District Court Upholds Chapter 7 Trustee’s Motion for Turnover In In re Fregeau, 15 C 01687 (N.D. Ill. June 26, 2015), FactorLaw represented a chapter 7 trustee in his efforts to obtain the turnover of $141,000 from a chapter 7 debtor. The parties agreed the debtor had the $141,000 in his possession on the petition date, but the debtor claimed he lost the money gambling in Las Vegas after the meeting of the creditors but before the entry of an order directing him to surrender such funds. After winning at the bankruptcy court level, FactorLaw represented the Trustee when the debtor appealed the turnover order on the grounds that he could not be ordered to turnover property he no longer possessed. In affirming the bankruptcy court, Judge Edmond E. Chang held the bankruptcy court did not clearly error in finding the debtor still possessed the property at the time the bankruptcy court entered the turnover order. The bankruptcy court found that the debtor’s “bald statement” that he no longer had the money was not credible, because his bankruptcy schedules suggested he still had the funds. Judge Chang also noted the debtor vaguely spoke of gambling losses, but did not offer a sworn declaration or testimony under oath in support of his claim that he gambled away the money. District Court Affirms Bankruptcy Court’s Orders Granting Sanctions and Denying Reconsideration In SC Real Estate LLC v. Acevedo, 15 C 1104 (N.D. Ill. July 1, 2015), Judge John J. Tharp, Jr. affirmed an order in favor of FactorLaw's client that sanctioned a creditor for violating the automatic stay. The sanctions order directed the creditor to pay approximately $21,000 in legal fees incurred to enforce the automatic stay after the creditor proceeded with state court litigation post-petition. Judge Tharp concluded the creditor forfeited its objection to the sanctions order by failing to timely respond to the underlying motion. He also rejected the creditor's due process argument premised on the alleged lack of an ability to respond meaningfully, noting the creditor had notice of the possible sanction and chose not to attend a critical hearing, at which the bankruptcy court granted the debtor's motion for sanctions.
