Central District Consumer Bankruptcy Attorney's Association

Hi Louis and thanks for your response to Mark's question. When I looked at the red-lined version of the new law, it appeared to me that with regards to avoidable preference transfers, the trustee can only avoid if it was made within 90 days of the filing of the BK, or if the transfer was to an insider, for 90 to one year from the date of the filing. I did see where the Fraudulent Transfer lookback period was being extended to 2 years, but it looks like that does not take effect until one year after enactment of the new reform legislation? I will reexamine the red-lined code to see if I am missing something and would like a response if you think I am misinterpreting or misreading the new code. If my analysis is correct, I could file any time after one year of the transaction and the trustee would not be able to avoid (and this would allow us to still file before October since the sale of the business was 9/27/04). Again, I would appreciate anyone's thoughts.

Sincerely,

Wayne Wilhelm
"Law Offices of Louis J. Esbin" wrote:
Mark,
My initial reaction is that the sale of the business, unless they
are in the business of buying and selling businesses, is not in the
ordinary course. With passage of the 2005 Act you have an immediate
issue of a 2 year preference for insiders. If you file a chapter 7,
the trustee will no doubt file a preference action against the
insiders. I do not think you can advise the client not to list the
payments, and may expose yourself on several levels if you did, and
even if you did not, if they do not list them. They can also be
subject to a 727 complaint to deny the discharge. Consider the more
controlled environment of a Chapter 13; however, even under a
Chapter 13, you must disclose and the Chapter 13 Trustee will raise
the preference issue. Chapter 13 Debtors have the standing to bring
preference actions. The insiders may not like it, but they may need
to be sued, or else a settlement reached on recovery with them.
They can take the bad debt charge off against they taxes to reduce
the sting!
Good luck and best regards. Lou Esbin
ps... Try to attend the June 18th Round Table discussion.
> Dear Group;
>
> Issue: H & W owned a business that was sold on Sept. 04 for
$300K. Of
> the $300K, approximately $130K was disbursed to four family
members
> who H & W claim loaned them the money to start the business. They
> don't have any evidence of the loan. After deducting all other
debts,
> H & W are left with a little over $3K.
>
> Question: Since this transaction was the sale of a business,
would it
> be considered "in the ordinary course of business", in which case
H &
> W would not have to list the payments to their relatives,
creditors,
> etc. in their Statement of Financial Affairs under #10, or do they
> have to list it?
>
> Any feedback would be appreciated.
>
> Mark C. Kim
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Hi Louis and thanks for your response to Mark's question. When I looked at the red-lined version of the new law, it appeared to me that with regards to avoidable preference transfers, the trustee can only avoid if it was made within 90 days of the filing of the BK, or if the transfer was to an insider, for 90 to one year from the date of the filing. I did see where the Fraudulent Transfer lookback period was being extended to 2 years, but it looks like that does not take effect until one year after enactment of the new reform legislation? I will reexamine the red-lined code to see if I am missing something and would like a response if you think I am misinterpreting or misreading the new code. If my analysis is correct, I could file any time after one year of the transaction and the trustee would not be able to avoid (and this would allow us to still file before October since the sale of the business was 9/27/04). Again, I would appreciate anyone's thoughts.

Sincerely,

Wayne Wilhelm"Law Offices of Louis J. Esbin" <Esbinlaw@sbcglobal.net> wrote:
Mark,My initial reaction is that the sale of the business, unless they are in the business of buying and selling businesses, is not in the ordinary course. With passage of the 2005 Act you have an immediate issue of a 2 year preference for insiders. If you file a chapter 7, the trustee will no doubt file a preference action against the insiders. I do not think you can advise the client not to list the payments, and may expose yourself on several levels if you did, and even if you did not, if they do not list them. They can also be subject to a 727 complaint to deny the discharge. Consider the more controlled environment of a Chapter 13; however, even under a Chapter 13, you must disclose and the Chapter 13 Trustee will raise the preference issue. Chapter 13 Debtors have the standing to bring
preference actions. The insiders may not like it, but they may need to be sued, or else a settlement reached on recovery with them. They can take the bad debt charge off against they taxes to reduce the sting!Good luck and best regards. Lou Esbinps... Try to attend the June 18th Round Table discussion.--- In cdcbaa@yahoogroups.com, "markkimlaw" <markkimlaw@y...> wrote:> Dear Group;> > Issue: H & W owned a business that was sold on Sept. 04 for $300K. Of > the $300K, approximately $130K was disbursed to four family members > who H & W claim loaned them the money to start the business. They > don't have any evidence of the loan. After deducting all other debts, > H & W are left with a little over $3K.> > Question: Since this transaction was the sale of a business, would it > be considered "in the
ordinary course of business", in which case H & > W would not have to list the payments to their relatives, creditors, > etc. in their Statement of Financial Affairs under #10, or do they > have to list it?> > Any feedback would be appreciated.> > Mark C. Kim

The post was migrated from Yahoo.

I wish I could attend but it's Evan's first birthay
party that day and I would be in the dog house for the
next year if I didn't go.
Mark
> Mark, maybe you can get more info from the other
> members at the round table on the 18th - I will not
> be back by then. Thanks for covering everything
> Mark. See you next week.
>
> Wayne
>
> markkimlaw wrote:
> Dear Group;
>
> Issue: H & W owned a business that was sold on Sept.
> 04 for $300K. Of
> the $300K, approximately $130K was disbursed to four
> family members
> who H & W claim loaned them the money to start the
> business. They
> don't have any evidence of the loan. After
> deducting all other debts,
> H & W are left with a little over $3K.
>
> Question: Since this transaction was the sale of a
> business, would it
> be considered "in the ordinary course of business",
> in which case H &
> W would not have to list the payments to their
> relatives, creditors,
> etc. in their Statement of Financial Affairs under
> #10, or do they
> have to list it?
>
> Any feedback would be appreciated.
>
> Mark C. Kim
>
>
>
>
>
>
>
> ---------------------------------
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>
> To visit your group on the web, go to:
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>
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> Yahoo! Terms of Service.
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>
If you have received this communication in error, please immediately notify us by telephone at (213)252-2224 and return the original message to: Law Offices of Kim & Wilhelm, 3600 Wilshire Boulevard, Suite 1220, Los Angeles, CA 90010. This communication may contain privileged information which is not to be disseminated.

The post was migrated from Yahoo.

Mark, maybe you can get more info from the other members at the round table on the 18th - I will not be back by then. Thanks for covering everything Mark. See you next week.

Wayne
markkimlaw wrote:
Dear Group;
Issue: H & W owned a business that was sold on Sept. 04 for $300K. Of
the $300K, approximately $130K was disbursed to four family members
who H & W claim loaned them the money to start the business. They
don't have any evidence of the loan. After deducting all other debts,
H & W are left with a little over $3K.
Question: Since this transaction was the sale of a business, would it
be considered "in the ordinary course of business", in which case H &
W would not have to list the payments to their relatives, creditors,
etc. in their Statement of Financial Affairs under #10, or do they
have to list it?
Any feedback would be appreciated.
Mark C. Kim
Yahoo! Groups Links
To visit your group on the web, go to:
http://groups.yahoo.com/group/cdcbaa/

To unsubscribe from this group, send an email to:
cdcbaa-unsubscribe@yahoogroups.com

Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service.
Mark, maybe you can get more info from the other members at the round table on the 18th - I will not be back by then. Thanks for covering everything Mark. See you next week.

Waynemarkkimlaw <markkimlaw@yahoo.com> wrote:

The post was migrated from Yahoo.

Mark,
My initial reaction is that the sale of the business, unless they
are in the business of buying and selling businesses, is not in the
ordinary course. With passage of the 2005 Act you have an immediate
issue of a 2 year preference for insiders. If you file a chapter 7,
the trustee will no doubt file a preference action against the
insiders. I do not think you can advise the client not to list the
payments, and may expose yourself on several levels if you did, and
even if you did not, if they do not list them. They can also be
subject to a 727 complaint to deny the discharge. Consider the more
controlled environment of a Chapter 13; however, even under a
Chapter 13, you must disclose and the Chapter 13 Trustee will raise
the preference issue. Chapter 13 Debtors have the standing to bring
preference actions. The insiders may not like it, but they may need
to be sued, or else a settlement reached on recovery with them.
They can take the bad debt charge off against they taxes to reduce
the sting!
Good luck and best regards. Lou Esbin
ps... Try to attend the June 18th Round Table discussion.
> Dear Group;
>
> Issue: H & W owned a business that was sold on Sept. 04 for
$300K. Of
> the $300K, approximately $130K was disbursed to four family
members
> who H & W claim loaned them the money to start the business. They
> don't have any evidence of the loan. After deducting all other
debts,
> H & W are left with a little over $3K.
>
> Question: Since this transaction was the sale of a business,
would it
> be considered "in the ordinary course of business", in which case
H &
> W would not have to list the payments to their relatives,
creditors,
> etc. in their Statement of Financial Affairs under #10, or do they
> have to list it?
>
> Any feedback would be appreciated.
>
> Mark C. Kim

The post was migrated from Yahoo.

Dear Group;
Issue: H & W owned a business that was sold on Sept. 04 for $300K. Of
the $300K, approximately $130K was disbursed to four family members
who H & W claim loaned them the money to start the business. They
don't have any evidence of the loan. After deducting all other debts,
H & W are left with a little over $3K.
Question: Since this transaction was the sale of a business, would it
be considered "in the ordinary course of business", in which case H &
W would not have to list the payments to their relatives, creditors,
etc. in their Statement of Financial Affairs under #10, or do they
have to list it?
Any feedback would be appreciated.
Mark C. Kim

The post was migrated from Yahoo.