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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I settled with my old company in court over a dispute regarding

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I settled with my old company in court over a dispute regarding a relocation agreement for $25,000 to be paid over 4 years. I've been paying for almost a year. The company just filed chapter 11 in Delaware. Do I have any options to get out of the debt for less money?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 1 year ago.
Hello,

In Chapter 11, everything in a debtor's assets and liabilities portfolio is generally "on the table" for negotiations. Most of the time, a Chapter 11 corporation is its own trustee (legally termed, "debtor in possession"). Occasionally, the court appoints a third party bankruptcy trustee -- typically in cases where the court determines that the corporation may be unable to fairly manage its own debts (e.g., likely to commit misappropriation or fraud).

Assuming that the corporation's attorney is acting on behalf of the debtor in possession, then the attorney can negotiate a settlement with you. If you have a bona fide offer to make, such as a reasonable lump-sum payment for less than the original $25,000 judgment, then you are better served to make that offer in writing to the attorney, and provide a date by which the attorney must agree to enter into a release and provide you with a satisfaction of judgment in exchange for your payment.

If after you send your offer, you receive no response, then this probably means that the corporation is not interested in your offer. You have no actual powers due to the bankruptcy to force the corporation to accept your offer. However, if a true U.S. bankruptcy trustee were to be appointed during the Chapter 11 proceedings, then you could try to negotiate again -- because a third party trustee has a big incentive to accept your offer, as the trustee's fees are based in part upon the amount of money that passes through the trustee's hands during the administration of the bankruptcy estate.

You can file a request for special notice with the bankruptcy court, so that you receive notice of any important actions that occur in the case. Or, you can sign up for a subscription to PACER, which is the federal court database of legal actions, and then you can occasionally review the court docket in the case to see if a U.S. Trustee is appointed.

That's about all of the available options. Please let me know if my answer is helpful or if I can provide further assistance.

Thanks in advance!
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34854
Experience: Attorney and Real Estate Broker -- Retired (mostly)
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