Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Diane Davis
A Chapter 7 trustee can’t reopen a case that was closed more than a year ago to sell a debtor’s Corvette and a boat and motor, the U.S. Bankruptcy Court for the Southern District of Georgia held ( In re Fauvie , 2017 BL 212714, Bankr. S.D. Ga., 15-40635-EJC, 6/21/17 ).
The trustee chose not to sell the assets when the case was pending and can’t reopen it now, Judge Edward J. Coleman, III wrote June 21.
Property that isn’t administered or sold by the trustee during the case is considered “abandoned” to the debtor under Bankruptcy Code Section 554(c).
There is some disagreement among courts, however, whether a closed case can be reopened to allow the administration of assets that have previously been “abandoned” by the trustee, the court said.
While some courts hold reopening a case automatically revokes any “technical abandonment” under Section 554(c), most courts say that it doesn’t automatically revoke it because abandonment is generally irrevocable, the court said.
The two exceptions to that rule are to administer an asset that was unknown to the trustee, or to administer an asset that was incomplete or misleading, the court said.
Keith Fauvie filed Chapter 7 and listed his assets as a 1978 Corvette valued at $9,000, and a 2003 Stingray CS 220 valued at $9,100.
Trustee James L. Drake, Jr. determined Fauvie’s case was a possible asset case, and hired Mike Bohannon to sell the car and the boat. Bohannon, however, was unable to sell them. Drake filed a “no asset” report and the case was closed. One year later, he wanted to reopen the case because he received a cash offer for both items.
The court denied the trustee’s request. He clearly took possession and knew about the assets, and had an opportunity to sell them, the court said. There also wasn’t any evidence to show that Fauvie failed to disclose assets or was misleading, the court said.
The court said it wasn’t clear why the trustee still had possession of Fauvie’s property a year later. It should've been made available to the debtor, the court said.
John E. Pytte, Hinesville, Ga., represented Fauvie; Shawna Y. Staton, James L. Drake, Jr., PC, Savannah, Ga., represented the trustee.To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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