Scott Mueller in Galloway’s St. Louis office recently secured the dismissal of an adversarial action brought by a Chapter 13 trustee in the Northern District of Illinois Federal Bankruptcy Court (Chicago). The Trustee sought to set aside the client’s mortgage which closed, with express authority of the Court, during the pendency of the bankruptcy action and stay. But the Trustee claimed that the Debtor/Borrower misappropriated loan funds away from the Estate and its creditors. Scott moved to dismiss based on the good faith lender’s extension of refinance funds without involvement in any breach of stay or inappropriate funding and the Trustee agreed to release the lender client.
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