Hangley Aronchick recently secured a significant victory for secured creditor Lehigh Valley 1, LLC, with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania dismissing the bankruptcy cases of Whitehall Trust and Saucon Trust after finding the entities are ineligible to be debtors under the federal Bankruptcy Code.
The team successfully argued that the two trusts — which own the real estate underlying a pair of personal care homes for the elderly in the Lehigh Valley — do not qualify as “business trusts” under Section 109 of the Bankruptcy Code and therefore are not eligible to seek bankruptcy protection in the first place.
On March 20, 2026, Judge Patricia M. Mayer granted Lehigh’s motion to dismiss in a 29-page opinion, which found the trusts fell outside the class of entities Congress intended to have access to the bankruptcy system.
“The trusts are not ‘business trusts’ within the meaning of the Bankruptcy Code,” Judge Mayer wrote.
The dismissal frees Lehigh from the automatic stay that had blocked it from enforcing its mortgages on the Trusts’ properties and allows it to renew its pursuit of pending mortgage foreclosure actions.
The Hangley Aronchick team included shareholder Matthew Hamermesh, associate Sara Smith and paralegal Maria Hunter.
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