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Ask Fritz Your Own Question
Fritz
Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience:  Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
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I am currently in non monetary default and monetary default.

Customer Question

I am currently in non monetary default and monetary default. the creditor is seeking restitution eventually and i was wondering if i file chapter 12 could i restructure these debts resolve the non monetary default and use the clawback provision to obtain some of the assets i sold due to financial distress and how does this provision work do i reimburse the creditor after i obtain the asset?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 3 years ago.
Hello and thank you for allowing me the opportunity to assist you.

For clarification, are you a family farmer or fisherman, as required in Chapter 12?
Customer: replied 3 years ago.
Yes I meet all qualifications
Expert:  TJ, Esq. replied 3 years ago.
Hi again.

I will open this to all attorneys so that you receive a response as quickly as possible.
Expert:  Fritz replied 3 years ago.
I need a little more information to provide a more accurate answer to your question. You mention that you would like to "use the clawback provision to obtain some of the assets sold due to financial distress." Was this property lost by forced sale (i.e. foreclosure or an equivalent process)? If so, approximately when was this property sold? Was the property sold back to the bank or a third party? (and if it was a third party, did this third party have any relationship of any kind with you?). Thanks.
Customer: replied 3 years ago.
No I sold this property on my own without creditors permission. To a third party
Expert:  Fritz replied 3 years ago.
These assets might be recoverable as a preferential transfer under Section 547(b) of the Bankruptcy Code, so long as the transfer was made on or within 90 days before the bankruptcy was filed (or within one year prior to filing if the transfer was made to an insider). Can you provide more details as to what was transferred, when the transfer occurred, and whether or not the transfer was made for (approximately) the fair market value of the property?
Customer: replied 3 years ago.
I traded equiptment, like tractor skidsteers drill etc to use for operating and I also sold livestock which could obviously not be returned. I also was wondering when these assets come back what happens do I just owe these people money at that point for exchange of assets
Expert:  Fritz replied 3 years ago.

IF you're able to recover these trades and sales as preferential transfers (which isn't assured, as the purchaser might be able to avoid clawback by demonstrating that the parties intended the transfer to be a contemporaneous exchange for new value, the exchange was in fact contemporaneous, and new value was actually given), the property that gets clawed back will generally be distributed to your secured creditors unless you obtain the permission of your creditors and the court to use cash collateral to maintain the farming operation (and also make regular payments to your secured creditors). This is really, really tricky stuff, and you need to hire an attorney with Chapter 12 experience to help you with this case.

 

 

But the short of it is yes, you could likely restructure the business (and possibly even get new funding to replace the property you sold if it turns out you cannot clawback the equipment you need to run your farm). All of this will ultimately end up being done by you (or your attorney) with the Bankruptcy Court's permission.

Customer: replied 3 years ago.
How would an individual go about obtaining money to operate there business or obtain equiptment while there in bankruptcy? Isn't that extremely challenging to do?
Expert:  Fritz replied 3 years ago.
To be honest, you really need to consult a local attorney at this point, and that attorney could give you a better overview of exactly how you'd go about operating your business in a Chapter 12 bankruptcy. The particular financial details are too complicated to get into without having a complete picture of your assets and liabilities.

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