How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask socrateaser Your Own Question
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37824
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
Type Your Bankruptcy Law Question Here...
socrateaser is online now
A new question is answered every 9 seconds

Regarding Chapter 11 Bankruptcy, please identify case law relating

Customer Question

Regarding Chapter 11 Bankruptcy, please identify case law relating to factoring of accounts receivable, and if the sale of accounts are represents a true sale, the accounts will not be part of the bankruptcy proceeding.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

Nothing on point concerning receivables specifically, however:


In re Coleman, 426 F.3d 719 (4th Cir. 10/20/2005) (Debtor in possession has same powers as trustee and must avoid any secured interest that can be avoided under the Code, for the benefit of the bankruptcy estate).


If I may suggest, the big issue would be whether or not the factoring was an artifice to pull money out of the bankruptcy estate, and actually intended to "defraud, hinder or delay" the unsecured creditor's claims. This is a factual issue as much as anything else, and the closer the factoring gets to the date of filing of the bankruptcy petition, the more suspect the transaction becomes.


Note: I am reluctant to look for case law outside of the 4th Circuit, because it is not binding on a Virginia-based bankruptcy.


Hope this helps.


Terms and Conditions: By your continuing in this conversation with me, or by your clicking “Accept”, you are expressly agreeing to all of the following: (1) our communication is for entertainment purposes only; (2) you are not consulting me in my professional capacity as an attorney; (3) you do not seek to establish an attorney-client relationship with me, nor do I with you; (4) you will not rely on anything I say and you will obtain appropriate legal counsel via a traditional/office consultation with an attorney licensed to practice in the jurisdiction where your legal issue arises (and you may not use our communication to avoid taxpayer penalties imposed by the U.S. Dept. of Treasury); (5) by communicating with me in this public forum you are irrevocably waiving any right to privacy, confidentiality and attorney-client privilege concerning the matters discussed. You further separately declare that any payment made by you is not consideration for this contract, nor offered for any services rendered by me on your behalf, but rather is made in genuine admiration and respect for my desire to help others. If you do not agree with these terms and conditions, then you must advise me immediately.

Related Bankruptcy Law Questions