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The Ch 11 Debtor is an individual whose assets include

Customer Question
The Ch 11 Debtor...

The Ch 11 Debtor is an individual whose assets include ownership of shares in two closely held companies. The Debtor has produced financial statements which demonstrate the value of his equity interest in the two companies (GAAP compliant), including as an attachment, appraisal of an income producing commercial real estate. Under what circumstances is a creditor entitled to obtain access to the confidential business records (tenant roster, rent role, loan documents) of the company and gain access to the premises to have a separate appraisal conducted.

Lawyer's Assistant: We keep all your personally identifiable information confidential and even have people that double check to make sure something doesn't slip through. Your question goes out to the Bankruptcy Lawyer's and then gets published with the answer to help others with similar problems.

In this case, the creditor is an unsecured creditor of the individual Debtor and has no claim against the company.

Lawyer's Assistant: What state are you in? And has anything been officially filed?

New York. Yes there is a pending case.

Lawyer's Assistant: Has anything been filed in civil court? If so, what?

No. It's a pending bankruptcy case alone and no pending action exists in state court, and no Motion for relief from the automatic stay is pending. The unsecured credit simply wants access to the company's records and to conduct an independent appraisal of its assets.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I believe this is sufficient; would like to get a handle on whether the bankruptcy court can enter an order directing an independent company to allow access to its financial records and permit the creditor to conduct an appraisal based on the fact that the Debtor is a shareholder of the company (if he owns 30%, 51%, 100% of the shares), and if so, the threshold showing the credit must make to be entitled to such an inspection and access to conduct the appraisal.

Submitted: 7 months ago.Category: Bankruptcy Law
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Answered in 14 hours by:
9/29/2017
Bankruptcy Lawyer: Law Educator, Esq., Attorney replied 7 months ago
Law Educator, Esq.
Category: Bankruptcy Law
Satisfied Customers: 124,400
Experience: Attorney At Law handling education matters.
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Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

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Bankruptcy Lawyer: Law Educator, Esq., Attorney replied 7 months ago

The BK court can order examination of the corporate records ONLY for the purpose of evaluating the shares of ownership interest of the BK Petitioner (debtor). The BK court has a right to determine the actual value of the debtor's shares, as that value goes to the bankruptcy estate for payment of the creditor claims. So, as far as tenant lists and other confidential information NOT pertaining to valuation of the debtor's shares, the corporation can file for a protective order or ask the court to not require the release of that specific information and why that information has no bearing on the share value.

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