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ACORN Makes Election Night Announcement of Chapter 7 Bankruptcy

By Joseph McDaniel, Esq.

Now, some people and some things are just more interesting than others.

There is the most interesting man in the world, for instance.

And among ordinary people filing bankruptcy, those who are stars on reality shows are also going to be, in general, more interesting than other filings. And they will produce a lot of articles.

But I have to admit I'm a little surprised that ACORN announced that it was filing a Chapter 7 Bankruptcy; and I am not yet convinced that such a filing is a great idea for an entity with a public face.

After all, the organization can't receive a bankruptcy discharge; it isn't a person, and only a person can receive such a discharge.

And filing a Chapter 7 doesn't permit the organization to keep operating, so that clearly wasn't the motivation for the filing.

In addition, the attorney-client privilege which previously belonged to the organization now belongs to the appointed bankruptcy trustee, who can waive it if he or she decides to do so.

And the obligation to testify under penalty of perjury exists in bankruptcy, and the existence of Rule 2004, which makes detailed discovery a fairly simple matter, could make it easier for prosecutors to pursue information to help their cases.

BUT WAIT, THERE'S MORE!

The automatic stay is a fundamental protection for an individual debtor, and for a bankruptcy estate; but it has holes like Swiss Cheese for criminal prosecutions, so there won't be a breathing space afforded by the filing of the bankruptcy, as there would in many cases.

All in all, it is not clear to me that a bankruptcy filing for ACORN will achieve useful results for that organization, and it seems to me that the filing may backfire, if there were preferences, or other transfers that can be set aside by the appointed bankruptcy trustee.

Only time will tell.

And I'll report it as it happens, because some bankruptcy filings are inherently more interesting than others.

Full post as published by Arizona Bankruptcy Attorney Blog on November 03, 2010 (boomark / email).