In Episode Five of Title Nerds, hosts Mike O’Donnell and Bethany Abele are joined by partners from Riker Danzig’s Bankruptcy & Corporate Restructuring Practice, along with Riker Danzig attorney Mike Crowley from the Title Insurance team.  First, Bankruptcy Chair Joe Schwartz explains how liens and mortgages pass through bankruptcy.  Partner Tara Schellhorn next joins Joe to address avoidance action-type claims, where Mike and Bethany questioned them about preferences as a way for Trustees to recoup payments and property interests, and best defenses against preferences.  In a wide-ranging discussion, Joe and Tara provided insights on trustees being a hypothetical lien holder or a bona fide purchaser for value, as well as fraudulent transfers and the federal and state fraudulent conveyance statutes.  Of particular interest to title underwriters, Tara discussed the 363 sale process, and how to confirm that clear title is being delivered.

In the second segment, Mike Crowley, an associate in Riker Danzig’s Title Insurance practice, discusses the federal case Tithonus Partners II, LP v. Chicago Title Ins. Co., 2021 WL 4711284 (W.D. Pa. Oct. 8, 2021) in which a dispute arose over coverage after the insured owner – a  limited partnership – conveyed the insured property to Tithonus Partners II, LP, another limited partnership that was the original insured’s 99.9% owner. Tithonus Partners later subdivided the property and sold some of it to a third party.  In 2020, that third party commenced an action against Tithonus Partners, claiming that some of the conveyed property was not owned by Tithonus Partners.  Tithonus Partners then made a title claim with Chicago Title, who denied the claim because Tithonus Partners was not the Insured under the policy.  Tithonus Partners then sued Chicago Title and the parties cross-moved for summary judgment.  The Court rejected Tithonus Partners’ claim that it was a successor to an Insured and, further, found that the unambiguous policy language requires that a grantee must “wholly own” the named insured for coverage under the policy to continue, and Tithonus Partners’ 99.9% ownership was not enough.  The Court granted Chicago Title’s motion and the action was dismissed.