Trustee Could Not Reopen Chapter 7 Case to Administer Assets Which he Abandoned Over a Year Ago After He Was Unable to Sell Tem

Trustee Could Not Reopen Chapter 7 Case to Administer Assets Which he Abandoned Over a Year Ago After He Was Unable to Sell Tem

Pending before the Court is the Motion to Reopen Case and to Set Aside Report of Inventory, Abandonment and No Distribution  filed by the Chapter 7 Trustee. In his motion, the Trustee requests that this Court reopen the instant chapter 7 case over a year after its closing so that the Trustee may revoke his abandonment of certain assets that he attempted, unsuccessfully, to sell during the pendency of this case. Having now received offers to purchase these assets, the Trustee seeks to sell them to create a fund from which to pay creditors.

In his bankruptcy schedules, the Debtor listed among his assets a 1978 Chevrolet Corvette valued at $9,000.00 and a 2003 Stingray CS 220 boat and motor valued at $9,100.00. (Dckt. 1, p. 14). The Debtor claimed a $1,500.00 exemption in the Corvette, but did not claim an exemption in the Stingray boat. Although initially encumbered by a judicial lien, the Trustee identified these assets as a potential source of funds from which to pay creditors.

On June 4, 2015, the Trustee conducted the § 341 Meeting and filed his report indicating that this case was a “possible asset case.”

Only three (3) proofs of claim were filed: a $5,207.33 claim held by Capital One Bank (Claims Register 1-1), a $4,339.49 claim held by EnerBank USA (Claims Register 2-1) and a $6,279.13 claim held by Wells Fargo Card Services.

On June 25, 2015, the Trustee filed an application to employ himself as attorney for the Trustee (dckt. 26) and Donald L. James, Jr. as an accountant. At some point, the Trustee also engaged Mike Bohannon to sell the 1978 Corvette and 2003 Stingray boat, but no application to employ Bohannon was ever filed by the Trustee. Bohannon did not sell either the Corvette or the Stingray boat, although it is unclear what efforts he made, if any, to market these assets. Had these assets been sold, the non-exempt equity would have been sufficient to make a substantial distribution to the three creditors who filed claims.

On September 14, 2015, the Court granted the Debtor a discharge under 11 U.S.C. § 727. Having apparently decided this was no longer an asset case, the Trustee filed his Chapter 7 Trustee’s Report of No Distribution on January 12, 2016. In his report, the Trustee states:

I, James L. Drake, Jr., having been appointed trustee of the estate of [the Debtor], report that I have neither received any property nor paid any money on account of this estate; that I have made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law. Pursuant to Fed R Bank P 5009, I hereby certify that the estate of [the Debtor] has been fully administered. I request that I be discharged from any further duties as trustee. Key information about this case as reported in schedules filed by the debtor(s) or otherwise found in the case record: This case was pending for 9 months. Assets Abandoned (without deducting any secured claims): $274,507.00, Assets Exempt: $36,143.00, Claims Scheduled: $390,599.80, Claims Asserted: Not Applicable, Claims scheduled to be discharged without payment (without deducting the value of collateral or debts excepted from discharge): $390,599.80. [emphasis added].

On May 2, 2017, over a year after this case was closed, the Trustee filed the instant Motion to Reopen asking the Court to reopen the Debtor’s case and set aside his Report of No Distribution so that he may sell the Debtor’s Corvette and the Stingray boat. In his motion, the Trustee advises that he attempted unsuccessfully to sell these items of personal property during the pendency of the Debtor’s case, but he has recently received cash offers to purchase both assets.

The Court held a hearing on the Motion to Reopen on May 25, 2017. At the hearing, counsel for Trustee stated that the Trustee hired Bohannon to take possession of the Corvette and the Stingray boat, put them in a condition to sell, and then sell them. After Bohannon did not receive any offers, the Trustee decided to file his Report of No Distribution and close the Debtor’s case. However, Bohannon has apparently remained in possession of the automobile and boat since the closing of the Debtor’s case and has now identified buyers for these assets. The Debtor opposes the reopening of the case and desires to have the property returned to him.

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