Earlier this month, the Chapter 7 Trustee (the “Trustee”) appointed in the Indalex bankruptcy began filing avoidance actions against various Indalex creditors. For those not familiar with the Indalex bankruptcy, Indalex filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware on March 20, 2009. Prior to filing bankruptcy, Indalex was one of the largest aluminum extruders in the United States.
In April of 2009, I wrote a post summarizing the Indalex bankruptcy proceeding. A link to my prior post is available here for review. Months after Indalex filed for bankruptcy, the company sold substantially all of its assets.
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Borrowing from Peter to pay Paul?
The American economy is dragging, with unemployment rates rising and consumer debt hitting $2.5 trillion. Many people are in deep and need help. Here, a Certified Financial Planner explains the mathematics of debt; strategies to deal with credit card, mortgage, student, and other loans; why debt consolidation and taking loans from a 401(k) can lead to problems; truths about bankruptcy; and how to use debt while eliminating it.
*Includes essential resources and websites, sample letters and forms, loan forgiveness programs, bankruptcy resources
*Author a Certified Financial Planner
*Covers every kind of debt, mortgages to credit cards to student loans
*National credit card debt is growing exponentially
Review:
Debt is a touchy subject.
The traditional wisdom regarding bankruptcy and tax refunds is: get it and get rid of it before filing bankruptcy. The bankruptcy trustee can’t take what you don’t have, right?
In the law there are rarely absolutes. In some cases the trustee can demand money that you no longer have in your possession. A common example of this is a preference payment to an insider creditor (e.g. repaying a loan to your mother from your tax refund). The trustee can sue you or your creditor for the turnover of the money.
The simplest way to avoid any potential loss of your income tax refund is to discuss the situation with your bankruptcy attorney. In many cases your attorney can exempt all or a portion of your tax refund, so you can keep the cash money after you file bankruptcy.
Background
Last month, the Chapter 7 Trustee in the Sunset Aviation bankruptcy began filing preference actions against various defendants seeking the recovery of alleged avoidable transfers. The Sunset Aviation bankruptcy proceeding includes the consolidated bankruptcies of Sunset Aviation, Inc., JetDirect Aviation and Regal Jets, LLC. The first bankruptcy commenced on February 25, 2009, when Regal Jets filed a petition for chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. On March 6, 2009, Sunset Aviation filed a petition for bankruptcy under chapter 7 of the Bankruptcy Code. JetDirect filed its chapter 7 petition on May 1, 2009. On June 10, 2009, the Regal bankruptcy proceeding was converted from a chapter 11 reorganization to a chapter 7 liquidation. Soon after, the Office of the United States Trustee appointed the Chapter 7 Trustee.
Debtors’ Operations
Prior to filing for bankruptcy, Debtors provided a range of services for the private aviation industry. These services included brokering the sales and rentals of private jets, in-flight catering, records management and aircraft utilization. According to court filings by the Chapter 7 Trustee, although the Debtors were separate legal entities, the companies operated from the same headquarters, co-mingled assets and were generally viewed by their creditors as a single entity. Based on these findings, the Trustee filed a motion to substantively consolidate the bankruptcy proceedings in July of 2010. The Court granted the Trustee’s consolidation motion the following month.
The Preference Actions
As is common in avoidance actions, the Chapter 7 Trustee in Sunset Aviation seeks to recover pursuant to several different causes of action. Pursuant to section 547 of the Bankruptcy Code, the Trustee seeks to avoid and recover transfers for the ninety days prior to the Debtors’ petition date – November 27, 2008 to February 25, 2009. According to the complaints, the “preference period” is calculated based on the earliest bankruptcy petition date for the consolidated Debtors.
Conclusion
The Sunset Aviation bankruptcy is before the Honorable Peter J.
An insurance policy is a contract that protects you financially in case you are caught in an unforeseen situation. Thus, insurance policies are there to cover for all the times that you are involved in a risky situation. You should also remember that your insurance may also help you if the financial disaster that is affecting you is debt. Thus, if you are in debt, then you can make use of your insurance to provide you relief from it instead of using various debt solutions such as the consolidation of debt.
So it is important for you to understand that insurance plays a major role in your life and you must be adequately insured in order to have a financially healthy life.
When you file a Chapter 7 personal bankruptcy you can protect your tax refunds from the Bankruptcy Trustee! Many of our Massachusetts bankruptcy clients need to be counseled to fully declare the tax refund on the Petition and Schedules as the Bankruptcy Trustee is absolutely entitled to know about it. The next step is to claim the refund as exempt. Of course, the exemption is limited, but with proper planning, our clients can generally keep the refund.
What happened if you need to divide the refund with your ex-spouse, who is not filing bankruptcy, but who you filed taxes with? The Massachusetts Supreme Judicial Court, HUNDLEY V. MARSH SJC #10729 under a certification request from the federal First Circuit Court, HUNDLEY V.