NJ Trustee Alleges Mortgage Lien Should Be Wiped Out
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June 27, 2022, US Bankruptcy Court for New Jersey – HKO3, LLC (“Debtor”) brings a complaint against E-Tree, Inc. (“Defendant”) to determine extent, validity and priority of the mortgage lien held by the Defendant.
Debtor HKO3, LLC alleges that its confirmed ‘Reorganization Plan’ under Chapter 11 enables the Debtor to retain its real property at 597-601-603 Broadway, Newark, New Jersey. U.S. Bank allegedly holds a first priority mortgage lien on the Broadway property. Debtor claims that the Plan allows it to obtain financing to satisfy the U.S. Bank within a limited period of time.
The Debtor in its complaint claims that Tae “Michael” J. Ahn had lent $500,000 to the Debtor through a promissory note. The loan was allegedly secured by two mortgages, one of Broadway property and the other of a Washington property owned by the Debtor. The promissory note and mortgages were later assigned by Mr. Ahn to E-Tree, Inc.
However, the Debtor alleges that it made payments to Mr. Ahn from November 2012 through November 2016 for a total of $500,000, satisfying the obligations of the loan in full.
The Debtor requests the Court to determine the E-Tree mortgage as no longer valid and it be discharged and removed from title. Additionally, the Debtor also claims that the note and mortgages held by the Defendant are unenforceable against the Debtor and seeks a declaratory judgment to waive, expunge or bar any claim of the Defendant.
HKO 3, LLC v. E-Tree, Inc. (In re HKO 3, LLC), AP No. 22-1176, U.S. Bankruptcy Court for New Jersey.