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Chapter 11 Bankruptcy Repayment Plan Must Meet Trustee Standards

Posted By admin || 25-Nov-2010

Chapter 11 Bankruptcy Repayment Plan Must Meet Trustee Standards

In the Chapter 11 bankruptcy case, In re Charles R. Livecchi, Sr., the pro se debtor was forced into a Chapter 7 bankruptcy after he failed to present a realistic and repayment plan.

On April 8, 2009, Appellant filed a voluntary Chapter 11 bankruptcy petition. On January 21, 2010, the United States Trustee filed a motion to convert the case to Chapter 7bankruptcy. Generally, the United States Trustee alleged that Appellant was not pursuing a realistic Chapter 11 bankruptcy plan, because, although Appellant claimed to own real estate worth over $3 million, he was not proposing to sell any of that property to pay his creditors. Instead, the United States Trustee maintained, Appellant was proposing to pay his creditors from speculative recoveries in certain lawsuits. For example, Appellant is pursuing legal action against the City of Grand Prairie, Texas, concerning a rental property that he owns in that city, known as the Barrington Apartments. Appellant also indicated that he intended to sue one of his former attorneys for legal malpractice. Plaintiff further indicated that he was appealing a judgment against him, in the amount of approximately $1.2 million, by the United States of America. See, United States of America v. Livecchi, 03-CV-6451 MWP. Subsequently, the United States of America, the City of Grand Prairie, and HSBC Bank all filed papers in support of the motion to convert the case from Chapter 11 bankruptcy to Chapter 7bankruptcy.

This is one of the drawbacks of representing yourself in bankruptcy. If this debtor had worked with an experienced bankruptcy attorney they would have told him that his proposal to pay creditors out of future "profits," was absolutely unrealistic.  No creditor is going to accept payment based on future income as opposed to existing assets that could be liquidated immediately.  Now, the debtor will face a liquidation in Chapter 7 bankruptcy which could have been prevented if he worked with an attorney to create a realistic and equitable Chapter 11 bankruptcy plan.

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