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Court Holds That Condominiums May File Bankruptcy

/ Owner - April 11, 2018

Recently, the Bankruptcy Appellate Panel for the First Circuit (which includes Puerto Rico) decided that a condominium association is a “person” eligible to file bankruptcy. While the court did not permit the bankruptcy to go forward due to fraud, the decision is significant for condominium associations that are saddled with debt.  The court’s reasoning follows:  “[W]e conclude the bankruptcy court committed legal error when it applied a narrow, exclusive interpretation of the term ‘person’ set forth in §101(41) in determining that the Asociación [de Titulares de Condominio Castillo] was not eligible to be a debtor under §109. However, the bankruptcy court also dismissed the petition on an alternative ground — the lack of a legitimate bankruptcy purpose for the filing. …Read the article……………

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