. Faulconer and Lance P. Martin

In North Carolina, a loan agreement can require a borrower to pay attorneys' fees upon default to reimburse the lender for collection expenses. The law provides that you can specify a percentage up to 15% of the amount du…

No Discharge for Bonnie, No Discharge for Clyde.

Written By Lance P. Martin

The Bankruptcy Code generally allows a debtor to wipe out all pre-bankruptcy debts and get a fresh start in life.  But not all debts are equal.  Some debts can't be discharged, meaning they survive bankruptcy, a…

Lance Martin Honored as a Top Author with 2023 JD Supra Readers' Choice Award

JD Supra, the premier source for legal updates, has named creditors' rights attorney Lance Martin as a top author in its 2023 Readers' Choice Awards. He was the only North Carolina attorney recognized in the bankrupt…

When Can You Freeze and Seize a Judgment Debtor’s Bank Account?

Written By Lance P. Martin

What can you do to collect on a judgment, and when can you do it?  And does it matter if you're going after the judgment debtor directly, or after the property of the judgment debtor in the hands of a third party?&nb…

18 Ward and Smith Attorneys Honored in 2023 Edition of Super Lawyers

Super Lawyers, a renowned rating agency, is honoring 18 Ward and Smith attorneys for their exemplary legal services in North Carolina. Thirteen distinguished attorneys have been recognized as 2023 Super Lawyers,…

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…

Beware of Procedural Pitfalls in HOA Foreclosures

Written By Lance P. Martin and Thomas C. Wolff

Most community associations already know the Planned Community Act allows them to place a lien on a delinquent homeowner's property and foreclose on that interest.  But to do so, associations must comply strictly wit…

Foreclosure Warning: Property Possessed but Not Owned by a Debtor May Be Subject to the Automatic Stay

Written By Lilian L. Faulconer and Lance P. Martin

Creditors know that a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.  The "automatic stay" provides fundamental protection to debtors, mandating a…

In Foreclosure, Your Attorney Can Be Counsel or Trustee, But Not Both

Written By Lance P. Martin

Five years ago, the General Assembly amended the foreclosure statute to prohibit an attorney who serves as trustee or substitute trustee from representing the noteholder or the borrower during a foreclosure proceeding.&nbs…

Best Lawyers Names 6 Ward and Smith Attorneys as "Lawyer of the Year"

Best Lawyers has named six Ward and Smith attorneys as "Lawyer of the Year" in the 2023 edition of The Best Lawyers in America.  This honor is awarded to individual lawyers with the highest overall peer feedback…

Best Lawyers in America Names 47 Ward and Smith Attorneys in 2023 Rankings

Forty-seven Ward and Smith attorneys were honored by the Best Lawyers® for their accomplishments in more than 30 practice areas. The 2023 edition of the prestigious guide names 40 attorneys as "Best Lawyers in Am…

Fireworks, Hot Dogs, and Bankruptcy?

Written By Lilian L. Faulconer and Lance P. Martin

As the townsfolk of Lubbock, Texas readied for the annual Fourth on Broadway Independence Day fireworks show and celebration, local car dealer Reagor-Dykes wanted to be front of mind.  So as it had the previous year, …

Can actions be inadvertent and intentional simultaneously? For automatic stay violations, the answer is "Yes."

Written By Lance P. Martin and Thomas C. Wolff

Creditors know that when a debtor files bankruptcy, the "automatic stay" prohibits further collection activity to give a debtor breathing room to reorganize his affairs.  If a creditor willfully violates the stay, it…

Corporate Bad Behavior Is Not Dischargeable Under Subchapter V

Written By Lance P. Martin

If a business engages in bad behavior like intentional interference with contract and tortious interference with business relations, then it may not use Subchapter V of Chapter 11 to discharge debts based on that bad behav…

Subchapter V Debt Ceiling Restored to $7.5 Million

Written By Lance P. Martin

In a welcome feat of bipartisanship, Congress passed a bill to restore the Subchapter V debt limit to $7.5 million, and President Biden signed it into law on June 21.  Subchapter V of Chapter 11 of the Bankruptcy Cod…

Lance Martin Speaks at National Association of Bankruptcy Trustees Conference

Creditors' rights attorney Lance Martin recently attended the National Association of Bankruptcy Trustees Conference in Vancouver, British Columbia, where he spoke on issues with individual debtor cases under Subchapter V.…

Ward and Smith and Attorneys Shine in the 2022 Edition of Chambers USA

Chambers USA, a leading guide to legal rankings, recognizes Ward and Smith and several of the firm's attorneys as among the top in North Carolina. According to the 2022 edition of the annual publication, Ward and Smith ea…

"My Lawyer Made Me Do It" is Not an Absolute Defense to Bankruptcy Court Sanctions

Written By Lance P. Martin

Last year, we offered a lesson and a moral from a North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court.  The lesson from the case was that the bankruptcy co…

Even Indirect Income from Cannabis Can Get You Banned From Bankruptcy

Written By Lance P. Martin and Tyler J. Russell

Despite widespread trends in state-level legalization and decriminalization of high-THC cannabis and growing acceptance of cannabis among Americans, cannabis and cannabis products remain illegal under federal law.  A…

How a Setoff Right Led to a Creditor Fight

Written By Lilian L. Faulconer and Lance P. Martin

A recent decision from the North Carolina Court of Appeals teaches a valuable lesson about how a creditor with the upper hand against another creditor should behave to avoid squandering its advantage and becoming mired in …

Debt Ceiling Shrinks for Small Business Bankruptcies

Written By Lance P. Martin

Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect in February 2020, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors.  Under the law as origina…

More Bad News for Non-Debtors Seeking Releases in Chapter 11

Written By Lance P. Martin

In January, we wrote about the Purdue Pharma mega-bankruptcy.  A United States District Court in New York vacated Purdue Pharma's confirmed Chapter 11 plan, holding it was improper for the plan to contain non-consensu…

24 Ward and Smith Attorneys Recognized by Super Lawyers for 2022

Super Lawyers is recognizing 24 Ward and Smith attorneys as leaders in their respective areas of law in North Carolina. The publication selected 14 attorneys for inclusion in its 2022 "Super Lawyers," a recognition a…

Who Gets Released in Chapter 11?

Written By Lance P. Martin

In Chapter 11, a business or individual seeks to confirm a plan of reorganization that – upon compliance -- will release it from liability for certain claims and obligations.  But what about parties other than …

Can I Hold a Debtor’s Bank Account Hostage?

Written By Lance P. Martin

For creditors dealing with debtors in the shadow of bankruptcy, a common scenario repeats itself.  The creditor repossesses collateral, attaches an account, or sets off a bank account, and then the debtor files a ban…

Use Clarity to Avoid Contempt in Bankruptcy

Written By Lance P. Martin

This is a story about contempt and clarity.  It comes to us from a July 2021 North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court.  The story offers a …

49 Ward and Smith Attorneys Recognized by Best Lawyers in America for 2022

Best Lawyers® has recognized 49 Ward and Smith attorneys in more than 30 practice areas from across the firm's five offices.  The 2022 edition of the prestigious guide named 42 attorneys as "The Best Lawyers…

Their Aim Wasn't True – The NRA and Bad Faith Bankruptcy Filings

Written By Lance P. Martin

Bankruptcy offers a temporary sanctuary for parties seeking relief from a variety of problems – financial crisis, lawsuits, collection actions, repossessions, foreclosure, and pandemics.   Filing bankruptcy bef…

4 Ward and Smith Attorneys Inducted into the 2020 NC Pro Bono Honor Society

The North Carolina Pro Bono Resource Center (PBRC) is recognizing four Ward and Smith attorneys for their efforts to help others in need. Mary Cavanagh, Chris Edwards, Paul Fanning, and Lance Martin were inducted into t…

Struggling Hotels Can Provide Turn-Down Service, Can't Be Turned Down for Subchapter V Bankruptcy

Written By Lance P. Martin

Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect in February 2020, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors.  It has proven popular d…

Congratulations Bankruptcy Graduates! You Are Now Eligible for PPP Loans.

Written By Lance P. Martin

To be eligible for a Paycheck Protection Program ("PPP") loan, the applicant must certify on the borrower application that the applicant and any owner of 20% or more of the applicant are not “presently involved in an…

Congress Extends Higher Debt Ceiling for Small Business Bankruptcies

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…

More Breathing Room for Commercial Tenants in Bankruptcy

Written By Lance P. Martin

The Consolidated Appropriations Act of 2021 ("CAA") took effect on December 27, 2020.  The mammoth spending and COVID-19 pandemic relief bill contains provisions related to commercial real estate leases in bankruptcy…

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…

22 Ward and Smith Attorneys Recognized by Super Lawyers in 2021

North Carolina Super Lawyers is recognizing 22 Ward and Smith attorneys.  The publication selected 13 attorneys as 2021 "Super Lawyers," an honor awarded to only 5% of Tar Heel attorneys each year. Addition…

13 Ward and Smith Attorneys Listed in Business North Carolina's 2021 "Legal Elite"

Business North Carolina has recognized 13 Ward and Smith attorneys as 2021 "Legal Elites." Of the thousands of lawyers practicing across the state, only about 4% achieve this recognition. Since 2002, the magazine ha…

Evict Like a Jerk and Suffer the Consequences

Written By Lance P. Martin

As the pandemic shows little signs of abating, and many sectors of the economy continue to struggle, the relationship between commercial landlords and tenants may be strained.  Commercial landlords may no longer be w…

What Do You Get When You Cross a $137,000 Cartier Necklace and a Debtor With Selective Amnesia? A Chapter 11 Trustee.

Written By Lance P. Martin

When a debtor files bankruptcy under Chapter 11, the bankruptcy court does not automatically appoint a trustee.  Unlike Chapter 7, where the court appoints a trustee to investigate the debtor's assets, liquidate asse…

Can a Business Owner Reorganize Guaranty Obligations Under Subchapter V?

Written By Lance P. Martin

We have 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 …

41 Ward and Smith Attorneys Named to "Best Lawyers in America®" for 2021

Ward and Smith is proud to announce that nearly half of the firm's attorneys have been recognized by one of the most respected and trusted attorney rating services in the country.  Forty-one attorneys were named…

40,979 Reasons Not to "Press Charges" Against a Debtor in Bankruptcy

Written By Lance P. Martin

It is a cardinal sin to attempt to collect a debt or repossess collateral after a borrower files bankruptcy.  Bankruptcy triggers the automatic stay – a command, not a suggestion, that collection activity cease…

Controlling Expenses in Small Business Chapter 11 Cases

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, you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.  Subchapter V w…

Leases, Bankruptcy, and Coronavirus: Force Majeure Edition

Written By Lance P. Martin

Many businesses in bankruptcy or heading that way – particularly retail establishments – face an uncertain future as states and cities impose closures and phased re-openings.  If you lease your office, st…

Can a Debtor Choose Salvation Over Creditors?

Written By Lance P. Martin

In a Chapter 13 bankruptcy, debtors propose a plan to re-pay all or a portion of their debts. The amount to be repaid depends on how much the debtors earn, the amount and types of debt owed, and how much property they own…

Marla Bowman and Lance Martin Inducted into the 2019 NC Pro Bono Honor Society

The North Carolina Pro Bono Resource Center (PBRC) selected attorneys Marla Bowman and Lance Martin for inclusion into the 2019 North Carolina Pro Bono Honor Society. This recognition is reserved for lawyers who provided …

Leases and Bankruptcy in a Time of Coronavirus

Written By Lance P. Martin

Many businesses in bankruptcy or heading that way – particularly retail establishments – face an uncertain future as states and cities move from closures to phased re-openings.  No one knows with certaint…

COVID-19 Closed My Business. Can I Still Reorganize in Bankruptcy?

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…

Finally, the SBA is Ready to Make Your Loan Payments

Written By Lance P. Martin

We previously notified you that the CARES Act contained a key provision related to existing SBA loans.  Section 1112 of the Act appropriated $17 billion to subsidize principal, interest, and fees for six months for so…

Can the New Small Business Chapter 11 Save Your B&B or Airbnb?

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, you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.  Subchapter V wa…

Loan Modification and Reporting During the COVID-19 Crisis

Written By Lance P. Martin

We reported that, on March 9, 2020, the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, National Credit Union Administration, and Conf…

Foreclosure and Forbearance Under the CARES Act

Written By Lance P. Martin

The CARES Act, which became law on March 27, 2020, imposes important restrictions on foreclosure activity by servicers of federally-backed mortgage loans. It also grants expansive rights to borrowers to seek forbearance o…

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…

25 Ward and Smith Attorneys Recognized as 2020 "Super Lawyers" and "Rising Stars"

Ward and Smith is proud to announce that Super Lawyers has recognized 25 of the firm's attorneys as leaders in their respective areas of law. The publication selected 14 attorneys as 2020 "Super Lawyers," an honor only&nb…

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, …

Lance Martin Recognized as a 2019 "Go To Thought Leader" by the National Law Review

The National Law Review (NLR)has named creditors' rights attorney Lance Martin as a 2019 "Go To Thought Leader." The publication recognized Lance specifically for his bankruptcy coverage, particularly as it pertains to …

Lance Martin Receives NCBA's 2019 Bankruptcy Section Pro Bono Award

Creditors' rights attorney Lance Martin was honored recently by the North Carolina Bar Association Bankruptcy Section. He was named the recipient of the 2019 Pro Bono Award for his work with helping those in need of legal…

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) …

Best Practices When Liquidating Real Estate-Secured SBA Loans

Written By Lance P. Martin

For several years, the United States Small Business Administration (SBA) has experienced continuous growth with its flagship 7(a) and 504 business loan programs.  For fiscal year 2018, the SBA made over $24 billion i…

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…

39 Ward and Smith Attorneys Make 2020 Best Lawyers in America® List

Best Lawyers®, one of the most respected and trusted attorney rating services in the country, is recognizing 39 Ward and Smith attorneys as "2020 Best Lawyers." Released annually since 1983, this list h…

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 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…

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…

28 Ward and Smith Attorneys Recognized as 2019 "Super Lawyers" and "Rising Stars"

Ward and Smith is thrilled to announce that 28 attorneys have been selected for inclusion in the 2019's North Carolina Super Lawyers and Rising Stars® lists. Around five percent of attorneys from across the state are …

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…

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 …

44 Ward and Smith Attorneys Selected for 2019 Best Lawyers in America List

Ward and Smith is thrilled to announce that 44 attorneys have been named as Best Lawyers in America, in their respective practice areas, in the 2019 edition of Best Lawyers®. The Best Lawyers list is based entirely on…

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…

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 …

30 Ward and Smith Attorneys Recognized as 2018 'Super Lawyers' and 'Rising Stars'

Super Lawyers is recognizing 30 Ward and Smith attorneys in its 2018 "Super Lawyers" and "Rising Stars" lists. These lists are published annually in the North Carolina Super Lawyers Magazine and include fewer than fiv…

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…

22 Ward and Smith Attorneys Recognized in 2018 "Legal Elite" by Business North Carolina

Since 2002, Business North Carolina has honored top lawyers from across the Tar Heel state with their list of "Legal Elite" attorneys. This year, 22 Ward and Smith attorneys are being recognized by their peers as "among th…

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…

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…

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…

What's So Special About a Foreclosure Special Proceeding?

Written By Lance P. Martin

The North Carolina Supreme Court recently clarified that the North Carolina Rules of Civil Procedure and doctrines of res judicata and collateral estoppel do not apply to a non-judicial foreclosure special proceeding. …

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…

How to Recover a Bid Deposit When a High Bidder Defaults on a Foreclosure Bid

Written By Lance P. Martin

Recently, in In re Ballard, the North Carolina Court of Appeals issued an opinion that provides a blueprint for a lender to pocket a cash recovery if it is outbid at a foreclosure sale but the high bidder subsequently defa…

U.S. Supreme Court Tie Vote Leaves Equal Credit Opportunity Act Spousal Guarantee Defense Unresolved

Written By Lance P. Martin

The recent death of Justice Antonin Scalia has impacted a decision of great importance to lenders:  Does the Equal Credit Opportunity Act ("ECOA") protect a borrower's spouse when the lender requires the spouse to gua…

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…

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 …

Two and Done? The Court of Appeals Suggests That Lenders May Only Get Two Shots at Foreclosure

Written By Norman J. Leonard and Lance P. Martin

Have you ever started a foreclosure, only to work something out with your borrower and dismiss the proceeding?  Have you ever done that twice?  If so, you should be aware of a recent decision by the North Carolin…

North Carolina Supreme Court Rules that ECOA Defenses May Be Waived by Obligors

Written By Lance P. Martin

On August 20, 2014, the North Carolina Supreme Court issued an opinion that provides a powerful tool for lenders with spousal guaranty agreements in their portfolios.  The unanimous opinion held that a blanket waiver …

Don't Bring My Spouse Into This.

Written By Lance P. Martin

In a case of first impression decided last month, the North Carolina Court of Appeals affirmed a trial court ruling that a guarantor-spouse may assert a violation of the Equal Credit Opportunity Act ("ECOA") as an affirmat…

Getting and Keeping Your Place in Line: Two Reminders if You Take Personal Property as Security for a Debt

Written By Norman J. Leonard and Lance P. Martin

As all creditors know, you must file a financing statement under the Uniform Commercial Code ("UCC"), called a "UCC-1," with the North Carolina Secretary of State to perfect a security interest in personal property (and wi…

Wealthy Individual, You Just Filed for Chapter 11. What Are You Going to do Next? I'm Going to Disney World!

Written By Lance P. Martin

Although Chapter 11 of the United States Bankruptcy Code is more commonly associated with business reorganization, an individual or married couple also may use Chapter 11 to reorganize debts.  In fact, Chapter 11 has …