Any Bankruptcy experts out there?

[Boomyal]

I am curious how a personal chapter 7 Bankruptcy Court would treat an asset that has value but is not marketable? Specifically, this asset is a percentage ownership in a partnership that owns one parcel of property. There are 5 partners in the Partnership with the voting power of one partner, one vote.

Any owner of the percentage in question would/does not have any sole power to direct the partnership. The Percentage has the ultimate value of its portion of the Property Parcel but neither a new owner, of that Percentage, nor the Bankruptcy Court could force a liquidation of the Property Parcel.

If the Court tried to liquidate the Percentage to satisfy creditors, no one in their right mind would pay par value for the Percentage OR even want to get locked in at all.

Might the Trustee ever appeal to the other Partners, to cash out the Percentage in question? And if so, would the Court have the savvy to know that not even an existing Partner would have any incentive to pay any where near par value for the Percentage?

----OR----

Might the Court just offer the Percentage to a creditor (forcing an unrelated partner into the Partnership)
and tell him he has to go with the flow and wait for the Partnership to exercise its will.

----OR----

Might the Court let the Defendant keep the Percentage as an exempt asset? The Defendant has listed this asset in the Exempt Asset category but I am sure that the Court will want to learn more about this asset and even possibly demand to see the Partnership Agreement to determine the scope of this asset. I'll also add that the Defendant has grossly under declared the value of the asset.

.....and NO. I have not filed for bankruptcy. This involves a Family Partnership that my wife is a Partner in.

 

[BuzzStPoint]

Re: Any Bankruptcy experts out there?

Depending on the value of the other items the person is claiming for exemptions,
They probably could use a wildcard exemption for the property. This would also depend on which state the bk'er lives in and what the exemption limits are.

As for the value.. Doesn't matter what the person said it's worth.
They will take the county/city's last assessment or have someone go out and assess the property.
Take the percentage of ownership.

Otherwise the court would grab a hold of the ownership percent and sell it off to pay creditors.
Who buys it? The court wont care as long as the trustee and creditors get their share.

 

[Limited-Time]

Re: Any Bankruptcy experts out there?

The 20% held by the partner filing chapter 7 has value. The court may order that individuals 20% be sold to satisfy the bankruptcy action. Ultimately bringing a new partner into the picture.

 

[Fishing Dude too]

Re: Any Bankruptcy experts out there?

Worse case, they may have the whole thing sold off, based on partnership. The other 4 investers may want to just buy them out on backruptcy. Your in Canada may be different than U.S. law.

 

[Boomyal]

Re: Any Bankruptcy experts out there?

The 20% held by the partner filing chapter 7 has value. The court may order that individuals 20% be sold to satisfy the bankruptcy action. Ultimately bringing a new partner into the picture.

Actually it is only 12.5% but it would be interesting to see how the Court would market such an asset. If my assessment is correct, they would have immense difficulty in trying to establish a quick sale value.

My reason for even posting this question is that if the circumstances were right and the opportunity were to present itself, I may want to pick it up at a highly discounted price. The owner of that percent was the Managing Partner for the Partnership. He (his corporation, also in chapter 7) was also the tenant. His corporation has not paid rent in 3.5 years and my Wife could never get her cousins to do anything about it. He has cost my Wife tens of thousands of dollars in either lost rent or having had the proceeds of a property sale in her possession for that period of time.

My wife just bought the small mortgage on the Partnership property from the bank. This will force the hand of the other partners to finally put the property up for sale as soon as the Chapter 7 corporate tenant is out the door. The primary issue I posted about was the Personal bankruptcy, not the Corporate one.

 

[Boomyal]

Re: Any Bankruptcy experts out there?

Worse case, they may have the whole thing sold off, based on partnership. The other 4 investers may want to just buy them out on backruptcy. Your in Canada may be different than U.S. law.

Hey Dude, that is Vancouver USA! The Court could not abrogate the Partnership agreement and force a sale of the property to liquidate the share in question. That much I know.

 

[Fishing Dude too]

Re: Any Bankruptcy experts out there?

They have in past to get true value then split proceeds equal to all, the creditors will only get 20% ask a lawyer this 10 to 15 years ago, all he handled was bankruptcy. I was on verg of filling due to ex wife but worked out on own.