bankruptcy liquidation sales

bankruptcy liquidation sales
Lawsuit against a bankruptcy trustee???

We believe we have a case against a trustee for, among other things, breach of feduciary responsibility. He was the appointed trustee in a chapter 11 case, and mis-represented the position of the company to push for liquidation. He told the banks that were financing the company that he had buyers, and would be able to expedite the sale if the banks would step aside and allow him to force a chapter 7 wherein he would have complete control. It’s been 20 months, nothing’s been sold, no creditors have been paid, the collateral was released to the banks but they have been unable to sell it. The principals are out 3 plus million dollars and a company which had a 25 year history was completely destroyed. Now, the trustee is lying low. A new judge has been appointed, and it appears that they are just trying to make the whole thing go away. Read more about the debacle on PACER/Hampshire Distributors, Inc.

A US trustee is in what could could be considered a quasi judicial position and probably has some type of immunity in the
performance of his/her duties. That is to say, qualified immunity.
Now, if there is a breach of a fiduciary duty, particularly in bad
faith, the immunity can be lost and a lawsuit brought.
You say we, which suggests that you are one of the principals that you speak of. If you have what is called a justiciable injury,
which is to say you have demonstrable damages, traceable to a
wrongful act by this defendant, and there is a remedy that the
court can fashion, your chances look good. You must, however,
have what is called “Article III standing” which means that you
are suing for your own damages, or you are suing on behalf of a
person for whom you are a conservator or for whom you hold
power of attorney In each of the federal bankruptcy districts there is a federal court which specializes in Bankruptcy cases,
and they would be the ones who would review any allegation of
misconduct. By the way, there is no such thing as a chapter 7
for a business. Only chapter 11, where the operators can sometines remain in control as “debtors in posession.”

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