Scribd Logo
Upload

Welcome to Scribd!

  • Supplemental Objection

    Uploaded by

    DeadlyClear
    145 views3 pages
    The hypothetical lien theory asserts that a security interest in personal property or fixtures that is not perfected (i.e. from a legal standpoint it is secret) by the time a creditor obtains a judicial lien will be subordinate to the judicial lien. If a security interest in personal property or fixtures is not perfected at the time a debtor files bankruptcy, section Bankr. Code 544(a)(1) (often known as the "strong arm clause") permits the bankruptcy trustee (or a "debtor-in-possession" in a Chapter 11 bankruptcy proceeding) to step into the shoes of and use the subordinating power of a hypothetical creditor with a judicial lien to avoid the unperfected security interest in its entirety, even if there is no such actual creditor and even though the unperfected security interest would only be subordinated, not eliminated, under state law. Avoidance of the security interest under this section of the Bankruptcy Code has the same effect as avoidance of a security interest under the preference power.

    Original Title

    SUPPLEMENTAL OBJECTION

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The hypothetical lien theory asserts that a security interest in personal property or fixtures that is not perfected (i.e. from a legal standpoint it is secret) by the time a creditor obtains a judicial lien will be subordinate to the judicial lien. If a security interest in personal property or fixtures is not perfected at the time a debtor files bankruptcy, section Bankr. Code 544(a)(1) (often known as the "strong arm clause") permits the bankruptcy trustee (or a "debtor-in-possession" in a Chapter 11 bankruptcy proceeding) to step into the shoes of and use the subordinating power of a hypothetical creditor with a judicial lien to avoid the unperfected security interest in its entirety, even if there is no such actual creditor and even though the unperfected security interest would only be subordinated, not eliminated, under state law. Avoidance of the security interest under this section of the Bankruptcy Code has the same effect as avoidance of a security interest under the preference power.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    145 views3 pages

    Supplemental Objection

    Uploaded by

    DeadlyClear
    The hypothetical lien theory asserts that a security interest in personal property or fixtures that is not perfected (i.e. from a legal standpoint it is secret) by the time a creditor obtains a judicial lien will be subordinate to the judicial lien. If a security interest in personal property or fixtures is not perfected at the time a debtor files bankruptcy, section Bankr. Code 544(a)(1) (often known as the "strong arm clause") permits the bankruptcy trustee (or a "debtor-in-possession" in a Chapter 11 bankruptcy proceeding) to step into the shoes of and use the subordinating power of a hypothetical creditor with a judicial lien to avoid the unperfected security interest in its entirety, even if there is no such actual creditor and even though the unperfected security interest would only be subordinated, not eliminated, under state law. Avoidance of the security interest under this section of the Bankruptcy Code has the same effect as avoidance of a security interest under the preference power.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    ENVER W. PAINTER, JR.

    (JD 2525) Attorney at Law, A Law Corporation 1188 Bishop Street, Suite 2505 Honolulu, Hawaii 96813 Telephone: (808) 537-9777 Facsimile: (808) 537-9207 enver.painter@hawaiiantel.net General Counsel for Trustee DANE S. FIELD IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF HAWAII In re ) ) DALE JULIAN PARSONS, JR., and ) MARY VIRGINIA PARSONS ) ) Debtors ) ) ) ) ) ________________________________ ) Case No. 09-02937 TRUSTEES SUPPLEMENTAL OBJECTION TO DEBTORS MOTION TO COMPEL TRUSTEE TO ABANDON PROPERTY Continued Hearing Date: August 10, 2011 Time: 10:30 a.m. Judge: The Honorable Robert J. Faris

    TRUSTEES SUPPLEMENTAL OBJECTION TO DEBTORS MOTION TO COMPEL TRUSTEE TO ABANDON PROPERTY (Dkt. # 208) Comes Now the duly appointed and acting Chapter 7 Trustee, Dane S. Field, by and through his undersigned counsel and object to the Debtors Motion to Compel Trustee to Abandon Property filed herein on June 20, 2011, Dkt. # 208 as follows.

    U.S. Bankruptcy Court - Hawaii #09-02937 Dkt # 224 Filed 08/08/11 Page 1 of 3

    As stated in the Trustees initial objection to Debtors instant Motion, it is axiomatic that the burden of proving that the property to be abandoned is of inconsequential value or benefit to the estate rest squarely upon the shoulder of the party requesting abandonment. Here the Debtors/ Movants have not meet their burden. Also as stated in the Trustees initial objection to Debtors instant Motion, the Trustee is negotiating with American Savings Bank (ASB) for the sale of the property with a substantial carve out for the estate. Lastly, since filing his initial objection to the Debtors instant Motion, the Trustees has discovered that American Savings Banks (ASB) purported mortgage in the subject property was not properly perfected at the time of the filing of the petition. To the contrary, the Mortgage was in fact in favor of MERS as nominee for ASB at the time of the filing of the petition. It was only subsequent to the filing of the petition that MERS conveyed its mortgage interest in the subject property to ASB. The Trustee believes that his hypothetical lien creditor status conferred by 544 of the Bankruptcy Code is superior to and has priority over any security interest ASB may claim in the property. The Trustee has advised ASB of his belief that his 544 status is superior to any claimed mortgage interest of ASB and is awaiting ASBs response.
    -2-

    U.S. Bankruptcy Court - Hawaii #09-02937 Dkt # 224 Filed 08/08/11 Page 2 of 3

    The Trustees counsel has also advised Debtors counsel, Ramon Ferrer of his beliefs regarding the priority of ASBs mortgage interest vis a via the Trustees hypothetical lien creditor status and has requested that the Debtors withdraw their instant Motion. To date Mr. Ferrer has not responded to counsel requests. The Trustees counsel is presently in the Republic of Palau and will not be able to attend the continued hearing on the instant motion in person or via telephone. As the subject property has value to the estate, the amount of which is yet to be determined and which amount could be substantial should ASB agree with the Trustees assessment of the priorities of their respective claims or the Trustee prevail on his belief that his interest in the property is superior to ASBs unperfected mortgage interest, the instant Motion should be denied. Alternatively, the Trustee requests that the hearing on the Motion be continued until his counsel can appear before the Court and present argument and evidence of the estates interest in the subject property. Dated: Koror, Palau, August 9, 2011

    /s/Enver W. Painter, Jr. ENVER W. PAINTER, JR General Counsel for Trustee DANE S. FIELD
    -3-

    U.S. Bankruptcy Court - Hawaii #09-02937 Dkt # 224 Filed 08/08/11 Page 3 of 3

    You might also like