The Lenny Dykstra bankruptcy drama continues.
When we last checked in, Dykstra was demonstrating what not to do in an individual Chapter 11 bankruptcy by trashing his mansion and allowing it to fall into disrepair in various ways. Essentially he was throwing away value that could’ve been used toward paying back creditors in an effort to get him through his Chapter 11 bankruptcy case.
Now, the WSJ Bankruptcy Beat is reporting that Dykstra has asked the bankruptcy judge to dismiss his case. The problem is that Dykstra is not in control of the case anymore. The judge appointed a trustee after determining that Dykstra was not able to administer his own finances.
In a Chapter 11 case, the debtor (i.e., Dykstra) and the debtor’s estate (i.e., Dykstra’s assets) start off as one in the same. However, the debtor’s estate has a duty to act in the interest of the creditors. And if the bankruptcy judge believes that the debtor is not doing this, then a trustee is appointed to oversee administration of the debtor’s estate. When that happens, it’s said that the debtor loses control of the case.
Since that’s what happened to Dykstra, it’s understandable that he would want the case dismissed. Of course, it sounds unlikely that the judge will see it the same way. Once you file for bankruptcy, you can’t just “undo” it. Dykstra seems to have sought the protections of the bankruptcy process (i.e., keeping creditors at bay) without fully appreciating the responsibilities, obligations and risks involved in the Chapter 11 bankruptcy process.
While you can’t predict everything that will happen in a Chapter 11 bankruptcy case, a good and experienced bankruptcy lawyer will put a great deal of effort into the preparation of the case. Preparation includes educating your client and making sure he or she understands what’s expected of them and what to expect from the process.
If done properly, Chapter 11 bankruptcy can be an extremely effective tool for individuals and small businesses in New York and elsewhere to really reorganize their finances and keep themselves and their business moving forward. (See, e.g., my recent post on the Sal’s Hardward Store Bankruptcy in Brooklyn.)
If you’re an individual or small business owner considering filing for Chapter 11 bankruptcy in New York, please feel free to contact me for a free initial consultation. I’m happy to share the benefit of my 30+ years of Chapter 11 bankruptcy experience and to discuss your situation and the options and strategies available to you.
Contact Bruce Weiner, Esq.
EMAIL Bruce Weiner
Phone
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
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Go to Chapter 11 Bankruptcy Lawyer Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.
