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Bankruptcy – Rents – Cash Collateral – Attorney’s Retainer – Automatic Stay (access required)

In re Smithville Crossing, LLC Where the debtor’s agreement with its lender allowed the lender to collect rents from the debtor’s tenants if the debtor defaulted on its loan payments, the debtor was entitled to continue collecting rents between its default and the lender’s notice to the debtor and its tenants that rents were thereafter to be paid to the lender. The rents collected post-default and pre-notice could be used by the debtor as it saw fit, including as payment of a retainer to its attorney. The creditor’s motion to disgorge the retainer is denied. The creditor’s motions to dismiss and for relief from the automatic stay are also denied. The debtor’s motion for turnover of post-petition rents held by the creditor is denied as well.
By North Carolina Lawyers Weekly Staff 
Published: November 10, 2011
Time posted: 10:20 am
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