Personal Bankruptcy Trustee trying to abandon assets,what to do?

[bookdaddy]

I am located in The State of Maine, as is the bankruptcy case.

A Brief History: A bar location I worked for as a bartender and shift supervisor filed for Ch. 11 bankruptcy in Aug, 2008. In October the lucky employees found the doors locked for multiple days and through anyone but the debtor eventually found out that all employees were laid off. In Jan, 2009 the case was converted to Ch. 7 due to the trustee filing a Motion to Convert that was granted by the court. I filed my priority claim for wages owed pre-petition of ~$1,500 early on. We are told so far by the trustee that there are some assets but have not been told anything as to what they are and what their value is as of yet. Next meeting of the Creditors (the first since going Ch. 7) is scheduled for Feb. 6th, 2009. I have no legal counsel.


My current question/issue: I have gotten two separate "Notice of Intent to Abandon Property" from the US trustee. The first is for the deposit put down on their lease which is for $17,500 and the second is for all the property contained within which is itemized and the value is estimated at $94,500. Now from my general knowledge I gather that the only reason a trustee should abandon property is if the value is less than the cost to liquidate and distribute. What I am wondering is if there is anything I don't understand about this as I feel this is a large enough sum of money that it should be getting liquidated and so on. I feel a bit like the priority table by which the creditors are to be paid is being bypassed by this "loophole" for lack of a better understanding. At the same time I feel I should be trusting that the US trustee has the creditors best interests in mind but I worry I might simply have a lack of information that is screwing me over. Conspiracy theories are also coming to mind but I'm trying to remain reasonable. Please help in any way you can to fill in some gaps for me. I have almost two weeks to file an objection for the Intent to Abandon the property which is the one I am more concerned with and which I am strongly considering. That also means that the next Meeting of the Creditors will take place before that deadline. What course of action would you recommend?

 

[Theresagail]

When the trustee abandons property, there is a lien on the property that is more then what the property is worth. The lien holders are asking the trustee to abandon the courts interest in the property so they can take the property and liquidate it. Otherwise the trustee would liquidate it and pay the lien holder off and distribute the funds for the creditors. The trustee's main goal is to locate assets to distribute to the creditors-- However you can call the court clerk and they will let you know why they are going to abandon the property-- The trustee is there to work for the creditors not the debtors-- I would think that with the market right now the time for the trustee to liquidate that piece of property would take to long for the amount needed to PIF the Lien holder and distribute. The Bankruptcy was converted to a chapter 7 meaning this company really has no assets.

 

[bookdaddy]

When the trustee abandons property, there is a lien on the property that is more then what the property is worth. The lien holders are asking the trustee to abandon the courts interest in the property so they can take the property and liquidate it. Otherwise the trustee would liquidate it and pay the lien holder off and distribute the funds for the creditors. The trustee's main goal is to locate assets to distribute to the creditors-- However you can call the court clerk and they will let you know why they are going to abandon the property-- The trustee is there to work for the creditors not the debtors-- I would think that with the market right now the time for the trustee to liquidate that piece of property would take to long for the amount needed to PIF the Lien holder and distribute. The Bankruptcy was converted to a chapter 7 meaning this company really has no assets.

Thank you for your reply. I technically fall under priority for wages. From my research I find that only the lawyer's fees and trustee's fees get paid before that priority wage claims are paid. Am I incorrect in this? Would the leins really be paid before the priority wage claims?

Thanks again for your help.

 

[Theresagail]

Yes the trustee and the attorney get paid 1st--- the lien holder would always get paid first because they will not release the deed to the property--- Wage claims as far as I know would just fall under creditor claims and they will be paid last--- However this is not a repay plan this is a chapter 7 -- Unless the trustee locates some asstes with equity the only people that will be paid ( more then likley already have) is the attorney and the trustee. everyone else will be SOL.

 

[bookdaddy]

Yes the trustee and the attorney get paid 1st--- the lien holder would always get paid first because they will not release the deed to the property--- Wage claims as far as I know would just fall under creditor claims and they will be paid last--- However this is not a repay plan this is a chapter 7 -- Unless the trustee locates some asstes with equity the only people that will be paid ( more then likley already have) is the attorney and the trustee. everyone else will be SOL.

Well I can tell you that in the State of Maine wages are a priority claim that falls higher in the chain than a lot of other creditors. I'll have to track down the chart to show the categories exactly. Let me see what I can find.

 

[bookdaddy]

Ok, here is what I had reada time or two before while researching my situation.

Priorities

Throughout Bankruptcy in Brief, we refer to "priority claims" and "priority taxes". Just what are the priorities of the Bankruptcy Code?

Priority refers to the order in which unsecured claims in a bankruptcy case are paid from the money available in the bankruptcy estate. Claims in the higher priority are paid in full before claims in a lower priority receive anything.

Within a class, creditors share the available funds in proportion to the size of their claim.

The order of payment, as set out in § 507, is as follows:

1.Claims for debts to spouse or children for court ordered support
2.Administrative expenses of the bankruptcy
3.Unsecured, post petition claims in an involuntary case
4.Wage claims of employees and independent salespersons up to $10,000 per claim
5.Contributions to employee benefit plans up to $10,000 per employee
6.Claims of farmers and fishermen against debtors operating storage or processing facilities.
7.Layaway claims of individuals who didn't get the item they made the deposit on
8.Recent income, sales, employment or gross receipts taxes

In the case of an individual debtor, some of these kinds of claims are also non dischargeable in Chapter 7, such as support and taxes.

Secured claims are paid from the proceeds of the collateral; if the collateral is insufficient to pay the claim in full, the balance becomes an unsecured claim.

The way I read this as applies to my case is,

1. There is no one in this category.
2. This is the lawyer and the trustee's expenses.
3. Is this where people with liens would fall? I'm not sure of this category.
4. And here I am.

Am I reading that right or ... what do you think?

 

[Theresagail]

4.Wage claims of employees and independent salespersons up to $10,000 per claim

In the case of an individual debtor, some of these kinds of claims are also non dischargeable in Chapter 7, such as support and taxes.

Call the bankruptcy clerks office on this one--- To me it states --this business will not receive a discharge of your wage debt owed--- If this is true, then you can sue him for the wages--- However you need to ask if the wages owed to you will be discharged in the bankruptcy. If they will be then you are SOL if they wont then sue

 

[Theresagail]

Also GO TO THE MEETING OF CREDITORS and talk to the trustee yourself - he will be there-- you may even see if you can reafiirn the debt that the bar owes you @ that time -- You can also call the attorney that is representing the bar and ask what the debtors intentions are in paying you your wages--- they will tell you too.

 

[bookdaddy]

Also GO TO THE MEETING OF CREDITORS and talk to the trustee yourself - he will be there-- you may even see if you can reafiirn the debt that the bar owes you @ that time -- You can also call the attorney that is representing the bar and ask what the debtors intentions are in paying you your wages--- they will tell you too.

Thank you so much for your help in understanding everything. I greatly appreciate it. I am in the process of some of this now. I will follow up with you in the near future to let you know how it goes. Thanks again.