A pair of recent decisions have some important lessons for your Chapter 7 Bankruptcy case, because they both deal with very common issues.
The Wrong Place
In Okechuku v. Sharp Management, a New Jersey sheet metal company filed a voluntary Chapter 7 petition. Shortly thereafter, the trustee filed a motion for turnover, claiming that Norman Sheet Metal & Mechanical owed over $100,000 in unpaid invoices to Sharp Management. NSM&M filed an unopposed motion to transfer the matter to U.S. District Court. It then almost immediately filed a motion to dismiss, claiming that the district court did not have jurisdiction. The judge granted the motion and dismissed the action, so NSM&M didn’t pay a dime to Sharp Management.
The case is confusing. This sheet metal company was a New Jersey LLC, but one member lived in New York and one in New Jersey. The trustee evidently believed that the district judge had jurisdiction, because of the diversity of citizenship. Instead, the court ruled that both the LLC and trustee were from the same state, so the matter could not be heard in federal court.
Especially when an emergency filing is involved, it is not uncommon for a case to be filed in the wrong jurisdiction. Even if that mistake can be fixed, it may lead to costly and unnecessary delays. In a similar vein, it’s also important to hire a local bankruptcy lawyer who is familiar with all the local rules and procedures, because many of these rules are unwritten.
The Wrong Attitude
A day before the Okechuku decision, the bankruptcy court refused a rather routine request because of the party’s behavior.
In Re Askman centered on Sergey Ishin’s request to extend time prior to discharge. Mr. Ishin was a creditor in the Chapter 7 Bankruptcy, and he was involved in a lawsuit against the debtor. Mr. Ishin received prior notice of the Creditor’s Meeting, but he neither attended that meeting nor requested an adjournment. Michael and Melinda Askman, on the other hand, attended the Creditor’s Meeting and timely responded to the Trustee’s request for more information. About two months later, and just two days before the discharge date, Mr. Ishin asked to extend the discharge date to investigate his claim against Mr. Askman.
When you were a child and you asked your mother to take you to a movie, she may very well have asked “did you do your homework and clean your room?” The same thing is true in a court of law. It is almost impossible to convince the judge to do you a favor if you have missed a deadline or ignored an order without a very good excuse for you conduct.
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