State Law Can't Stop Voiding Of NJ Tax Sale, 3rd Circ. Says

Law360 (September 12, 2019, 7:02 PM EDT) -- The Third Circuit upheld on Thursday a bankruptcy court finding that a tax lien holder's prepetition foreclosure on a New Jersey couple's property was an avoidable transfer in their Chapter 13 case, justifying returning the property to a bankruptcy trustee.

In its precedential opinion, a three-judge panel concluded that federalism concerns "cannot overcome the plain language of the Bankruptcy Code," which requires equal distribution among creditors and prevents creditors from receiving more than they would in liquidation.

The case arose from the North Brunswick, New Jersey, auction of an unpaid municipal lien on the property of Frank J. Hackler and Dawn A....

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