Macdonald | Fernandez LLP


221 Sansome Street
San Francisco, CA 94104
Telephone: (415) 362-0449
Facsimile: (415) 394-5544
914 Thirteenth Street
Modesto, CA 95354
Telephone: (209)549-7949
Facsimile: (209) 236-0172

Wednesday, August 12, 2015

Success Story: $20 Million Hotel and All Jobs Saved From Collapse

In the summary below, we tell the story of how we recently saved a $20 million hotel from collapse, keeping the doors open without interruption and saving all jobs.

The Company: A hotel in Riverside, California.

The Problem: The hotel defaulted on certain terms of an approximately $20 million loan agreement with a lender.  The lender subsequently initiated state court litigation to foreclose. 

The Solution:  We filed a chapter 11 bankruptcy case for the hotel, halting the state court litigation and allowing the hotel to continue to operate without interruption.  Thereafter, we handled issues touching upon municipal bond financing, assumption of the franchise agreement, disputed easements and purchase options.  Recently, we obtained bankruptcy court confirmation of the hotel's chapter 11  plan of reorganization, which modifies the terms of the loan agreement and completely resolves all issues.

The Impact: Through a confirmed chapter 11 plan, we saved the hotel from foreclosure.  The hotel’s bankruptcy case is now closed and the hotel is operating profitably. 

Tuesday, August 4, 2015

Mortgage Modification Procedures Established in Bankruptcy Courts forNorthern District of California

Effective August 1, 2015, most bankruptcy courts adopted sweeping new mortgage modification procedures, which can be viewed here.

This impressive set of new procedures was tested in Florida and certain other jurisdictions but is entirely new to the Northern District.  Specifically, the procedures provide for monitoring and mediation of mortgage modifications based upon lender consent.  Most major lenders regularly consent and have pre-registered with the electronic documentation system, which is key to the functioning of the program.

The program applies to all open and new chapter 13 bankruptcy cases in participating courts.  It may also be applied in individual chapter 11 bankruptcy cases by special request.

The new procedures streamline the processes under HAMP, HARP, Fannie Mae, Freddie Mac, FHA, VA, private bank programs and other mortgage modification procedures.  It also eliminates several common roadblocks to mortgage modification approval and dealing with mortgage modification denials, including document completion, income and expense analysis, forbearance and balloon payments, reamortization, cure of arrears and due diligence and title problems.

A key advantage is the combination of mortgage modification with bankruptcy relief, adding opportunities for discharge of unsecured debts, reorganization of priority debts and resolution of title and lien-priority issues.  This combination is likely to provide relief for thousands of debtors who were poorly served by either process standing on its own.

Monday, August 3, 2015

Macdonald Fernandez LLP is Proud to Announce Premier Commercial Bankruptcy Attorney from the Eastern District of California, Carl W. Collins, has Joined the Firm as Partner






1127 12th Street, Suite 106
Modesto, CA  95354
(209) 521-8100

Iain A. Macdonald
Reno F.R. Fernandez III
Matthew J. Olson
Roxanne Bahadurji

Bankruptcy and Related Litigation

San Francisco Office
221 Sansome Street, Third Floor
San Francisco, CA 94104
(415) 362-0449

Monday, June 15, 2015

Chapter 7 Trustee Must Notify Creditors and Obtain Court Approval Before Paying Taxes

In In re Cloobeck, 14 C.D.O.S. 5982, No. 23-15432 (9th Cir. June 12,  2015), the United States Court of Appeals for the Ninth Circuit ruled that a chapter 7 bankruptcy trustee must notify creditors, set a hearing or opportunity for a hearing and obtain bankruptcy court approval as a condition of paying taxes incurred by the bankruptcy estate.  Specifically, a trustee must obtain court approval both as to the appropriate amount of taxes and authority to pay the taxes.

Bankruptcy Code Section 503(b)(1)(B) affords administrative priority to tax claims against the estate.  A creditor objected to the trustee's payment of estate taxes more than two years after apparently learning of the payment, arguing that Section 503(b) requires "notice and a hearing" before payment of administrative expenses.  

The trustee argued that this would be inconsistent with Internal Revenue Code (26 U.S.C.) Section 6012(b)(4), which provides that:  "Returns of an estate, a trust, or an estate of an individual under chapter 7 or 11 of [the Bankruptcy Code] shall be made by the fiduciary thereof."  Moreover, the trustee must ordinarily pay federal taxes on time.  28 U.S.C. § 960. Also, Section 503(b)(1)(D) excuses the government from filing a request for payment of an administrative expense, unlike other creditors.

The bankruptcy court rule in favor of the trustee.  On appeal, the district court affirmed and determined that the creditor's objection was untimely.  The creditor appealed to the Ninth Circuit.

The Ninth Circuit reversed and remanded for further proceedings.  Specifically, the court ruled that the trustee must notify creditors and set a hearing, or provide an opportunity for a hearing, and must also obtain court approval both as to the appropriate amount of taxes and authority to pay the taxes.  The court explained that a trustee must pay taxes in time, even if the IRS does not file a request, and must also provide notice and an opportunity for hearing.  Judge Wallace concurred in the result but write separately to voice concerns over the timeliness of the creditor's objection.

Monday, April 13, 2015

Reno Fernandez Recognized by Bar Association of San Francisco for National Volunteer Week

Today the Bar Association of San Francisco recognized Reno Fernandez in honor of National Volunteer Week for his work as chair of the Commercial Law and Bankruptcy Section, an arm of the bar association dedicated to continuing legal education of the bankruptcy bar.  Read more here.

Friday, March 27, 2015

Starting Up & Winding Down: Both Sides of the Business Cycle

Join Matt Olson for lunch as he and Greg Demirchyan present "Starting Up & Winding Down: Both Sides of the Business Cycle" for the Business Law Section of the Bar Association of San Francisco on Tuesday, May 26, 2015.  Reno Fernandez is a member of the section's executive committee.

Starting Up and Winding Down: Both Sides of the Business Cycle

Fail again.
Fail better.
- Samuel Becket

This is the entrepreneur's motto.  In this program, learn to properly form and advise a startup and also wind it down so entrepreneurs can smoothly transition to the next project.


Greg Demirchyan
Emergent Legal

Matthew J. Olson
Macdonald Fernandez LLP


• Forming corporations and limited liability companies
• Advising startups, tips and best practices
• Winding up and dissolving a company out of court

Date, Time & Location

Tuesday, May 26, 2015
Noon to 1:30 pm
301 Battery Street, Third Floor
San Francisco, California


Thursday, February 19, 2015

The Intersection of Tax and Bankruptcy

This Monday, February 23, 2015, at the City Club of San Francisco, the Bay Area Bankruptcy Forum in cooperation with the Taxation Section and the Commercial Law & Bankruptcy Section of the Bar Association of San Francisco will present "The Intersection of Tax and Bankruptcy."  Reno Fernandez is a member of the Forum's board of directors.

The Intersection of Tax and Bankruptcy

Dennis Bean, CPA
Bean Hunt Harris & Company

Heinz Binder
Binder & Malter, LLP 

Richard Pierotti, CPA
Kokjer, Pierotti, Maiocco & Duck LLP

A. Lavar Taylor
The Law Offices of A. Lavar Taylor

February 23, 2015
5:00 to 7:00 pm

The City Club
155 Sansome Street
San Francisco, California

More information here.