[CLBS] Avoiding Liquidation of Real Estate in Chapter 7?

[Safa Riadh]

Chapter 7 Debtors find themselves with their home listed for sale by the Trustee, with an offer $215,000 higher than the appraised value they obtained on the eve of their bankruptcy.

Debtors have been able to gather $210,000, which they’ve offered to the Trustee to cancel the sale.  Payment of this amount will substantially increase dividends to creditors above that of a sale, and will substantially minimize costs of administration; Trustee refuses to accept the cash and cancel the sale.  An objection to the sale, with Debtors’ offers and Trustee's denials attached, has been filed and set for hearing.

Has anyone heard of seeking a Court Order to compel the Trustee to accept compensation in lieu of liquidation, when the costs of liquidation that the estate would bear are large and unnecessary, and Debtors have instead offered cash compensation which would allow a larger dividend to creditors?

A Motion to Compel Abandonment, to the extent that liquidation of the asset creates a burden on the Estate, seems somewhat relevant  (though clearly the asset is not of inconsequential value); but it would seem that a second motion, suggesting the alternative, i.e. cash payment eliminating the burden, would also need to be brought.  A motion to compromise controversy might hold some appeal, but I believe it must be either brought, or agreed to, by the Trustee, which clearly won’t happen.

Does anyone have any insight, experience or suggestions?  Thank you all.

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Safa Michael Riadh
Attorney at Law
VALIANT LAW
208-667-5437
924 Sherman Ave
Coeur d Alene, ID 83814
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