Case Type:
Case Status:
17-8029, 2018 WL 2711204 (6th Circuit, Jun 06,2018) Published
Creditor cannot assert derivative standing to bring adversary proceeding where Trustee does not have standing in first instance.
Procedural context:
Creditor filed adversary proceeding asserting that transfers by debtor to self-settled trust were avoidable. Bankruptcy Court dismissed proceeding, finding that Bankruptcy Court lacked jurisdiction if Creditor was bringing action in own name, and that Creditor could not assert derivative standing of Trustee as Trustee lacked standing to bring action. On appeal, the Bankruptcy Appellate Panel affirmed the dismissal of the adversary proceeding.
Earlier in the case, Trustee brought avoidance action against Creditor. Action was settled with Creditor paying money to the Estate and taking assignment of all causes of action that Estate had or may have other than actions to object to Debtor's discharge. Creditor brought adversary proceeding to recover avoidable transfers, which Bankruptcy Court dismissed as there was on jurisdictional nexus between claims to be asserted and bankruptcy estate ,as any recovery would go exclusively to Creditor and would not augment estate. Creditor later sought to bring action to challenge transfers to self-settled trust. Bankruptcy Court held that Creditor could nor being action in his own name as there was no nexus to the Bankruptcy Case; and the Creditor could not assert derivative standing as Trustee would not have had standing in first instance given that Trustee had previously sold and transferred to Creditor all potential causes of action other than dischargeability.
Humphrey, Opperman and Wise

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

3615 in the system

3500 Summarized

0 Being Processed