Assignment of Rents and Bankruptcy


The Sixth Circuit Court of Appeals recently issued an important decision on the Michigan assignment of rents statute and the impact and effect of a lender exercising its rights thereunder prior to the commencement of a bankruptcy petition. The holding is that a properly perfected assignment of rents enforced prior to the commencement of a bankruptcy excludes such rents from becoming property of the bankruptcy estate. This decision represents the first ruling by the Sixth Circuit Court of Appeals on this issue, and resolves a split amongst the Eastern District and Western District Bankruptcy Courts. The Debtor/Creditor Rights Committee of the Business Law Section of the State Bar of Michigan offered a presentation on this subject Wednesday, Aug. 9, at the offices of Jaffe, Raitt, Heuer, & Weiss PC in Southfield. Speaking at “Assignment of Rents and Bankruptcy” were (l-r) Robert Bassel; Judith Greenstone Miller of Jaffe, Marc Swanson of Miller, Canfield, Paddock, and Stone PLC; Judge Walter Shapero; and Gregory DeMars.

Photo by John Meiu