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Question
The covenant not to compete is not dischargeable. I recall the 9th Cir
case of Tia Carrere (sp?) regarding enforcement of a covenant not to compete.
It is similar to an injunction, and not a dischargeable debt and remains
enforceable.
The covenant not to compete is not dischargeable. I recall the 9th
Cir case of Tia Carrere (sp?) regarding enforcement of a covenant not to
compete. It is similar to an injunction, and not a dischargeable debt and
remains enforceable.
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Dennis:
It seems to me that it would be a claim under 101(5)(B) and therefore dischargeable.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
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Dennis:
About four years ago I had a Chapter 13 case in front of Judge
Thompson where the debtor had a state court injunction in effect not
to compete with her former employer and the creditor made a big issue
out of it at the confirmation hearing. Judge Thomspon indiciated that
such order for that equitable remedy remained effective and would ride
through the bankruptcy case. However, factually that case had more
to do with alleged use of customer lists, than just mere competing. I
did not have to delve into the case law much in the bankruptcy context
as the client was not then or even contemplating ever again working in
that industry.
My two cents is that I see the covenent not to compete as a contract
clause, which if valid under applicable state law, may have legal
and/or equitable remedies. Regardless, unless somehow the individual
facts cause that particular clause to fall under the auspices of
Sections 523(a)(2),(a)(4) or (a)(6) or (a)(15) I do not see how a mere
covenent not to compete would be excepted from discharge.
The last time I researched the issue under CA law about 4 or 5 years
ago, covenents not to compete were widely disfavored in the
employer/employee context. Any such restrictions had to be narrowly
tailored geographically and of limited duration to have any chance to
be enforceable. Employees of course can be restricted from using
proprietary information after leaving employment, but again that is
not just a simple noncompetition agreement. From the buyer/seller
context absolutely they were enforeceable, but again geographic and
time considations were applicable depending on the nature of the
business.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
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On Tue 12/01/10 2:13 PM , Dennis McGoldrick easky1@yahoo.com sent:
Ladies and Gents: Has anyone ever researched if the obligations
in a covenant not to compete can be discharged in a bk? dennis
--- On TUE, 1/5/10, ATTORNEY CHRISTINE __ wrote:
Subject: [cdcbaa] UST Review under 11 USC 707
To: cdcbaa@yahoogroups.com
Date: Tuesday, January 5, 2010, 9:45 AM
As my newbie luck would have me on a steep learning curve, one
of my chapter 7 cases has been selected for review by the renowned
Hatty Yip. This is a Los Angeles case with Zurzolo and was filed in
December.
With the above information and knowing that the case was filed in
December, 2009, the UST is asking for:
1. Any and all bank and credit union statements and brokerage
accounts for the period covering August 2008 through the date of their
letter December 23, 2009;
2. Any and all credit card statements for all credit cards listed on
the debtor's schedule F for the period covering August 2008 through
the date of their letter December 23, 2009;
3. Were there any intervening factor(s) which caused the Debtor(s)
to file this Chapter 7 proceeding? Please explain the special
circumstances behind the filing of this petition.
Now, the letter is asking for other information, including W2's,
credit report and 2008 tax return, but I do not find these other
requests to be as voluminous as items 1-3 above.
Would those that have been through this process before please advise
what you would do under the circumstances? Any help, guidance or
direction in this case would be greatly appreciated.
Oh, and I put a call into Hatty Yip's office asking if it was a
typo, just to be sure.
Thanks in advance,
Christine Wilton
attorneychristine@ gmail.com [1]
Links:
[1]
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