A62 Equities LLC v. Chohan (In re Chohan)

ORDER AFFIRMING BANKRUPTCY COURT’S ORDER

I. INTRODUCTION

This is an appeal from the Bankruptcy Court’s July 24, 2014 Order Establishing Scope of the Automatic Stay in Connection with Alleged Swap Agreement. (8:14-bk-13606-SC Dkt. 74.) This appeal stems from an interest rate swap agreement between appellees Shaukat A. Chohan and Mahmooda K. Chohan (“Debtors”) and U.S. Bank, National Association (the “Bank”). At the heart of this appeal are three intertwined questions: (1) what if any interest was assigned to appellant A62 Equities, LLC (“A62”); (2) whether this assignment entitles A62 to avail itself of the swap agreement exemption from the application of the automatic stay, 11 U.S.C. §§ 362 (b)(17) & 560; and (3) whether A62 may collect such interest (if any exists) by foreclosing on the subject trust deed. The nebulous nature of the inquiry surrounding these questions is confounded by the seemingly unique facts of this case, as well as the expedited nature of the appealed from decision.

This case involves an alleged post-termination assignment of some interest related to a terminated interest rate swap agreement. A62, the alleged assignee, sought to foreclose on the collateral…