Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
BeVier v. Warder (In Re BeVier)
Citations: 12 B.R. 75; 1981 Bankr. LEXIS 3530; 8 Bankr. Ct. Dec. (CRR) 80Docket: 19-40017
Court: United States Bankruptcy Court, D. South Dakota; June 18, 1981; Us Bankruptcy; United States Bankruptcy Court
Marvin Eugene BeVier and Joyce LaVae BeVier, the Debtors, filed for Chapter 7 bankruptcy, leading to a trial regarding the Trustee, Robert A. Warder's, authority to sell a promissory note payable to the Debtors. The promissory note, valued at $3,000 plus interest, was part of a pre-bankruptcy real estate transaction and is due in February 1982. The Trustee notified the Debtors' Attorney of his intent to sell the note. The Trustee's defense included a motion to dismiss the Debtors' Complaint, arguing it failed to state a cause of action and asserting that adequate protection does not apply to a trustee selling a note in Chapter 7 bankruptcy. The Bankruptcy Court identified three key issues: (1) whether the promissory note is property of the Debtors' estate, (2) whether the Trustee has the power to sell the note, and (3) whether adequate protection applies to this sale. The Court concluded that the promissory note is indeed property of the estate under 11 U.S.C. § 541(a)(1), which includes all legal or equitable interests of the debtor as of the bankruptcy's commencement. The Court also determined that since the note is property of the estate, the Trustee has the authority under 11 U.S.C. § 704 to collect and liquidate the note in the best interests of the parties involved. Debtors allege that the Trustee must provide adequate protection upon the sale of a promissory note they are payees of, as mandated by 11 U.S.C. § 361. However, the Trustee contends that adequate protection does not apply to a trustee selling a note in a Chapter 7 bankruptcy. The Bankruptcy Court concludes that adequate protection is irrelevant to estate property in Chapter 7, where the Trustee's role involves liquidating estate property under 11 U.S.C. § 704. The adequate protection framework is intended to safeguard creditors during the use, sale, or lease of property, not to protect the bankruptcy estate itself. An examination of Debtors' bankruptcy Schedules B-2 and B-4 reveals that Debtors have not listed any liquidated debts in Schedule B-2, necessitating an amendment to include the promissory note as estate property. Additionally, Debtors have claimed exemptions below the amounts allowed by South Dakota law in Schedule B-4, suggesting they may want to amend this schedule to claim a portion of the value of the chose in action as exempt. Consequently, the Bankruptcy Court grants the Trustee's motion to dismiss the Debtors' Complaint due to a lack of a viable cause of action, with the decision serving as Findings of Fact and Conclusions of Law, instructing the Trustee to issue an order accordingly.