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 Andrea, Esq. Your Own Question
Andrea, Esq.
Andrea, Esq., Attorney
Category: Legal
Satisfied Customers: 12554
Experience:  25 yrs. experience in family law, estates, real estate, business law, criminal defense, immigration, and employment law.
Type Your Legal Question Here...
Andrea, Esq. is online now
A new question is answered every 9 seconds

Sirs, A Chapter 11 proceedings in District of Delaware is

Resolved Question:

A Chapter 11 proceedings in District of Delaware is filed by a Debtor. An Unsecured Creditor for supply of goods from India subsequently finds that the Debtor in connivance with the Forwarder of goods committed a fraud on the Unsecured Creditor in taking delivery of the goods WITHOUT PRODUCING ORIGINAL BILLS OF LADING, which originals were negotiated through Bank. This fraud has taken place before the date of filing for bankruptcy by the Debtor.
Kindly let me know what actions the Unsecured Creditor take against the Debtor? Can he file a criminal compliant in USA and also move the Hon'ble Court to appoint a Trustee or an Examiner in the bankrupcy case? Can he insist that the amount outstanding has to be paid out of turn under S.509(b) ?
Best regards
B.K.S.Ragavan [email protected]
Submitted: 7 years ago.
Category: Legal
Expert:  Andrea, Esq. replied 7 years ago.


Goof Evening,


Thank you for choosing JustAnswer. I will be happy to help you.


When a debtor has filed a Chapter 11 Petition in Bankruptcy, he must make a list of all his creditors. Your name, as a creditor, should appear on that list. you or your attorney should send a letter to the Trustee in Bankruptcy, a person appointed by the Bankruptcy Court to inform them of your status as a creditor, and in this way, determine if the debtor included your name on the list of creditors which he filed along with his Petition in Bankruptcy.


However, if the debtor has included your name and the amount he owes you in his Petition in Bankruptcy, you will be included with the rest of his creditors and whaatever money the debtor has will be divided among all the creditors, and the claims will be "discharged in bankruptcy"


If the debtor has not included your name on the list of creditors, then the debt he owes you will not be discharged in bankruptcy and he will still owe you the full amount.


Unfortunately, neither the Bankruptcy Court or the Trustee in Bankruptcy will permit any payment because that would be a "Preference" and the rule is that all creditors listed in the debtor's Petition in Bankruptcy will be treated equally.


Once a debtor has filed a Petition in Bankruptcy, the Bankruptcy Court prohibits the debtor from paying any creditor to the detriment of the other creditors to whom the debtor owes money. In fact, if within 4 months of filing his Petitin in Bankruptcy, the debtor makes any transfer of money or anything else of value to someone, te Court will negate and reverse the transfer, unless the transferee can show that he gave the debtor good and valuable consideration for the transfer.


Additionally, the Bankruptcy Court prohibits the debtor from transferring anything of his out of the bankruptcy estate during the time he is under the jurisdiction of the Bankruptcy Court.


The Bankruptcy Court does not have jurisdiction (authority, power) bring crimial charges against the debtor, or to try him on those charges, even if there was fraud.

Your remedy would be to notify the Federal authorities of the fraud committed against you and they will have the power to prosecute him in Federal District Court.


I hope that clarifies your options. Kindly press the "ACCEPT" button so that I may receive credit for my work. Leaving Positive feedback, Bonus, etc. is always appreciated.


Thank you for allowing me to help you and Good Luck!

Please do not forget to press the "ACCEPT" button.


ANDREA Attorney at Law & Legal Expert




Customer: replied 7 years ago.

Good morning.

Your replies are general in nature. My question was NOT on how creditors' payments are protected in C-11 case. Let me rephrase below.

1. My company has shipped the goods which are subject matter of C-11 proceedings by the Debtor. My company also validly filed Claim Form.

2. While it was so, we observed that forwarder of goods in connivance with the consignee (Debtor) took delivery of the goods fraudulently without producing the Negotiation copy of the bill of lading.

3. The forwarder has accepted the lapse and has offered to indemnify my company. This indemnity itself is an incontrovertible proof of fraud.

4. Now I would like to move the Bankruptcy Court seeking appointment of a Trustee or an Examiner in the affairs of the Debtor. Can I also file a criminal compliant against the Debtor for the fraud committed by him ? What compensation can be sought ? Pl keep in mind the C-11 proceedings does not tolerate fraudulent practices.


Pl re-examine and provide your opinions with relevant statutory quotes.


Best regards,



Expert:  Andrea, Esq. replied 7 years ago.

Thank you for your reply,


I will ry to clarify my answer because I did state what you are asking in my previous answer.


Although I do not specificaly state that "the Bankruptcy Court appoints a Trustee in Bankruptcy" I make reference to the Trustee in several paragraphs.


A Trustee in Bankruptcy is always appointed when a debtor files a Petition in Bankrupty under any of the chapters. So it is not necessary to move the Bankruptcy Court to do so. If the Court has not yet appointed a Trustee or a Receiver for the Debtor you can contact the Bankruptcy Court and ask when they anticipate appointing them.


As for filing a complaint for fraud against the debtor - I stated that the Bankrupcy Court has no jurisdiction over this matter, but that you could file a complaint with the Federal Prosecutor who would prosecute the debtor in Federal District Court for the District of Dlaware,; I respectfully XXXXX XXXXX attention to the fourth (4th line from the bottom in the body of the letter, the sentence starts with "Your remedy....."


I apologize if I did not make myself clear. I hope the above clarifies this.


Thank you aain for allowing me to help you. Please press the "ACCEPT" button so that I may receive credit for my work.


Thank you againand Good Luck!


ANDREA - Attorney at Law & Legal Expert

Andrea, Esq. and 7 other Legal Specialists are ready to help you