Bankruptcy

Robbing Peter to Pay Paul Can Land You in Bankruptcy Court

By J. Michael McBride

A gallery ("Debtor") in New York, who was charged with holding art work, sold that art work (worth $4.6 million) without the permission of the owners in order to pay off its debts. When the owners ("Creditors") found out they placed the Debtor in involuntary bankruptcy under Chapter 7 on November 1, 2007. The Debtor has since converted to Chapter 11 in order to reorganize instead of selling off all its assets in order to pay back the Creditors.

One Creditor has requested a Rule 2004 Examination in order to find out the particulars of the sale which included her 15 pieces of art work worth $3.4 million. When questioned about the sale by the Creditor's attorney, an executive of the Debtor stated that the gallery sold the paintings "early in the year and at one time had the cash in its custody, but no longer has the money". The hearing on the request for the examination is scheduled for February 14, 2008.

You can read the entire article at: http://www.chron.com/disp/story.mpl/ap/fn/5486297.html

Chandra

Full post as published by Texas Lawyer Blog on January 30, 2008 (boomark / email).