[CLBS] Emailing: Wallace%20-%20Gugino%20v%20NELMAP%20-%20Default%20Judgment%20FINAL.pdf

[Jeremy Gugino]

Folks:

 

While this decision deals mainly with civil procedure issues, about halfway
through there is a discussion about the trustee's right to control closely
held entities vis a vis individual debtors.  In other words, if an
individual files for bankruptcy protection and that debtor is the sole
member/shareholder of an entity (or if the joint debtors are the sole
members/shareholders of an entity), then the trustee steps into their shoes
and may control the entity.  To the extent this concept was not already
clear, the decision spells it out.  This decision cites to Hoyle, which was
an oral decision that Matt referenced on the list serv a few weeks back.
>From a bankruptcy point of view, this is something ALL debtor's attorney's
should be cognizant of - if you bring a debtor into bankruptcy who is
expecting his or her non-debtor entity assets to be safe, you could be
setting them up for a fall.

 

Jeremy  

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