Tag Archives: Trustee

Avoidance Action Timely Filed

Avoidance Action Timely FiledHow do you know if a Court would see an avoidance action timely filed? Here’s an example of a court’s process.

The order for relief was entered in debtor’s case on September 13, 2004. The trustee filed avoidance actions on September 13. 2006, seeking to avoid several transfers of real property and marketable securities that were made to debtor’s spouse. The spouse subsequently filed a motion to dismiss on the basis of the action being time-barred under § 546(a).  The bankruptcy court and district courts both overruled her dismissal motion.  The spouse then sought a ruling from the Eighth Circuit Court of Appeals, In re Raynor, 406 B.R. 375 (8th Cir. BAP2009).

The Eighth Circuit Court of Appeals likewise found that the avoidance action of the Trustee was timely filed under § 546(a) the court found that the specified avoidance actions “may not be commenced after the earlier of the later of 2 years after the entry of the order for relief.”

The Eighth Circuit Court of Appeals found that although the language was “inelegant,.. it was nevertheless unambiguous and included the 2-year anniversary date so long as the complaint was filed before midnight of that date.   Accordingly, the trustee’s avoidance action timely and not time-barred.

If you have questions about real property and securities transfers to a spouse when you are considering filing a bankruptcy, or if a transfer avoidance action timely filed – you should seek the advice of an experience bankruptcy attorney to discuss your options.

For more information about Bankruptcy and if an avoidance action timely filed – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Trustee is Bona Fide Purchaser

Trustee is Bona Fide PurchaserTrustee is Bona Fide Purchaser – Is Trustee is bona fide purchaser despite simultaneous filing of debtor’s electronic petition and schedules. Here’s an example,

When debtor refinanced her condominium, she gave Chase a deed of trust to secure her note that was not recorded. Instead, all that was recorded was the deed of conveyance from the previous loan, which was paid off in full. Thus, it appeared from county records that the condo had been paid off.

Debtor later filed for Chapter 7 relief, electronically filing her petition and schedules simultaneously. The schedules listed Chase’s secured debt. Chase then commenced an adversary proceeding to quiet title to its lien. It actually prevailed in the bankruptcy court on the theory that, under In re Professional Investment Properties of America, 955 F.2d 623 (9′” Cir. i992), the schedules provided constructive notice to the trustee of the unrecorded lien. The SAP reversed.

Chase appealed to the Circuit Court, which affirmed. Chase Manhattan Bank, USA, N.A. v. Taxel (In re Deuel), 594 F.3d 1073 (9′” en.2010). The Circuit Court focused on the phrasing in § 544(a)(3) that the trustee has the status of a bona fide purchaser of real property from the debtor “at the time of commencement of the case” without regard to any knowledge of the trustee “as of the commencement of the case .”

The court observed that when a Chapter 7 case is filed, only the petition commences the case, regardless of what else happens at the same time. “The trustee has not even been appointed when the petition is filed and could not possibly be a bona fide purchaser for value without notice upon the filing of the petition, but he is treated by the statute as though he were.” Moreover, because the strong-arm power exists without regard to any knowledge of the trustee it did not matter whether a hypothetical trustee who immediately read what was filed would have actual knowledge of the lien from the schedules. Finally, the Circuit Court distinguished Professional Investments limited to involuntary petitions that gave notice of an interest and further rejected Chase’s argument that its current lien should be treated as subrogated to its own previous lien, since it used the money from the most recent refinancing to payoff the loan from the prior refinancing.

If you have questions about whether the Trustee is bona fide purchaser in a chapter 7 case, you should contact an experienced bankruptcy attorney.

Trustee is Bona Fide Purchaser – for more information about Bankruptcy laws  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Plea Agreement establish Ponzi debtors intent to defraud

Plea Agreement establish Ponzi debtors intent to defraudPlea Agreement establish Ponzi debtors intent to defraud – Does a plea agreement establish Ponzi debtors intent to defraud?

After filing for Chapter 7 relief, a Debtor was charged with crimes in connection with an alleged Ponzi scheme. Pursuant to a plea agreement, he subsequently pled guilty to the charges and was sentenced to prison . In the plea agreement, he admitted that he operated a Ponzi scheme over a lengthy period.

In a fraudulent transfer action , the Trustee sought to avoid transfers from the Debtor to investors, to the extent they exceeded the amount invested (“false profits”). The Bankruptcy Court granted summary judgment to the Trustee, finding that the Debtor’s guilty plea and plea agreement conclusively established that the Debtor had operated a Ponzi scheme from which the actual intent to defraud his creditors would be imputed. The District Court affirmed.

Further appeal was taken to the Ninth Circuit. In re Slatkin, 525 F.3d 805 (9th Cir. 2008). The Circuit Court also affirmed, finding that once the existence of a Ponzi scheme is established, payments received by investors as purported profits are deemed fraudulent transfers as a matter of law. The Circuit Court further noted that the Debtor was not a “stockbroker” under the Code and, therefore, the Trustee was not barred by §546(e). The Court also rejected the investors’ argument that the plea agreement should not have been admitted because it was hearsay. The Court found it to be admissible under Federal Rule of Evidence 807. The admissions in the plea agreement were more probative on issues of the Debtor’s intent to defraud than any other evidence the Trustee could procure. The interest of justice would be best served by its admission as evidence. Further. the plea agreement had the equivalent circumstantial guaranties of trustworthiness as a statement covered by Rules 803 or 804 . A plea agreement does establish a Ponzi debtor’s intent to defraud. If you have questions about a Ponzi scheme you should seek the advice of an attorney.

Plea Agreement establish Ponzi debtors intent to defraud – for more information about Bankruptcy and plea agreements establish a Ponzi debtor’s intent to defraud  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy Order to Vacate Home

Bankruptcy Order to Vacate HomeBankruptcy Order to Vacate Home. In a bankruptcy, can you be ordered to vacate your home? The answer is yes. Here’s what happened in another case.

The Trustee successfully avoided the lien on a debtor’s residence. Thereafter, the trustee sought to sell the home in order to realize the value for the benefit of the bankruptcy estate. Debtors refused to cooperate and argued that their exemptions exceeded the value of the home thereby depriving the trustee of the ability to administer the asset.

Alternatively, the debtors argued that the trustee would be required to foreclose the lien thereby giving the debtors an opportunity to exercise their right of redemption. The trustee moved for turnover of the property. The court granted the motion. In re Neal, 424 B.R. 235 (Bankr. E.D. Mich. 2010). Judge Rhodes first held that debtors would only be entitled to an exception to the extent of any equity therein, and there was none. Next the court found that the trustee was not required to foreclose in her capacity as holder of the lien on the property, because instead could exercise the rights of a trustee to sell the property under the Bankruptcy Code.

As the debtors had failed to cooperate with the trustee in the marketing of the property, the court held that the trustee was entitled to have them removed so that she could perform her statutory duties as a trustee. If you have questions about a bankruptcy order to vacate home, you should seek the advice of a knowledgeable bankruptcy attorney.

For more information about Bankruptcy and your home  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Does a Motion To Dismiss Trump Motion to Convert

Does a Motion To Dismiss trump a Motion to ConvertDoes a Motion To Dismiss trump Motion to Convert?  After being served with the Chapter 13 Trustee’s Motion To Convert the case to Chapter 7, the Debtor filed a Motion To Voluntarily Dismiss the case.

In a recent case, the Trustee opposed the dismissal motion filed by the Debtor, noting that there appeared to be substantial undisclosed, non-exempt assets in his estate. The Debtor asserted that 1307(b) provided him an absolute right to dismiss prior to adjudication of the conversion motion. The Trustee argued that 1307(c) limited the Debtor’s right to dismiss. In re Jacobsen, 378 B.R. 805 (Bkrtcy. E.D. Tex. 2007).

Judge Rhoades noted a split of authority on this issue, with some courts holding that 1307(b) trumps subsection (c) “even where cause exits to convert the case under subsection (c).”

However, the Court found that both the language and policy of the Code require a different finding. If Congress had intended subsection (b) to prevail over subsection (c) it could have included language that the court could convert or dismiss a case “except” as provided in subsections (b) and (e).” Further, the Court found that its 105(a) powers support this reading of 1307. Mandating conversion, rather than dismissal, was in the best interest of the bankruptcy estate. Therefore, a conversion order was necessary to further the purpose of this substantive provision of the Bankruptcy Code.

Does a Motion To Dismiss trump a Motion to Convert – for more information about Bankruptcy and whether you have an option to dismiss your chapter 13 case when the trustee files a motion to convert the case to chapter 7  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.