Michael Joseph:
I am reminded of an example of an unusual asset (although I have more than one) known as the Delaware motor vehicle license plate case. I believe Delaware is the only state that permits license plates to be sold and transferred to buyers. In Delaware, a license plate can be a valuable asset. You can keep a license plate number your whole life, transferring from car to car. You can sell it to someone or bequeath it to your children. Delaware license plates are numbered, and plate numbers 1 to 3 are reserved for the governor, the lieutenant governor, and the secretary of state. Starting with plate #4, Delaware keeps counting and issuing plates up to 6 digits. Plates with low digit numbers are prestigious and valuable. Recently plate #6 sold for $675,000! Several years ago, it was discovered that an elderly Chapter 7 debtor held Delaware license plate #67. The debtor had held this plate for many years and alleged he didn’t realize it had value. As the chapter 7 trustee and the US Trustee questioned this asset, the debtor converted the case to chapter 13. Although the chapter 7 trustee objected to the conversion under Marrama, the Bankruptcy Court found it was a good faith conversion and allowed the debtor to proceed under chapter 13. See In re Murray, 377 BR 467 (Del. Bankr. 2007). The low numbered tag was very valuable. I required and the debtor and his counsel agreed to advertise it for a public auction. I supervised the terms and organization for the sale, although the debtor ultimately maintained control of the sale. It sold for $145,000, that fully paid all allowed claims after debtor’s exemptions. Truly an unusual asset.
Nancy Grigsby:
One memory that I recall well involved a home tied up in federal district court. An unusual and valuable situation. I had a debtor who inherited his mother’s home in southern Maryland, which was free and clear of any liens. He filed bankruptcy after he was arrested as part of a drug ring where, at some point, the drug bust or sale of drugs took place in that home. After the drug bust and after the bankruptcy case was filed, an order was entered allowing the home to be seized as one of the properties the government intended to liquidate under federal seizure laws. The federal drug case was in progress in my division and I contacted the Assistant District Attorney to see if we could get that property excluded from liquidation. I told him I intended to challenge the seizure because it was property of the bankruptcy estate before the seizure order was entered. The home had more than enough equity to pay all creditors 100%. The ADA saw the bankruptcy as an inconvenience and would not play ball. I wrote the District Court Judge and all parties a letter citing authority for the district court to exclude the property as property of the estate, stating that I would oversee the sale of the real estate and turn over any excess funds to the federal court case after payment to creditors. The ADA was furious, but the District Court Judge agreed with me and excluded the property. Within a few months the property was sold, creditors paid and proceeds turned over to the District Court. A win for the creditors. Kudos also to the attorney who had the foresight to put the debtor into a chapter 13 so I could pursue the asset.
Herb Beskin:
A Debtor filed his case listing on Schedule A a “family home” in Gambia, West Africa. He had not been back there for many years, and was very unsure of its value. I thought the Schedule A value was suspiciously low, so I asked Debtor’s counsel for proof of valuation. Initially the Debtor could provide no documents and no explanation of how he came up with that figure. After significant efforts by Debtor’s counsel, we were able to obtain a tax assessment, but I assumed that, like here, a tax assessment is usually not a fair market value. So, the attorney–after much additional effort–obtained a valuation by a Gambian “Senior Lands & Valuation Officer.” Problem: it was in Gambian “Dalasis.” The Dalasi is the official Gambian currency. We then had to obtain a current exchange rate into dollars, and were finally able to come up with a valuation figure we could all live with. (Note: as of last year, One Gambian dalasi was worth 0.016 US dollars; it has slipped to 0.015 dollars as of today.)
Robert Wilson:
We had a Chapter 13 debtor who claimed to have a couple of old nag horses. We decided to investigate it further and joined the American Quarter Horse Association. From there we were able to get records of all the horses, and their owners. We found the debtor had some good horses that were winning races. When confronted he took the position that they were in an LLC and we didn’t have any right to the earnings. We flew through that argument and the debtor then dismissed. While we didn’t get the assets, the creditors got their state court rights back and pursued the debtor.
Denise Pappalardo:
I think I had a pretty boring trusteeship. I really can’t think of a case where there was an unusual asset like Mike’s license plate case. I did have a debtor who was a lawyer who “forgot” to schedule two personal injury cases where she was the plaintiff and fired her attorney the day after the 341 meeting. That case converted to chapter 7 on my motion. It turned out to be a good recovery in the 7.
Isabel Balboa:
I recall an unusual case that was the 3d filing for the debtor – case involved a Chapter 13 filed by a power of attorney. The debtor had authorized the first filing with his mother as POA. However, in the most recent case, the debtor claimed he was unaware that the 2d and 3d filings were filed by his mother on his behalf. The 3rd case was filed by the mother to obtain a stay of proceedings by the HOA on New Jersey real property owned by the debtor where his mother was raising his daughter. Prior to the 341(a) Meeting, the actual debtor (not the POA) called our office and advised that he had not filed a bankruptcy case nor authorized anyone to do so on his behalf. That set off lots of bells. The following day the debtor called again, and I spoke with him. He shared a lot of details about his life and past addictions. He also disclosed a contentious relationship with the bankruptcy attorney who filed the petition. The attorney that filed the case was in fact representing the debtor’s mother.
Many questions arose in this 3rd case: The POA was 4 years old; the signature seemed questionable; Debtor’s mother and debtor’s stepfather’s income was listed, not the debtor’s; the debtor resided in Philadelphia, not New Jersey; and Schedule J expenses were difficult to ascertain.
As a result of these concerns, a Motion to Dismiss was filed. At that time the POA’s attorney withdrew as counsel and new counsel retained. After a hearing on the Motion, the court allowed the case to continue with 180-day bar to future filings should the case be dismissed. Prior to confirmation however the debtor through his mother sought to cut a deal with the HOA attorney to pay arrears under the plan and the case. These efforts were unsuccessful, and the HOA filed a Motion for Stay relief for failure to make post-petition payments and failure to complete the Census Form. The Census form completed by the POA contained inaccurate information and the Board had no way to communicate with the Debtor. The HOA argued the debtor was in breach of non-monetary ownership obligations. At the conclusion of the plenary hearing, Judge Altenburg dismissed the case with a two-year bar to future filing.
