United Surety & Indemnity Co. v. Lopez-Munoz (in re Lopez-Munoz)

First Circuit is uncharacteristically lenient on debtors in the context of a motion for a trustee.

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Case Type:
Business
Case Status:
Affirmed
Citation:
16-9007 (1st Circuit, Aug 09,2017) Published
Tag(s):
Ruling:
Bankruptcy court affirmed
Procedural context:
This case concerns an appeal from a bankruptcy court's decision, under 11 U.S.C. § 1104(a), to deny a creditor's motion to appoint a trustee for the bankruptcy estate to replace the debtor in possession of that estate.
Facts:
The fact pattern is rather complicated, but may be summarized as follows. The appellee in this case is the debtor in possession of the estate, Pedro López-Muñoz. Prior to filing a petition for bankruptcy under Chapter 11 of the Bankruptcy Code, López was an owner, either in whole or in part, of two petroleum products companies. A dispute with a creditor (the appellant) arose, relating to certain apparently fraudulent transfers, and the creditor garnished the individual debtor's personal bank account. The creditor moved for the appointment of a chapter 11 trustee based largely on the transfers. After an evidentiary hearing, the bankruptcy court denied the motion because even if the transfers were fraudulent, they caused no materially adverse effect on the bankruptcy estate. Creditor appealed to the BAP, which affirmed. The First Circuit also affirmed.
Judge(s):
Before Howard (CJ), Toruella, and Barron. Opinion by Barron,

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