My questions is will she be allowed to offer to purchase it as well?
A: The right to the VARS should have been disclosed during bankruptcy. Ex-spouse has a community interest in that property, which means that the bankruptcy estate has that same interest, and the bankruptcy court is authorized to divide the community property, if it wishes to do so. Because of this, the trustee, who is authorized to liquidate the ex-wife's estate, can decide to sell the ex-wife's interest in the VARS to your husband.
Theoretically, the sale could be made to the ex-wife, as a means of generating a bidding war -- but, the value of the claim would be exactly the same amount as the ex-wife would receive were she to prevail in family court, so there would be little point in making that transaction, since it would result in a net-zero result for the ex-wife.
So, the answer here, is "yes," but almost no probability of it occurring. And if we settle is the Family Law case and over. Family Law would not move forward with case because they needed a release from stay from the Bankruptcy courts and it does not look like that’s going to happen.
A: The family law case is over, because the bankruptcy court has jurisdiction to distribute the ex-wife's community property, and if it sells it to your husband, then that is the end of the matter, because it will be his separate property -- not community.
Will it be a done deal or will she be allowed to still fight in Family Law after the settlement in Bankruptcy Court?
A: It's a done deal, unless the family court judge doesn't know the law (which, in my experience, is a 50/50 bet). I can promise at least one fairly contentious hearing in family court to dismiss the action as preempted by federal court order, and to try to explain to the court why there is no longer any community property to divide.
Hope this helps. NOTICE
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