24-40046
Bankr. D. Neb.Sep 5, 2025Background:
- Debtor Jennifer M. Lennemann filed Chapter 11 in January 2024 and confirmed a plan on November 14, 2024, which modified and replaced prepetition loan terms and limited the creditor to plan-granted rights.
- Exchange Bank held deeds of trust on multiple parcels and had served prepetition notices of default in late 2023 for missed payments; it did not accelerate the loans.
- The confirmed plan preserved certain loan-document terms but changed repayment terms, interest rate, maturity/balloon date, and included a 30-day (or longer) cure period on post-plan defaults before the bank could enforce remedies.
- Debtor failed to timely pay real estate taxes; Bank gave a plan-default letter on May 5, 2025 (cure deadline June 4, 2025). Debtor paid taxes on June 10 and June 16, after the 30-day period expired.
- Despite the taxes later being paid, the Bank resumed publication of its prepetition notice of trustee sale (without filing a new notice of default) and scheduled a sale for August 19, 2025; the court enjoined the sale.
Issues:
| Issue | Lennemann's Argument | Exchange Bank's Argument | Held |
|---|---|---|---|
| Effect of confirmed plan on prepetition default and lien rights | Plan superseded and replaced prepetition obligations; prepetition default no longer governs enforcement | Plan merely tolled/stayed enforcement of prepetition foreclosure so original default remains effective | Plan modified debtor's obligations and limited the bank to rights provided in the confirmed plan; prepetition defaults could not be enforced as prepetition defaults postconfirmation |
| Whether bank could rely on prepetition notice of default after confirmation | Bank must file a new notice identifying the postconfirmation breach (failure to pay taxes) before exercising power of sale | No second notice required if original default remains uncured | Bank could not rely on the prepetition notice; a new notice describing the postconfirmation breach was required under Nebraska law |
| Cure-period compliance before foreclosure | Plan required 30-day notice and cure window; bank had to wait the full cure period before enforcing remedies | Bank complied by giving notice and could proceed once cure period expired | Bank did give the 30-day notice, but could not foreclose without a new notice of default and the obligation was cured, blocking foreclosure |
| Entitlement to injunctive relief to stop trustee sale | Injunction necessary because foreclosure was based on invalid prepetition notice and plan protections | Trustee sale allowed under Nebraska Trust Deeds Act | Court granted injunction and enjoined the trustee's sale |
Key Cases Cited
- State Bank of Trenton v. Lutz, 719 N.W.2d 731 (Neb. App. 2006) (statutory notice-of-default filing is a precondition to power of sale and trust-deed statutes are strictly construed)
- Gilroy v. Ryberg, 667 N.W.2d 544 (Neb. 2003) (notice of default must provide sufficient information to notify interested parties of the event authorizing sale)
- Gen. Elec. Cap. Corp. v. Dial Bus. Forms, Inc., 341 F.3d 738 (8th Cir. 2003) (a confirmed Chapter 11 plan binds participants and functions like a contract)
- United States v. Lincoln Sav. Bank (In re Com. Millwright Serv. Corp.), 245 B.R. 585 (Bankr. N.D. Iowa 1998) (postconfirmation a creditor's enforcement rights are limited to those granted in the plan)
- In re Chiles Power Supply Co., Inc., 264 B.R. 533 (Bankr. W.D. Mo. 2001) (after confirmation, debtor obligations are governed by the confirmed plan and the court retains in rem jurisdiction)