Bankruptcy Law - Whether a Debtor-in-Possession Can avoid a Pre-Petition Real Property Foreclosure that Complies with State Law and is Non-Collusive on the Grounds that the Foreclosure Constituted a Preferential Transfer

In July 2011, the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, denied a creditor bank’s motion to dismiss the complaint, filed by a debtor-in-possession seeking to avoid the bank’s pre-petition foreclosure on the debtor’s real property. In doing so, the court held that a Chapter 11 debtor-in-possession can avoid a pre-petition foreclosure on the grounds that the foreclosure constituted a preferential transfer, even though the foreclosure complied with state law and was non-collusive.  

Read the case note in Related Content, below.  Read the full case HERE.