Tag Archives: bankruptcy

The Ninth Circuit makes life much more difficult for individual Chapter 11 debtors

Debtors considering a personal bankruptcy under Chapter 11 previously had an edge in California that gave some added leverage against classes of creditors. A Ninth Circuit decision last year, however, eliminated that edge. Overview of the Bankruptcy Chapters As most lawyers and many lay people know, there are several types of bankruptcy cases – Chapter 7 (liquidation), Chapter 11 (reorganization) and Chapter 13 (wage earner reorganization) being the most common. In a Chapter 7 case, the debtor surrenders all non-exempt property to a trustee, who liquidates it for the benefit of the debtor’s creditors. In most cases, the debtor is Read More

Asset-Protection Update: QPRTs May Be Deemed Revocable!

In a recently affirmed decision TVA obtained for the Chapter 7 bankruptcy trustee, the U.S. Bankruptcy Court held that a QPRT — generally irrevocable and commonly used in estate planning to hold personal residences — may nonetheless be revoked when the debtor retains an right to reacquire ownership of the residence. The case, In re: Robert Ferrante, involves a former savings-and-loan banker, Robert Ferrante, who owned a beautiful 5,500 square foot home on an exclusive island in the harbor of Newport Beach, California, with a 50-foot frontage overlooking the bay. In 1994, Robert transferred property into a QPRT — a Read More

TVA Recovers QPRT Home for Bankruptcy Estate: “QPRTs are not creditor-protection devices”

A Qualified Personal Residence Trust (commonly referred to as a QPRT) has long been a method by which an individual can gift their home to someone else (typically children) at a reduced tax cost, while retaining the ability to live in the home for a set number of years. QPRTs can be an effective way to minimize tax costs in transferring property. But they might not be effective as asset-protection devices any longer, now that the Ninth Circuit Bankruptcy Appellate Panel has upheld a groundbreaking January 2014 order obtained in favor of TAV on behalf of the Chapter 7 bankruptcy Read More