Legal Question in Bankruptcy in California

Oakland (CA) Ch 7 trustee at the 341(a) said he wants me to close down my small restaurant which I own as a 50% partner with my son and operate it as a "dba". Business assets only total $7500 and are claimed exempt. I have 2 employees. How do I overcome this in order to keep my business open?

Asked on 9/14/13, 1:19 am

2 Answers from Attorneys

Michael Avanesian Avanesian Law Firm

There are many solutions, but one option is for your attorney should talk to the trustee and work out a deal, another is to convert to Chapter 13 or 11, etc.

I assume that you did not file for Chapter 7 without an attorney. So that begs the question why you're posting a question on the internet instead of asking your attorney.

Some people run into bad luck and end up having to file for bankruptcy but when you decide to be cheap and get a 1,499 attorney, you're getting the bottom of the barrel. They work great for people with credit cards and medical bills but a case where employees and a running business are involved?

So a warning to others who read this. Bad luck may get you into a situation where you need relief from the bankruptcy courts but it is your choice whether to get a good attorney or a cheap one. If you have something to lose, get the expensive attorney.

You get what you pay for!

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Answered on 9/14/13, 10:51 am

Charles Andersen Charles Andersen, Atty

Let me explain something to you. The chapter 7 trustee is acting under standing administration rules and guidlines established by the US

The Chapter 7 trustee is on the lower level of the pecking order. The US Trustee is the ultimate authority in chapter 7 cases.

The Chapter 7 trustee has no authority to negotiate with you since to do so he would be violating the policies of a superior authority (the Office of the United States Trustee Department of Justice ) who's guidlines require Chapter 7 debtors to dissolute any existing business organizations that the own or control.

The US Trustee (Department of Justice) has no interest in negotiating with you since they are way to big to change their policies and guidlnes over your case.

What the chapter 7 trustee is suggesting ot you is exactly right. He's not forcing you to close your restaurant, just to change over to a new buisness form.

Your on your own as far as how you do that. A proper dissolution of a busines requires sale of assets to pay creditors of the business, however no one is going to be looking over you back to make sure you do that.

If you want to make an issue over this policy, just simply refuse to do what the trustee asks. He may then bring a motion to revoke or deny your discharge, which would give you and your attorney (hopefully not the above) the chance for you to voice your view from a legal perspective.

It seems to me the chapter 7 trustee is simply suggesting an easy way around this policy.

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Answered on 9/14/13, 8:35 pm

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