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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Archive for October, 2009
Written by Craig D. Robins, Esq.
New Hyde Park Pet Store Seeks Chapter 11 Bankruptcy Protection
EPets Inc., a large retail pet store, filed for Chapter 11 bankruptcy relief on September 29, 2009 in the Central Islip Bankruptcy Court under case number 8-09-77362. Judge Robert E. Grossman was assigned to the case as bankruptcy judge.
The corporation, which is located in New Hyde Park, is being represented by Long Island bankruptcy attorneys McBreen & Kopko, and its bankruptcy attorney, Kenneth Reynolds, who is located in Jericho, New York. Its president is Timothy Denis. The debtor has 13 employees. The store is located at 1335 Jericho Turnpike in New Hyde Park.
The Debtor’s bankruptcy filing was necessitated by efforts taken be a secured party to. The debtor had previously purchased the assets of another retail pet store, Pets of New Hyde Park, for $1.075,000, and owed this credior approximately $720,000. The creditor is represented by Robert L. Pryor, Esq. of Pryor & Mandelup in Westbury.
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The debtor has already negotiated a cash collateral stipulationwith the secured creditor, which was approved by the bankruptcy court, and has also received bankruptcy court permission to pay pre-petition wages.
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The debtor filed a bare-bones bankruptcy petition and was required to file all remaining bankruptcy schedules by October 14, 2009, but failed to do so.
The Meeting of creditors will be held on October 30, 2009 at the United States Bankruptcy Court for the Eastern District of New York in Central Islip (Room 563 at 11:00 a.m.). A Status conference has been scheduled before Judge Grossman for November 9, 2009 at 1:30 p.m. in Courtroom 860.
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This post is one of a series of posts available on the Long Island Bankruptcy Blog detailing every Chapter 11 bankruptcy case filed in the Central Islip Bankruptcy Court since August 1, 2009. I will typically post a summary of each Chapter 11 case several days or weeks after it is filed as not all info is available immediately upon filing. To see a list of Chapter 11 cases profiled on this blog, click Chapter 11 Filings on Long Island or type the name of the debtor in the upper right search box.
Written by Craig D. Robins, Esq.At various times this year, Congressional committees have pondered the idea of making it easier for consumers who are overwhelmed with medical debt to file for bankruptcy.
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I previously discussed this in: Special Bankruptcy Protection on the Way for Consumers with High Medical Debts and Congress Considers Amending Bankruptcy Code to Make it Easier for Consumers to Discharge Medical Debt .
Yesterday, the Senate Judiciary Subcommittee on Administrative Oversight and the Courts held a hearing on proposed legislation to make it easier to file for bankruptcy relief for those consumers whose medical debts are the primary cause of their financial difficulty. The legislation is being sponsored by subcommittee chair Senator Sheldon Whitehouse (D-R.I.).
The hearing questioned whether the new bankruptcy laws adopted in 2005 make it unreasonably difficult for consumers burdened with medical debt to get a fresh new financial start.
One of the key issues is determining what consumers would be eligible for relief.
The other key issue concerns what the relief would be. Here’s what was being discussed:
A) the means test would be waived
B) the credit counseling requirements would be waived
C) there would be a national homestead exemption of $250,000 for these debtors
D) these debtors would be permitted to pay some of their attorney’s fees after filing
Written by Craig D. Robins, Esq.
Bankruptcy of Glen Cove Chinese Restaurant Forces Landlord to Seek Chapter 11 Bankruptcy Protection
Lightning AB Corp., a single asset real estate company, filed for Chapter 11 bankruptcy relief on September 29, 2009 in the Central Islip Bankruptcy Court under case number 8-09-77322. Judge Robert E. Grossman was assigned to the case as bankruptcy judge, replacing Judge Trust because this case is related to another case.
The corporation, which is located in Glen Cove, is being represented by New York City bankruptcy attorney Bruce H. Kaplan. Its president is Nicola Lavista. The debtor’s primary assets consists of a parcel of real estate located at 49 Glen Cove Road, upon which is a two-story restaurant. The debtor estimates the real estate is worth about $850,000. The debtor paid a retainer of $7,500.
There is currently a Chinese restaurant renting the premises, Won Long Won Restaurant, Inc. However, the debtor plans on rejecting the lease of this restaurant and selling the property. This restaurant is, itself, currently in a Chapter 7 bankruptcy proceeding before Judge Grossman.
The Debtor’s bankruptcy filing was necessitated by the fact that the mortgagee was prosecuting a foreclosure sale.
The Meeting of creditors will be held on October 30, 2009 at the United States Bankruptcy Court for the Eastern District of New York in Central Islip (Room 563 at 9:00 a.m.). The debtor recently filed an application to retain a real estate broker. A Status conference has been scheduled before Judge Grossman for November 9, 2009 at 1:30 p.m. in Courtroom 860. A motion to lift the stay is returnable on the same date.
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This post is one of a series of posts available on the Long Island Bankruptcy Blog detailing every Chapter 11 bankruptcy case filed in the Central Islip Bankruptcy Court since August 1, 2009. I will typically post a summary of each Chapter 11 case several days or weeks after it is filed as not all info is available immediately upon filing. To see a list of Chapter 11 cases profiled on this blog, click Chapter 11 Filings on Long Island or type the name of the debtor in the upper right search box.
By Craig D. Robins, Esq.
Husband Used Bankruptcy to Eliminate Debt Fraudulently Incurred by Deceased Wife
One of my most interesting Long Island Chapter 7 bankruptcy cases was a number of years ago. It involved an 80-year-old widower who learned some incredible, disturbing and unfortunate secrets about his wife’s finances while she was on her deathbed.
One of my most interesting Long Island Chapter 7 bankruptcy cases was a number of years ago. It involved an 80-year-old widower who learned some incredible, disturbing and unfortunate secrets about his wife’s finances while she was on her deathbed.
By using some creativity and the filing of a consumer bankruptcy case, I saved the day for my client.
Filing Bankruptcy Proved to Be the Ideal Solution to an Unusual Problem
Just a week after his wife had died, the widower, accompanied by his adult children, consulted with me about a very serious debt problem he had only discovered two weeks prior.
His deceased wife, also 80 years old, had been in the hospital, diagnosed with a terminal disease. When the widower walked into her hospital room to pay her a visit a week before she died, he caught her trying to shove some papers under her covers. These were credit card bills and lawsuit papers.
Wife, Unbeknownst to Husband, Incurs Substantial Debt in His Name
As it turned out, for years, the wife, who had handled all of the family’s finances, opened numerous credit card accounts in the husband’s name by forging his signature. She did not tell him about this. She had all the credit card bills sent to a post office box.
Just a week before she died, the husband learned that not only was he obligated to pay over $60,000 to credit card companies for debts he had absolutely nothing to do with, but several of the credit card companies had even commenced litigation against him. The widower wanted to know what to do.
Although we discussed disputing some 15 different accounts, or defending the various suits that had been brought in state court, I decided that the easiest and most efficient way to resolve the problem would be to file a Chapter 7 bankruptcy.
Using Bankruptcy to Resolve the Problem
The tricky aspect of this case was that the debtor-husband owned his entire Locust Valley home free and clear of all liens, far exceeding the homestead exemption. The unprotected home did not concern me because my strategy was to totally eliminate all creditors.
Just a week after his wife had died, the widower, accompanied by his adult children, consulted with me about a very serious debt problem he had only discovered two weeks prior.
His deceased wife, also 80 years old, had been in the hospital, diagnosed with a terminal disease. When the widower walked into her hospital room to pay her a visit a week before she died, he caught her trying to shove some papers under her covers. These were credit card bills and lawsuit papers.
Wife, Unbeknownst to Husband, Incurs Substantial Debt in His Name
As it turned out, for years, the wife, who had handled all of the family’s finances, opened numerous credit card accounts in the husband’s name by forging his signature. She did not tell him about this. She had all the credit card bills sent to a post office box.
Just a week before she died, the husband learned that not only was he obligated to pay over $60,000 to credit card companies for debts he had absolutely nothing to do with, but several of the credit card companies had even commenced litigation against him. The widower wanted to know what to do.
Although we discussed disputing some 15 different accounts, or defending the various suits that had been brought in state court, I decided that the easiest and most efficient way to resolve the problem would be to file a Chapter 7 bankruptcy.
Using Bankruptcy to Resolve the Problem
The tricky aspect of this case was that the debtor-husband owned his entire Locust Valley home free and clear of all liens, far exceeding the homestead exemption. The unprotected home did not concern me because my strategy was to totally eliminate all creditors.
I prepared the bankruptcy petition and listed the various credit card accounts totaling $60,000, but indicated that each and every credit card debt was disputed.
The bankruptcy court assigned the Chapter 7 case to Long Island bankruptcy trustee Kenneth Kirschenbaum. He almost fell off his chair at the meeting of creditors when he learned that there was a valuable house that was almost totally non-exempt. Keep in mind that at the time of filing, the homestead exemption was only $10,000 and the house was worth several hundred thousand dollars. The trustee immediately began salivating over the prospect of administering a nice asset case.
However, I told the trustee, “not so fast, Cowboy” (or words to that effect). I explained the situation and said that I would be filing an application for a “bar date” in which creditors would be notified that they have only so much time to file claims. I then told the trustee that I would be filing objections to every filed claim.
Trustee Can’t Administer Bankruptcy Estate and Debtor Gets Discharge
Well, it turned out that even though there were 15 creditors, only six of them filed claims. (Remember, this was many years ago when creditors often neglected to file claims). I then successfully objected to every claim, on the ground that the husband did not incur them.
That left a bankruptcy estate that contained a very significant non-exempt asset — the house — but with not one single claim that could be paid.
Trustee Kirschenbaum, who was not too happy, had no choice but to close the case as a “no asset” case because there were no creditors who he could pay. The debtor, meanwhile, received his Chapter 7 discharge, kept his home, and eliminated all of the headaches caused by his wife’s secret financial life.
By thinking out of the box, I utilized an unorthodox solution to an unusual debt problem and achieved a great result for my client.
The bankruptcy court assigned the Chapter 7 case to Long Island bankruptcy trustee Kenneth Kirschenbaum. He almost fell off his chair at the meeting of creditors when he learned that there was a valuable house that was almost totally non-exempt. Keep in mind that at the time of filing, the homestead exemption was only $10,000 and the house was worth several hundred thousand dollars. The trustee immediately began salivating over the prospect of administering a nice asset case.
However, I told the trustee, “not so fast, Cowboy” (or words to that effect). I explained the situation and said that I would be filing an application for a “bar date” in which creditors would be notified that they have only so much time to file claims. I then told the trustee that I would be filing objections to every filed claim.
Trustee Can’t Administer Bankruptcy Estate and Debtor Gets Discharge
Well, it turned out that even though there were 15 creditors, only six of them filed claims. (Remember, this was many years ago when creditors often neglected to file claims). I then successfully objected to every claim, on the ground that the husband did not incur them.
That left a bankruptcy estate that contained a very significant non-exempt asset — the house — but with not one single claim that could be paid.
Trustee Kirschenbaum, who was not too happy, had no choice but to close the case as a “no asset” case because there were no creditors who he could pay. The debtor, meanwhile, received his Chapter 7 discharge, kept his home, and eliminated all of the headaches caused by his wife’s secret financial life.
By thinking out of the box, I utilized an unorthodox solution to an unusual debt problem and achieved a great result for my client.
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About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the October 2009 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Patchogue, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
Bankruptcy Cartoon Strip BAPCPA Man — #6
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BAPCPA Man Shows that Bankruptcy Can Be Humorous!
Written by Craig D. Robins, Esq.
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I am pleased to post the sixth cartoon strip of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall. Here is strip number six. BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys.
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Steve and Gideon originally came up with the well-received Bankruptcy Bill cartoon strips, about a hapless New York City bankruptcy attorney associate at a large bankruptcy firm.
“BAPCPA”, an acronym universally known to all bankruptcy attorneys, stands for The Bankruptcy Abuse Prevention and Consumer Protection Act. This is the new bankruptcy law that went into effect in 2005.
The strips seek to educate consumers, humor attorneys, and will also try to poke fun at some of the more ridiculous requirements of the new bankruptcy law. Please check out the Bankruptcy Bill and BAPCPA Man Website which now has references and links to other bankruptcy blogs around the country.
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The strip is posted with permission from Bankruptcy Bill.
Written by Craig D. Robins, Esq.New Bankruptcy Means Test Criteria Goes Into Effect November 1, 2009
Passing the bankruptcy means test is dependant upon the amount of median income in the state where you live. For New York residents, it will be slightly easier for some families to qualify for Chapter 7 bankruptcy next month. For those seeking to file for Chapter 13 bankruptcy, some families will be able to pay less each month.
The figures used for the each state’s median income are based on United States Census data, and adopted by the Office of the United States Trustee.
The last time the median income figures were updated was March 15, 2009, and I wrote a blog article about that. See Good News for Consumers on Long Island — Chapter 7 Bankruptcy Will Be Easier to Qualify For .
The new figures go into effect for those personal bankruptcy cases filed after November 1, 2009. To see the new median income data for each state, go to the U.S. Trustee Census Bureau Median Income Chart.
New Means Test Figures Not Helpful for Everyone
Family Size of One: For the first time ever, some of the figures have actually decreased. If you are a single individual, which means that you have a family size of one, the New York median income has decreased from $46,523 to $46,485. This is a change of only $38 per year, or $3 per month. Nevertheless, it is less. Chances are, however, that one will be adversely affected by such a small change
Family Size of Two: For a family size of two, the new median income figure is just over $1,000 more than the old amount, making it slightly easier to qualify.
Family Size of Three: For a family size of three, the new amount is about $1,400 per month more, which will certainly be a help.
Family Size of Four: For a family size of four, the new median income amount is actually about $500 less than the previous figure, making it the slightest bit harder for typical families to qualify for Chapter 7 bankruptcy. However, the difference is so small that it should hardly matter for most Long Island consumers.
The Bankruptcy Means Test
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This is a comprehensive, very complex series of calculations that the federal government designed to ascertain whether someone qualifies for Chapter 7 filing. Under the old bankruptcy law, almost anyone could seek to eliminate their debts by filing Chapter 7. The new laws changed that. Click here to take a look at the actual Means Test form.
The Means Test formula is designed to evaluate whether a debtor has the financial means to pay back a substantial portion of his or her debts. If the person does, then he or she may not be eligible to file Chapter 7 bankruptcy, and may instead have to file a payment plan bankruptcy under Chapter 13. If debtor’s income is below the New York State median income for a family of that particular size, then passing the Means Test is virtually automatic. If not, the debtor must have a sufficient amount of acceptable deductions permitted by the Means Test.
Impact of New Means Test Figures on Consumers Filing Bankruptcy on Long Island
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In my Long Island bankruptcy law practice, I estimate that about 7 out of 8 clients now seeking to file for Chapter 7 bankruptcy relief do indeed qualify under the means test. The new numbers may just slightly help some couples or small families qualify for Chapter 7 bankruptcy when the new criteria is used.
New Median Family Income Figures for New York
(Effective for cases filed after 11/1/09)
Family Size Amount
1 $46,485
2 $58,109
3 $69,421
4 $82,457
Add $6,900 for each individual in excess of 4.
Corporate Debtor and Attorney May Be In Hot Water For Failure to File Corporate Resolution
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Written by Craig D. Robins, Esq.Every now and then I come across a situation that I just find incredible. I just met with a potential client who was being subpoenaed by the attorneys for a Long Island Chapter 7 bankruptcy trustee.
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The trustee is now going on a fishing expedition for assets involving a corporate Long Island Chapter 7 business bankruptcy filing. The trustee retained counsel to assist in this endeavor.
Apparently, the potential client and another fellow were each fifty-percent shareholders of a corporation that filed for Chapter 7 bankruptcy relief over a year and a half ago. The amazing thing was that the potential client who I met with had just found out about the bankruptcy. Consequently, we now have all sorts of sticky issues such as whether the corporate bankruptcy was filed in good faith or not.
Corporate Bankruptcy Filings Must Be Authorized
Here’s why: any time a corporation seeks bankruptcy protection, it must have authority to file the bankruptcy petition. That typically means that the corporation’s board of directors must meet, agree to permit the corporation to file for bankruptcy, and then acknowledge this authorization by preparing a corporation resolution authorizing the bankruptcy filing.
In this case, there was no corporate resolution! Local E.D.N.Y. Bankruptcy Rule 1074-1(a) states that any bankruptcy petition filed by a corporation shall be accompanied by a duly attested copy of the corporate resolution authorizing the filing. Such a document was never filed – nor could it have since it would have required the consent of both shareholders. The shareholder I met with never consented to the bankruptcy filing, let alone knew about it.
So, here is a corporate bankruptcy filing that is fatally deficient. If a corporate bankruptcy is not duly authorized, it can be dismissed.
Authority to File Corporate Bankruptcy Requires Consent by a Majority of the Board of Directors
In order for a corporation to have the appropriate authority to file bankruptcy, there must an agreement by the majority of the directors, which is necessary to constitute a quorum to transact business.
Shareholders, themselves, lack the authority necessary to file bankruptcy because they do not have the power of management. Thus, one shareholder cannot decide, on his own, that he wants to put the corporation into bankruptcy, even if that shareholder is the president, unless he has over 50% of the voting shares of stock.
What is also perplexing is that the shareholder who filed the bankruptcy failed to include his partner as an interested party, which would have enabled the partner to then receive notice of the filing.
What happens now? If this is brought to the attention of the court, the judge would have no choice but to find that the court does not have jurisdiction over the case and would be constrained to dismiss it. It also appears that the subpoena that my potential client received cannot be enforced.
In any event, this matter leaves some serious questions upon the attorney who filed the case, considering that he may have filed a frivolous case. The attorney, who holds himself out as a business lawyer, should know better.
Alcides Curtis Files Chapter 11 Relief
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Written by Craig D. Robins, Esq.
Numerous pending foreclosure actions push this debtor into seeking Chapter 11 bankruptcy protection
Alcides Curtis, an individual, filed for Chapter 11 bankruptcy relief on September 17, 2009 in the Central Islip Bankruptcy Court under case number 8-09-76989. Judge Robert E. Grossman is the assigned bankruptcy judge.
According to the debtor’s bankruptcy filings, the bankruptcy was necessary because a number of mortgagees had commenced foreclosure actions on several of the debtor’s properties. The debtor, who lives in Freeport, owns eight properties.
The Meeting of creditors will be held on October 23, 2009 at the United States Bankruptcy Court for the Eastern District of New York in Central Islip (Room 562 at 10:00 a.m.). The first Status Conference before Judge Grossman hasbeen scheduled for November 9, 2009 at 1:30 p.m. in Courtroom 860.
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A Notice of Appearance was filed by Jerold C. Feuerstein, Esq. on behalf of Eastern Savings Bank; by Dennis Jose on behalf of GMAC Mortgage, LLC.; and by Bruce Weiner on behalf of Northeast Community Bank.
This post is one of a series of posts available on the Long Island Bankruptcy Blog detailing every Chapter 11 bankruptcy case filed in the Central Islip Bankruptcy Court since August 1, 2009. I will typically post a summary of each Chapter 11 case several days or weeks after it is filed as not all info is available immediately upon filing. To see a list of Chapter 11 cases profiled on this blog, click Chapter 11 Filings on Long Island or type the name of the debtor in the upper right search box.
Written by Craig D. Robins, Esq.The next storm to hit the housing market will be caused by the wave of defaults on pay-option adjustable rate mortgages according to an article in the Wall Street Journal yesterday.
The problem is part of the sub-prime mortgage meltdown. Between two and four years ago, an incredible number of homeowners took out pay-option adjustable rate mortgages (ARM), especially here on Long Island. A very large number of our clients who own homes have such mortgages.
Now, with these mortgages starting to reset to much higher rates and exorbitant monthly payments, many homeowners will be unable to afford them any longer. There can actually be a flood of defaults. Many Long Island communities have a great majority of homeowners who refinanced their homes with ARMs.
The rate of delinquencies and foreclosures on ARMs is extremely high, in large part because so many of these homes are underwater and have no equity.
A bankruptcy filing can often provide relief from an onerous adjustable rate mortgage
The Long Island bankruptcy attorneys in our firm meet with homeowners on a regular basis who are facing this dilemma. Fortunately for them, they have various bankruptcy options.
With some, we recommend Chapter 7 bankruptcy which enables them to stay in the home for a period of time without having to make any payments. Then, they can move out and not have to worry about any deficiency obligation on the mortgage, as that is discharged in the bankruptcy proceeding.
With other clients who may have several mortgages, we may recommend Chapter 13 bankruptcy as there is a mechanism in that type of bankruptcy to eliminate the second mortgage if he house has lost a great deal of value.
For those Long Island homeowners in financial difficulty, it makes sense to quickly meet with an experienced Long Island bankruptcy attorney.
Written by Craig D. Robins, Esq.The precipitous drop in real estate values during the past two years is forcing many wealthy homeowners to consider bankruptcy as an option and Long Island is no exception.
Here’s why: many well-to-do individuals invested heavily in one parcel of real estate — their home — during the go-go real estate boom, thinking that it was a fantastic investment. After all, who could complain about an investment that increased 10% to 20% in value for a number of years?
Recently, homes have been bad investments. The more expensive the home; the worse the investment.
However, as we all know, real estate values have plummeted. To make matters worse, many of these high-income homeowners leveraged their real estate purchase. They bought a million dollar home and financed it with a million dollar mortgage. Unlike an investment in stock, which, in a worse-case scenario, can become worthless, a leveraged investment in real estate can actually result in an extreme amount of additional liability.
Thus, if the value of the home is under water and worth less much less than the amount due on the mortgage, the homeowner can now be liable to the mortgage company for hundreds of thousands of dollars more than what the home is worth. In addition, the homeowner must also pay for property taxes, insurance and maintenance.
Individual Chapter 11 bankruptcy filings with million dollar homes have greatly increased
With many highly-paid executives being laid off, there are a lot of million dollar homeowners who can’t afford to make their mortgage payments. According to data from the National Bankruptcy Research Center, personal Chapter 11 filings, which is the type of bankruptcy wealthy individuals would file, have jumped 73 percent over last year.
In general, if secured debt is more than $1,010,650, then a homeowner is not eligible for Chapter 13 bankruptcy, and instead, must file for Chapter 11 bankruptcy, which is also the type ob bankruptcy that businesses ordinarily file. Individual consumers who have earned substantial income in the six-month period before seeking bankruptcy relief are often precluded from filing for Chapter 7 bankruptcy because of the means test.
The falling demand for million dollar homes is one cause of increased individual chapter 11 filings
It is also interesting to note that nationwide listings of homes for ,worth $1 million or more, increased 27.3 percent in July from last October, according to Zillow.com, a Web site that tracks real estate transactions. Yet, the number of nationwide homes sold with a value between $1 million to $2 million fell 23 percent in July from a year earlier, according to the Chicago-based National Association of Realtors. Furthermore, there was a 21-month supply, up from 16 months last year. That means that expensive homes are not selling, and are losing value.
In my Long Island bankruptcy practice, I frequently consult with individuals who previously earned substantial incomes, and homeowners who own expensive homes. For such clients, bankruptcy offers many possibilities and should be considered.