Michael S. Wrona: Lawyer with Halloran & Sage LLP

Michael S. Wrona

Partner
Hartford,  CT  U.S.A.
Phone860-297-4626

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Experience & Credentials
 

Practice Areas

  • Bankruptcy, Creditors' Rights & Restructuring
  • Litigation & Dispute Resolution
 
University Boston University, B.A., 1994
 
Law SchoolQuinnipiac University School of Law, J.D., 1999
 
Admitted1999, Connecticut; 2002, District of Connecticut
 
Memberships 

Associations

Connecticut Bar Association
Commercial Law & Bankruptcy Section
Hartford County Bar Association

 
BornJuly 9, 1972
 
Biography

Michael is a member of the Commercial Litigation Department. He has experience representing both individuals and businesses in bankruptcy and commercial litigation matters. He also has represented clients involved in foreclosure proceedings, summary process proceedings and collection matters.

Attorney Wrona's bankruptcy experience includes:

representing both secured and unsecured creditors seeking to recover debts and to protect their rights against bankrupt debtors;

representing vendors in preference actions commenced by bankrupt debtors who are seeking to recover funds paid to the vendor prior to the commencement of the bankruptcy

representing clients in actions to prevent their debt from being discharged in bankruptcy

representing creditors in the sale of the debtor's assets in bankruptcy

In addition to his bankruptcy experience, Mr. Wrona has also represented individuals and businesses in a wide variety of commercial disputes, including breach of contract, fraud, replevin, civil theft, conversion, dissolution of partnership and unfair trade practices. Mr. Wrona has also commenced and defended numerous foreclosure actions. Attorney Wrona also represents housing authorities and private landlords in summary process matters and has lectured on summary process in the past.

Publication

Additional Concerns for Residential Lenders in Chapter 11 and 13
New England Real Estate Journal, 03/18/2011

In last month's edition, I discussed potential loan modifications facing residential lenders in Chapter 11 and 13 cases in bankruptcy. In addition to those concerns, however, residential lenders also need to be aware of the risks involved in providing borrowers second or third mortgages on their homes. As mentioned last month, with many high leveraged borrowers and declining property values, this has clearly become more of a concern for mortgagees holding a second or third mortgage.

In those instances, the lender potentially could have its entire debt cramdowned and treated as unsecured, notwithstanding it is secured by the debtor's primary residence. Consider the following example:

* The mortgagor's residence is worth $300,000.

* Bank A has a first mortgage of $200,000.

* Bank B holds a second mortgage in the amount of $100,000.

* Bank C holds a third mortgage in the amount of $75,000.

Under this scenario, the first mortgage is secured as is the second mortgage. The anti-modification provision of the Bankruptcy Code would apply to those mortgages since they are fully secured. However, the debtor/mortgagor would undoubtedly argue that Bank C's mortgage of $75,000 should be treated as wholly unsecured and, as a result, treated as any other unsecured debt. Should that occur, Bank C's loan would be paid a pro rata share under the plan of reorganization equal to that provided to the other unsecured creditors. This is the unfortunate result for Bank C because for a mortgagee to receive the protection of the anti-modification provision it must first show it has a secured claim. Pursuant to the Bankruptcy Code, a secured claim is not secured merely due to the existence of a mortgage on the land records but only when the value of the collateral is proven to be more than the amount due on the loan.

However, all is not lost for Bank C provided it can demonstrate that the residence is worth more than $300,000. Moreover, Bank C is not required to prove that its entire loan is secured, only that a portion of it is secured. So, for example, even if Bank C can show that the property is worth only $310,000, its claim cannot be treated as unsecured. The Bankruptcy Code and the related case law are clear that so long as some portion of the lien (even if that is only $1) is secured by the residence, Bank C would be considered the holder of a claim secured by the debtor's principal residence and its rights in the entire lien would be protected under the antimodification provision. The courts' stated rationale for this conclusion is the secured portion of a mortgagee's claim would necessarily be effected by the modification of the unsecured portion. And, since the modification of the secured portion is impermissible under the Code, the entire lien must be treated as secured.

For a while, some circuits held to the minority position that the rights of all mortgagees are entitled to the protection of the Bankruptcy Code's antimodification provision, even if they held completely unsecured claims. That minority view however, appears to have been completely swept away for the more well-reasoned majority view outlined here.

This is another example of another area of concern for the residential lender. Second and third mortgage holders could find themselves in a battle of appraisers attempting to prove that a portion - any portion - of their debt is secured so as to avoid being treated as any other unsecured creditors. As a result, secured lenders need to be acutely aware of the value of the collateral when providing loans when the resulting mortgage will not be the first mortgage on the residence.

By: Michael WronaBankruptcy Concerns for the Residential Lender
New England Real Estate Journal, 03/16/2011

In the present residential market, with many highly leveraged borrowers and generally declining property values, mortgage lenders face significant perils when their borrowers file for bankruptcy protection. While these risks are generally well-understood in the commercial real estate world, residential lenders may also find themselves with court-sanctioned cramdown debt modifications that drastically alter the original mortgage loan terms. How bankruptcy courts address residential mortgage loan restructuring is generally a function of the nature and use of the property.

A cramdown allows a debtor to bifurcate the debt into a secured portion (based on the current value of the property) and an unsecured portion with the unsecured portion only receiving a pro-rata distribution similar to the Debtor's other unsecured creditors. In areas where real estate prices have depreciated, cramdowns can result in significant mortgage reductions.

A modification of the mortgage would then allow the borrower to reduce the monthly mortgage payment. In some cases, the court may order the remaining secured debt amortized over the remaining life of the loan term, thus lowering monthly payments. In other cases, monthly payments remain the same as before the cramdown, and the secured mortgage is simply paid off faster.

While the Bankruptcy Code does not typically allow debtors to cramdown a debt owed to a secured lender which is secured by a mortgage on the debtor's primary residence (often referred to as the antimodification provision), there are exceptions. Those exceptions occur when the loan documents provide additional collateral or the Debtor's use of the property provides the lender additional security.

Some examples are where the real estate at issue is a multi-family dwelling, used as a bed and breakfast, or the loan documents provide the lender a security interest pursuant to Article 9 of the UCC. In those instances, courts are much more likely to hold that since the property is income producing, the secured lender will not be afforded the protection of the antimodification provision, regardless of the borrower's use of the property as his residence.

Unfortunately, this has led some debtors to argue that the debtor's use of the property for his business (typically because the residence contains a home office) means the property is income producing. That argument, without more, is unavailing. The primary reason is because the use of the home for one's business does not provide the lender any additional collateral and typically does not add any value to the real estate.

Also, if the Debtor has demonstrated an intent to use his property as farmland, subdivide it, or harvest it for timber, the real estate may also be subject to modification and a cramdown. It should be noted, however, that the Debtor's intent, must be more than just a future desire to use the land for one of those purposes. The debtor typically must demonstrate what affirmative acts have been taken to use the property for that purpose.

Lastly, some bankruptcy courts have employed factors to determine whether a mortgage should be subject to modification and/or cramdown. These include whether the mortgage was handled through the commercial loan department or the residential loan department, whether the interest rates applied to the mortgage were home loan rates or commercial loan rates, and the extent to which potential business uses of the land were considered by the lender. By considering the totality of such factors, the Court will decide whether the mortgage is secured by something more than just the debtor's residence and, as a result, whether the lender bargained to be within the scope of the antimodification provision.

In short, the courts have determined that when the collateral securing the loan includes something in addition to the debtor's primary residence, the antimodification provision will not apply. As a result, lenders need to be aware whether the loan documents secure more than just a residence and what is the debtor's use, or intended use, of the property. The outcome to that analysis can have a dramatic impact on whether a lender is paid in full or something far less.Residential Mortgage Lenders Face Significant Perils When Their Borrowers File for Bankruptcy
New England Real Estate Journal, 02/18/2011

In the present residential market, with many highly leveraged borrowers and generally declining property values, mortgage lenders face significant perils when their borrowers file for bankruptcy protection. While these risks are generally well-understood in the commercial real estate world, residential lenders may also find themselves with court-sanctioned cramdown debt modifications that drastically alter the original mortgage loan terms. How bankruptcy courts address residential mortgage loan restructuring is generally a function of the nature and use of the property.

A cramdown allows a debtor to bifurcate the debt into a secured portion (based on the current value of the property) and an unsecured portion with the unsecured portion only receiving a pro-rata distribution similar to the debtor's other unsecured creditors. In areas where real estate prices have depreciated, cramdowns can result in significant mortgage reductions.

A modification of the mortgage would then allow the borrower to reduce the monthly mortgage payment. In some cases, the court may order the remaining secured debt amortized over the remaining life of the loan term, thus lowering monthly payments. In other cases, monthly payments remain the same as before the cramdown, and the secured mortgage is simply paid off faster.

While the Bankruptcy Code does not typically allow debtors to cramdown a debt owed to a secured lender which is secured by a mortgage on the debtor's primary residence (often referred to as the antimodification provision), there are exceptions. Those exceptions occur when the loan documents provide additional collateral or the debtor's use of the property provides the lender additional security.

Some examples are where the real estate at issue is a multifamily dwelling, used as a bed and breakfast, or the loan documents provide the lender a security interest pursuant to Article 9 of the UCC. In those instances, courts are much more likely to hold that since the property is income producing, the secured lender will not be afforded the protection of the antimodification provision, regardless of the borrower's use of the property as his residence.

Unfortunately, this has led some debtors to argue that the debtor's use of the property for his business (typically because the residence contains a home office) means the property is income producing. That argument, without more, is unavailing. The primary reason is because the use of the home for one's business does not provide the lender any additional collateral and typically does not add any value to the real estate.

Also, if the debtor has demonstrated an intent to use his property as farmland, subdivide it, or harvest it for timber, the real estate may also be subject to modification and a cramdown. It should be noted, however, that the debtor's intent, must be more than just a future desire to use the land for one of those purposes. The debtor typically must demonstrate what affirmative acts have been taken to use the property for that purpose.

Lastly, some bankruptcy courts have employed factors to determine whether a mortgage should be subject to modification and/or cramdown. These include whether the mortgage was handled through the commercial loan department or the residential loan department, whether the interest rates applied to the mortgage were home loan rates or commercial loan rates, and the extent to which potential business uses of the land were considered by the lender.

By considering the totality of such factors, the court will decide whether the mortgage is secured by something more than just the debtor's residence and, as a result, whether the lender bargained to be within the scope of the antimodification provision.

In short, the courts have determined that when the collateral securing the loan includes something in addition to the debtor's primary residence, the antimodification provision will not apply. As a result, lenders need to be aware whether the loan documents secure more than just a residence and what is the debtor's use, or intended use, of the property. The outcome to that analysis can have a dramatic impact on whether a lender is paid in full or something far less.

By: Michael Wrona

News & Events

Michael Wrona Featured Presenter at 9th Annual Landlord-Tenant Seminar

Halloran & Sage attorney Michael Wrona is a presenter at the 9th Annual Landlord-Tenant Seminar taking place Tuesday, August 19th in Hartford, CT. He will be speaking as a faculty member on a panel involving topics that include lease preparation, landlord and tenant rights, evictions, bankruptcy filings and ethics in landlord-tenant law. This seminar qualifies for continuing education credit and registrants may apply a $50 discount with the code FLD50. Full seminar information and registration is available on the Sterling Education program page .Firm Attorneys Included in Super Lawyers and Rising Stars 2012 List

Halloran & Sage is proud to announce that twenty-two of the Firm's attorneys have been selected for inclusion in the 2012 Super Lawyers or Rising Stars lists. The attorneys that have been selected are:

Super Lawyers

Henry Beck, Jr. - Business/Corporate (Hartford)

Thomas Boyce, Jr. - Personal Injury Defense: Medical Malpractice (New London)

John Farley - Appellate (Hartford)

Stephen Fogerty - Business Litigation (Westport)

Jeffrey Gostyla: Insurance Coverage (Hartford)

Leslie Grodd: Tax (Westport)

Daniel Krisch: Appellate (Hartford)

Dan LaBelle: Civil Litigation Defense (Westport)

William McGrath, Jr.: General Litigation (Hartford)

Allen Gary Palmer: Family Law (Westport)

George Royster: Business Litigation (Hartford)

Daniel Scapellati: Insurance Coverage (Hartford)

Andrew Schaffer: Family Law (New Haven)

Kenneth Slater, Jr.: Land Use/Zoning (Hartford)

James Szerejko: Civil Litigation Defense (Hartford)

Richard Tynan: Personal Injury Defense: Medical Malpractice (Hartford)

Rising Stars

Joseph Arcata, III: Insurance Coverage (Hartford)

Joshua Auxier: Professional Liability: Defense (Westport)

Melanie Dykas: Government Relations (Hartford)

Timothy Grady: Medical Malpractice, Personal Injury Defense (Hartford)

Brian Rich: Business Litigation (Hartford)

Michael Wrona: Bankruptcy &Creditor/Debtor (Hartford)

The Super Lawyers designation is based on regional balloting by attorneys, research conducted by Law & Politics magazine, and a peer review process that encompasses sixty different practice areas.

An explanation of Super Lawyers and Rising Stars methodology can be found here.H & S Attorneys to Hold Two Seminars for Financial and Lending Professionals

Halloran & Sage attorneys have scheduled two seminars for the benefit of financial and lending professionals. The seminars, entitled CT Foreclosure and Lender Liability: A Primer for Financial and Lending Professionals and Bankruptcy Code, will both take place during this month in New Haven and Hartford, respectively.

CT Foreclosure and Lender Liability will take place on Wednesday, September 19, 2012 from 8:30 to 10:00 a.m. at the Firm's New Haven office, 195 Church Street. The program is designed to provide a real world view of the legal landscape, substantive law, and highlight ways in which courts are reacting to the foreclosure epidemic. Practical information will also be provided of what is involved in commencing foreclosure proceedings and what may be expected once they are underway. Brian Rich will present the seminar - Christopher McCarthy will also be a speaker.

Bankruptcy Code will take place on Thursday, September 27, 2012, at the Hartford 21 building, 221 Trumbull Street, Hartford, from 8:30 to 10:30 a.m. and will be presented by Michael Wrona and Christopher McCarthy. It will include a general overview of the bankruptcy process under Chapters 7, 11 and 13 of the Bankruptcy Code including a discussion concerning adequate protection, the automatic stay, sale of estate assets, cramdown and confirmation.

Both seminars will take place from 8:30 to 10:00 a.m. at the locations specified above and include a continental breakfast and complimentary parking. CT Foreclosure and Lender Liability, and for Bankruptcy Code .2011 'Super Lawyers' Recognizes 20 H & S Attorneys

Halloran & Sage is pleased to announce that 13 attorneys, based out of three different Connecticut offices, were recently announced as Connecticut Super Lawyers. In addition, 7 attorneys at the firm were recognized as Rising Stars.

The Super Lawyers designation is based on regional balloting by attorneys, research conducted by Law & Politics magazine, and a peer review process that encompasses 60 different practice areas.

Super Lawyers

Henry Beck, Jr. - Business/Corporate

Thomas Boyce, Jr. - Personal Injury Defense

John Farley - Appellate

Stephen Fogerty - Business Litigation

Jeffrey Gostyla - Insurance Coverage

Leslie Grodd - Tax

Daniel Krisch - Appellate, Civil Litigation Defense, Criminal Defense

William McGrath, Jr. - General Litigation

George Royster - Business Litigation

Daniel Scapellati - Insurance Coverage

Kenneth Slater, Jr. - Land Use/Zoning

James Szerejko - Civil Litigation Defense

Richard Tynan - Personal Injury Defense

Rising Stars

Joseph Arcata, III - Insurance Coverage

Timothy Grady - Personal Injury Defense, Medical Malpractice

Brian Rich - Business Litigation

Michael Wrona - Bankruptcy & Creditor/Debtor RightsH & S Announces New Counsel

The law firm of Halloran & Sage is pleased to announce that Michael Wrona has been named Counsel.

Michael is a member of the Firm's Commercial Litigation Department. He represents both individuals and businesses in bankruptcy matters, including creditors' claims and prosecution and defense of adversary proceedings. Michael graduated with his B.A. from Boston University and his J.D. from Quinnipiac University School of Law.Firm Announces New Partner

The law firm of Halloran & Sage is pleased to announce that Attorney Laura Pascale Zaino have been admitted as a partner. Laura handles tort and general litigation matters as well as appellate matters.

 
Reported CasesRepresentative Matter: Camelot Modular Homes v. Freska, et al. 2008 Conn. Super. LEXIS 1935 Conn. Elec. Equip. Co. v. Fid. & Guar. Ins. Co., 2002 Conn. Super. LEXIS 3410 Rapuano v. Rapuano, 2001 Conn. Super. LEXIS 2961 Wright v. Mallett, 94 Conn.App. 789, 894, A.2d 1016, cert. denied, 278 Conn. 918, 899 A.2d 623 (2006)
 
ISLN915817472
 
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Office Information

Michael S. Wrona

225 Asylum Street
HartfordCT 06103




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