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Can a creditor in a California bankruptcy proceeding who has…

Can a creditor in...

Can a creditor in a California bankruptcy proceeding who has entered into a post petition contract with the trustee in a chapter 7 case resend the contract if the trustee breeches the agreement.

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

California. The contract with the trustee provided that part of a secured judgment lien would go to the trustee if the trustee performed certain obligations. The trustee breached. In addition to suing for breach of contract, can I also resend or cancel the agreement under Civil Code section 1688

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

Many things have been filed in bankruptcy court including the contract and the bankruptcy courts approval of the contract. As a result, the trustee was supposed to perform certain obligations. For example, one property was sold payment was supposed to be made immediately. Instead the payment was sequestered.

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

There was $3 million involved that under the contract was supposed to be split 50-50. Because of the breaches, if the contract was cancelled the trustee would not receive his half, which went for trustee legal fees anyway

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Customer reply replied 3 months ago
That should say “rescind” not “resend”
Customer reply replied 3 months ago
To be more precise, the contract is a “carve out” whereby the estate received 50% of a secured judgment lien. In return the trustee agreed to revoke a trust formed by the debtor, to support the judgment Lien in any litigation where it should come up, to sell the property fast and pay off the lien out of escrow when the property was sold and litigate a pending case to completion. In fact, he sequestered the funds, abandoned the litigation, attacked the lien in litigation and did not sell the property for over two years. The question is can the Ch 7 estate be sued for breach of contract and can the remedy of rescission be sought. The contract was approved by the bankruptcy court on June 18, 2014. There was $1.5 million in the trustee share allegedly for the benefit of unsecured creditor. He wants to take out $1.4 million for his own fees.
Answered in 1 day by:
11/24/2017
DrakeLAW
DrakeLAW, Attorney
Category: Bankruptcy Law
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Hi, my name is ***** ***** I look forward to helping you, please give me a moment to review and possibly research answers to your question.

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I see that your question was posted yesterday, I can help you with this, please let me know if you still want assistance with it. Thank you.

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Customer reply replied 2 months ago
I still would like an answer, thank you
Customer reply replied 2 months ago
thank you for your assistance.

Alright, thank you for your patience. That is quite a set of facts.

Yes, a chapter 7 trustee can be sued just like any other entity. All of the contract claims, defenses, and remedies would be available as well. The trustee gets sued in his capacity as a trustee, not individually.

Please kindly rate the question so I may be credited. Thank you. You can still ask follow-up questions.

DrakeLAW
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