You represent an individual in a contested Federal Court litigation to recover a valuable piece of equipment. Title is disputed. The dispute has been pending for a year, with discovery closing soon and getting close to trial. The case is in a state far removed from your client’s (the Plaintiff’s) state of residence. You agreed to be paid on a contingent fee based on the ultimate value of the equipment. You think it is a good case, worth a lot of money. Out of the blue you learn that your client filed a Chapter 7 (“no asset”) bankruptcy 5 months earlier (a month after the litigation started), failed to list the asset or the lawsuit and received a discharge. There is a very small amount of debt scheduled. You learn of this upon being contacted by the Trustee, who has been informed of the case by defense counsel. Trustee wants to know the status of the litigation.
5 Minute Legal Master Series: When to Involve an Attorney in a Bankruptcy Case
December 16, 2013
How do you know when to involve an attorney in a bankruptcy case? In this 5 Minute Legal Master Series, Board certified business bankruptcy and creditors’ rights specialist, Kirk Burkley, will explain when it’s the right time to hire a lawyer.
Today’s topic is when to involve an attorney in a bankruptcy case. This is a question that we often hear from clients and other people in the business which is, “Hey! The company went bankrupt, doesn’t that mean they don’t have any money so why would I hire an attorney to help me in this case and isn’t that just throwing good money after bad. The answer is, it depends.
Let me just start off with the basic notion that bankruptcy is definitely one of those places where the squeaky wheel gets the grease. Often times in bankruptcy proceeding, the debtor has for some period of time prior to the case been fending off creditors, either creditor such as their bank trying to foreclose on property or other assets, unsecured creditors and file lawsuits. Some sort of proceeding that has caused the debtor to say I need to avail myself of the automatic stay and stop all these creditor collection activities. So those creditors that drove the company into bankruptcy have already taken some action that is now stayed by the bankruptcy case.
Usually what happens is some other creditor maybe the same creditors show up in the bankruptcy case demanding payment. And the debtor is probably trying to survive on its last legs or attempting to get a sale done and they’re going to take care of the creditors that are preventing them from doing that. So creditors that sit back and do nothing in the case even if they’re not being paid later in case or even if they have some interest that could be protected, oftentimes the debtor is going to ignore them. So, does that mean that because you have seen a bankruptcy case you automatically get attorney involved. No, of course it doesn’t mean that, because you first have to evaluate what is the interest that you are protecting, and is it worth hiring an attorney to protect that interest?
One of the basic notions in bankruptcy is that creditors should not be hurt worse after the date of filing of the bankruptcy than they were prior to the filing of bankruptcy. So, post-bankruptcy the debtor is supposed to be paying everybody it does business with. So again you’re not supposed to get further into the whole post-bankruptcy then you were on the date of filing. If the debtor is not able to pay its cost of administration, what we call administrative expenses, in the bankruptcy case, then that’s the case should be dismissed or converted and the court should not let the debtor continue to remain in bankruptcy.
So if you have a secured claim and there is collateral to secure your claim, so maybe you’re a bank or you loaned money on a secured basis to the to the debtor, then more often than not you should be protecting your interests and making sure the debtor is paying you or you should move to recover your collateral so that you can sell that collateral and pay off your claim.
If you are a vendor thats doing business with the bankrupt company after the following petition, you should also be getting paid. If you’re not, then you should protect that interest because an administrative claim is a top priority claim that has to be paid 100 cents on the dollar in order for the debtor to confirm a plan. So in that case, so long as it’s worth it by terms of dollars and cents you should be protecting that interest. Similarly if you have an unexpired lease or an executory contract, you should be making sure that the debtor is performing under that contract and hopefully they will eventually assume that contract so that you can get paid going forward into the future.
It all takes a discussion with your attorney, analysis of the cost and benefit of participating and protecting your interest in the bankruptcy case and whether or not the claim is of significant value that is worth it to you and taking the extra steps in bankruptcy just might make a difference between getting paid or not getting paid.
Another Court Appointment for Robert S. Bernstein
November 5, 2013
Shortly after completing a 9-month stint as Receiver for Christian Financial Management, Robert S. Bernstein, Managing Partner of Bernstein-Burkley, P.C. was again at work as an estate fiduciary, this time as the Chapter 11 Trustee of Prime Plastics, Inc., appointed by the United States Bankruptcy Court in Pittsburgh. Prime Plastics, Inc., a company that manufactures toys and commercial food and drink containers, filed for Chapter 11 bankruptcy in February 2013 and is based in Washington, PA. For reasons not entirely clear in the Court records, the principal operators of Prime were removed from the business by Order of the Bankruptcy Court. Bernstein was selected as Trustee thereafter.
For a matter in litigation, the proper method for obtaining oral testimony of an organization itself is the through the service of Notice of Deposition under Federal Rule of Civil Procedure 30(b)6. The purpose of this article is to provide a basic framework for using this Rule to obtain testimony and to review some considerations on how to handle a 30(b)6 Notice served on your client.
The Bankruptcy Court in Tampa (case no: 8:12-bk-19111-KRM) has ordered the sale of the ownership interest claim and partnership interest of Dan Mathis, Jr., alleged owner of the 1960 Corvette described as “one of three 1960 cars prepared by Briggs Cunningham for entry in the 24 Hours of Le Mans that same year.” Here is a recent article about the car – http://www.autoweek.com/article/20130617/CARNEWS01/130619837.
Motion for summary judgment are probably not very well understood by a lot of plaintiff’s in litigation. Obviously a suit has been filed and defendant filed and answer raising some factual issues. I have many clients come to me and tell me what the all these allegations there they’re simply false. That’s not what happened we have a number of witnesses that can refute everything this defendant and sayings answer. Can’t we move for summary judgment on this because simply just wrong.
The short answer that question is no. False statements, perhaps more accurately inaccurate statements, or the ability of the plaintiff to produce witnesses to rebut those statements, do not give rise to a basis for an immediate motion for summary judgment. You gotta think about the standard for summary judgment. A Motion for summary judgment is a legal “so what?” Meaning even if everything that the opposing party claims is true so what?
Even admitting the facts stated by the opposing party, we are still entitled to summary judgment as a matter of law for the relief we have requested because there are no real genuine issues as to any material fact and we are in title to judgment as a matter of law.
Now the example I gave to be at the outset of this discussion, inaccurate allegations made by the defendant, witnesses being available to refute, that same determination as a matter of fact which requires a trial. Hopefully in the trial the trier of fact one of that fact is that judge alone or jury believes your witnesses and disbelieves the defendant or defendant’s witnesses. But a motion for summary judgment is determination by the judge as a matter of law that you are entitled to the relief you requested without the need of going through the time expense or the trial.
Now how is the basis for summary judgment determined? The first thing your attorney should look at when you should look at when the attorney reports to you about the answer that it’s filed the lawsuit is what admissions have been made by the defendant in the answer of those files.
Now these admissions where the fan of responses to respond to your claims they established facts that are not in dispute. Secondly, if we take a look at the defendant’s affirmative defenses that are being alleged and is there a need to refute them as a matter of law. Third, and probably most important from a summary judgment standpoint, is you are going to have to engage in pretrial discovery which is another topic that some one of our legal master presentations. You can make it effective use of written discovery is such as request for admissions to have the defendant admit to the truth of certain facts. If the defendant denies certain fact you can follow that with the interrogatories and see if you deny that request for admission tell us what you claim the facts to be.
Perhaps most effective in trying to set up matter for motion for summary judgment is to take the deposition of the defendant and grill the defendant question defendant intensely about the defenses that he’s asserting or the allegation that he’s made in the counter claim and hopefully through that testimony established the really is no factual dispute. Once you establish there’s no factual disputes based on the written discovery and the admissions you’ve been able to obtain, only then can a motion for summary judgment be sought.
That you can move for summary judgment obviously for the claim that is set forth in your complaint. You can move for summary judgment as to the defendants counterclaim. If the defendant has determined that things didn’t try to file a counterclaim to try to get some leverage against you. File a motion for summary judgment as to both but keep in mind the key thing that is the defendant filed a counterclaim as means of trying to intimidate you or leverage of mutual dismissal out of you and you’re able to get summary judgment dismissing counterclaim, he lost a lot of leverage.
The other thing that you can use the summary judgment process for is to limit the issues for trial. Sometimes summary judgment may not be rendered for all the relief that you have requested. That’s often referred to as a partial summary judgment perhaps you may be able to obtain summary judgment as the liability and the trial is limited only to the amount of damages or the judge can enter an order setting for the facts which are no longer genuinely disputed as a result of the admissions in the answer and the information developed through discovery.
Summary judgment as you can see is not an easy process. All the opposing party has to do is show that there’s a genuine issue of fact for trial and you can try to overcome that through appropriate use of discovery whether it’s written depositions. Thank you very much.
5 Minute Legal Master Series: Asset Investigation
September 26, 2013
Do you have a commercial collection claim against a debtor? Knowing the debtor’s asset picture is important. Board Certified Creditors’ Rights and Business Bankruptcy attorney, Robert S. Bernstein, discusses asset investigation in this 5 Minute Legal Master video.
Welcome to the 5 Minute Legal Master series where expert attorneys help you master important legal topics. Today, board certified creditors’ rights and business bankruptcy attorney, Robert S. Bernstein discusses asset investigation.
I am going to talk about asset investigations in the context of a commercial collection or other recovery matter where knowing the debtor’s asset picture is important to the decision making process. There are 3 categories of sources of asset information that I want to talk about, 1 is obvious, 1 is not so obvious and 1 is questionable. Under the obvious category we have things like real estate workers. If your debtor owns real estate in the area, you should be able to find that by looking at the real estate records, searching it by name or address, there are ways to either physically or electronically go to those records and find it. Similarly with vehicles, each state has a registration and titling process for vehicles and if they are titles vehicles you should be able to find that out from the state records. There are services that you can hire to do this in the state capitals. Some states have it electronically searchable.
Another obvious is if you adversary, your debtor is a business, go look at the business or have someone drive by. Is there an open business that has inventory, equipment or other assets of substance that you can see? Of course that is helpful because if you drive by the business and it is closed and empty, that tell you something about your likelihood of recovery too. The not so obvious areas, uniform commercial code filings, you probably know that the uniform commercial code is a method of registering liens on personal property, personal property as distinguished from real property.
If there is a lien registered against a tractor in your debtor’s name, the chances are your debtor has a tractor, it may be liened to someone and might not have any equity, but there still is some value in knowing that there is a tractor that your debtor uses for some part of its business. So looking at UCC filings, another is looking at other lawsuits filed against your debtor. You may think, well if there are other suits that means it is going to be more difficult to collect. It may be, but also it will tell you something about who thinks your debtor owes them money and it may tell you about the basis for that money. Perhaps your debtor bought things, inventory, equipment, furniture, fixtures, any of those things, that would give you an idea that your debtor might have those things, so that is a clue.
The third point in not obvious is just logic, what kind of business is your debtor in? What kind of equipment or assets would your debtor be likely to have if it is in that business? Let us say it is as simple as a plumber, if your debtor is a plumber the chances are your debtor has some plumbing tools and maybe has a truck. If your debtor is a commercial plumber may have a compressor, trailer, may have some other piece of equipment that is logical to be part of the business tools of the kind of debtor.
The questionable category are things like bank account locating. Someone once said about the way laws are made you do not want to know what goes into them. Some of these things you might want to know what goes into this agency finding this asset, lie locating bank accounts. I am not sure how that works and I am not sure whether there is an liability for using a service like that, but just be careful about that. Another is talking to neighbors, if you have a consumer collection matter the fair debt collection practices act or other debt collection acts may cover that and you may not be able to talk to third parties about locating information or asset information.
You have just heard the 5 minute Legal Master series where expert attorneys help you master important legal topics. For more information on this and other topics please visit 5minutelegalmaster.com
PBI 18th Annual Bankruptcy Institute
Bob Bernstein and Kirk Burkley of Bernstein-Burkley are speakers at today’s CLE in Pittsburgh. Bob will be discussing how to effectively negotiate or mediate a dispute and Kirk will be talking about points every attorney needs to know about Oil and Gas leases.
Personal Injury Claims in Chapter 7 and Chapter 13 Bankruptcy
September 23, 2013
Bernstein-Burkley, P.C.
Personal injury claims appear often in bankruptcy cases and it is helpful to understand them from the debtor’s side in order to effectively deal with them when representing a creditor.
If the debtor is a defendant in a personal injury action, the assets are generally part of the bankruptcy estate. Specifically, if the injury and/or injury compensation occurred before the filing of the petition, the assets will be part of the estate. However, if injury occurred after the filing of the petition, the claim is generally not part of the estate unless the injury compensation occurs during the pendency of the bankruptcy; in which case the trustee will very likely seize the funds. If involved in a reorganization bankruptcy such as chapter 13, the obligation of good faith and fairness to one’s creditors may require a debtor to turn over some or all of the compensation to the Trustee.
Board Certified Creditors’ Rights and Business Bankruptcy attorney Kirk B. Burkley will be discussing the different chapters of the Bankruptcy Code. If you want to be notified of any new postings, don’t forget to subscribe.
Congratulations are in order once again to Bob Bernstein. He was chosen by his peers for inclusion in the 20th Edition of The Best Lawyers in America in the practice areas of: Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law and Litigation – Bankruptcy.
Keep up the good work!
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