In a complex bankruptcy case, New York bankruptcy attorney Bruce Weiner successfully won another appeal in the US Court of Appeals for the 2nd Circuit: In re Alexander Kran, III on July 25th, 2014, which has been reported at 2014 WL 3685939.
The case was written up in both the New York Law Journal and on the website Law 360.
Our client, the defendant, was a lawyer who had entered into a business arrangement with another attorney. The other attorney was to advertise for new cases, do some initial intake and then pass the cases along to the debtor to handle the bulk of the matters. According to their arrangement, part of the fee would be given back to the initial attorney once the case was completed.
When the defendant failed to pay the referral fees owed, the attorney who originally brought in the business sued him. After the defendant Kran, failed to produce documents requested by the other attorney, which documents might have helped prove the amount of closed business that resulted from the arrangement, the state court struck defendant’s answer. The case was eventually settled for a judgment of $1.4 million. When Kran couldn’t pay back the agreed upon amount, he filed for bankruptcy.
The creditor objected to the bankruptcy on the grounds that the debtor didn’t keep proper books and records to prove his financial condition in the original lawsuit. Mr. Weiner, representing the defendant/debtor, countered this claim, stating that this wasn’t relevant, because the debtor was able to prove his financial condition at the time he filed in bankruptcy court.
Mr. Weiner filed a summary judgment on behalf of the debtor to dismiss the claim, and the bankruptcy court granted his request. The creditor subsequently filed an appeal, but the original decision was upheld by the United States District Court for the Southern District of New York and now upheld again by the United States Court of Appeals, Second Circuit.
In the decision, Circuit Court Judge Robert Sack stated:
“We agree with bankruptcy court that the inquiry into the debtor’s financial condition is limited to the span from a reasonable period of time before the bankruptcy filing through the pendency of the bankruptcy proceedings…We further conclude that Berger has not met his burden to show that the missing records were necessary to ascertain Kran’s financial condition during this temporally limited period.”
When asked about the court’s determination, Mr. Weiner told the New York Law Journal: “This was the correct decision, what happened in state court in that lawsuit had no connection to the bankruptcy.”
Summarizing the salient points of the decision in the Law 360 article, Mr. Weiner concluded: “It seemed to be pretty clear that the failures of my client in state court to produce documents were too remote and did not bear on his financial condition at the time he filed for bankruptcy.”
If you or someone you know needs legal representation in a complex bankruptcy proceeding, contact New York bankruptcy attorney Bruce Weiner.
