Wheeler Financial, Inc. v. J.P. Morgan Chase Bank, N.A., No. 21-2681 (7th Cir. 2022)Annotate this Case
JPMorgan loaned the debtors $1.3 million on the security of a Cook County restaurant. After the debtors stopped paying real estate taxes, Wheeler paid on their behalf and received the right to a tax deed once a redemption period expired. JPMorgan did not pay the taxes or redeem from Wheeler. The debtors filed a bankruptcy petition. They listed some tax debts but did not identify Cook County or Wheeler as creditors. Neither was served with notice or a summons. JPMorgan knew about the unpaid taxes but failed to ensure that the County or Wheeler was served. The bankruptcy judge approved a plan of reorganization. The debtors did not pay; Wheeler got the judge to lift the automatic stay in order to get a tax deed. A state judge issued the requested deed. The federal district court held that the stay should have been left in place because the confirmed plan superseded Wheeler’s unpaid lien. On remand, the bankruptcy court declared the tax deed “void” and approved a revised plan of reorganization, calling for JPMorgan to pay Wheeler $65,000.
In a second appeal, the district court concluded that the order approving the revised plan and knocking out Wheeler’s lien was valid. The Seventh Circuit affirmed. Wheeler is a party, the plan has been confirmed, and Wheeler has bypassed its principal opportunities to contest the plan.