I’m trying to figure out if a declaratory judgment that’s on appeal (related to an LLC ownership percentage) is considered part of the estate in bankruptcy. The judgment involves both ownership and a money component, and it’s getting really tricky with the trustee trying to compromise with the creditor while also pushing a non-dischargeability action. Anyone have any experience with this?
Yeah, from what I’ve read, pretty much everything the debtor owns or is entitled to at the time of filing goes into the estate, even if it’s on appeal. Bankruptcy law is super broad about this.
Dakota said:
Yeah, from what I’ve read, pretty much everything the debtor owns or is entitled to at the time of filing goes into the estate, even if it’s on appeal. Bankruptcy law is super broad about this.
Wait, so even if the judgment isn’t finalized yet, it’s still considered part of the estate?
Dakota said:
Yeah, from what I’ve read, pretty much everything the debtor owns or is entitled to at the time of filing goes into the estate, even if it’s on appeal. Bankruptcy law is super broad about this.
Exactly. Even an appeal doesn’t stop the ownership interest from being property of the estate. It’s all about the timing of the filing.
Dakota said:
Yeah, from what I’ve read, pretty much everything the debtor owns or is entitled to at the time of filing goes into the estate, even if it’s on appeal. Bankruptcy law is super broad about this.
So basically, the appeal itself is also treated as an asset?
What happens if the trustee compromises with the creditor and abandons the appeal? Doesn’t that mess things up if the judgment gets reversed later?
Zayn said:
What happens if the trustee compromises with the creditor and abandons the appeal? Doesn’t that mess things up if the judgment gets reversed later?
Yeah, that’s where things get messy. If the trustee settles and the judgment is reversed later, you’d be stuck trying to undo everything. It’s like unscrambling an egg.
Zayn said:
What happens if the trustee compromises with the creditor and abandons the appeal? Doesn’t that mess things up if the judgment gets reversed later?
Can’t you argue due process? It feels wrong to settle before the appellate court even weighs in.
Zayn said:
What happens if the trustee compromises with the creditor and abandons the appeal? Doesn’t that mess things up if the judgment gets reversed later?
I think so. Maybe file a motion to stay the settlement until the appeal is resolved?
If fraud was involved in obtaining the judgment, is there any way to get that considered in bankruptcy court?
River said:
If fraud was involved in obtaining the judgment, is there any way to get that considered in bankruptcy court?
You could file a motion under Rule 9024 (Rule 60(b) in bankruptcy), but that’s usually for judgments from the same court. It might not apply here.
River said:
If fraud was involved in obtaining the judgment, is there any way to get that considered in bankruptcy court?
What’s Rule 9024? I don’t really get it.
River said:
If fraud was involved in obtaining the judgment, is there any way to get that considered in bankruptcy court?
Basically, it lets you ask the court to reconsider a judgment because of fraud or new evidence. But it has limits.
If the trustee sells the appeal to the creditor, does that mean you lose your chance to fight it?
Kari said:
If the trustee sells the appeal to the creditor, does that mean you lose your chance to fight it?
Kinda. The trustee’s goal is to maximize the estate’s value, but it can feel like they’re selling you out.
Kari said:
If the trustee sells the appeal to the creditor, does that mean you lose your chance to fight it?
Ugh, so frustrating. Is there any way to object to that?
Kari said:
If the trustee sells the appeal to the creditor, does that mean you lose your chance to fight it?
You can try arguing it’s unfair or prejudicial, especially if the appeal could change the outcome.
What’s the best way to raise fraud claims if you found evidence after the judgment?
Rin said:
What’s the best way to raise fraud claims if you found evidence after the judgment?
You could object to the creditor’s claims in the bankruptcy case or try an adversary proceeding if there’s enough evidence.
Rin said:
What’s the best way to raise fraud claims if you found evidence after the judgment?
Wait, what’s an adversary proceeding?