Georgia Bankruptcy Blog

Seraphin v. Morris Publ'g Group LLC (In re Morris Publ'g Group LLC), 2010 Bankr. LEXIS 488, Ch. 11 Case No. 10-10134 (Bankr. S.D. Ga. Feb. 9, 2010). Morris Publishing Group and 15 affiliates filed Chapter 11 petitions on January 19, 2010.  The Debtors filed a prepackaged plan under which all classes were unimpaired. 

A group of "longtime readers and subscribers" of the St. Augustine Record (one of Debtors' newspapers), objected to the Plan saying they are "horrified" at the quality of the newspaper and its news coverage.  Because the newspaper promised "no change" as a result of the bankruptcy, the Activists argued that the Plan did not work.

The Objecting Parties object to "the promise of 'no change'" (id. P 3) as "uphold[ing] Morris family mismanagement" of the Debtors' media properties (id. P 10). The Objecting Parties see the Debtors' plan as "a potential death sentence for smaller newspapers" like the Record, the demise of which "would be a clear and present danger to our democracy, allowing wrongdoers to prosper without investigative news coverage." 2 (Id. P 7.) The Objecting Parties assert that "Morris Publishing must be held accountable" for inadequate news coverage and for "violating the standard of care . . . . result[ing] in a death spiral of declining interest in newspapers." (Id. P 8.) The Objecting Parties further argue that "[r]efusal to cover the news adequately is contrary to the interest of bondholders . . . in selling newspapers and advertising." (Id. P 9.)

It is not a surprise that the Court found that the Activists had no standing to object to the Plan as creditors.  The Court further held that they had no standing as "newspaper readers" or "community activists."

Mere interest in the outcome of the proceeding is not sufficient to meet the standard. In re Goldman, 82 B.R. 894, 896 (Bankr. S.D. Ohio 1988). Thus an entity without some kind of direct relationship with the debtor, the debtor's property, or the administration of the bankruptcy estate--an entity that is a stranger to the bankruptcy case--is generally not a party in interest under § 1109(b).

The Objecting Parties, as newspaper readers and community activists, are just such strangers to the bankruptcy case here, with nothing more than mere interest in the confirmation of the Debtors' plan. The Objecting Parties, self-styled as community activists or readers, have no direct relationship with the Debtors, the Debtors' property, or the administration of this chapter 11 case. Further, the Objecting Parties do not assert a pecuniary interest that is directly or adversely affected by confirmation and as to which they require representation. Indeed, the Objecting Parties do not assert any pecuniary interest at all.

None of the issues raised by the Objecting Parties are in any way related to the purpose of this chapter 11 case, which is to give the Debtors the breathing space necessary to accomplish their financial rehabilitation. The Objecting Parties raise what could generally be termed public interest issues. The Objecting Parties, self-styled as community activists or merely readers, therefore have not met the standard under § 1109(b) and consequently are not parties in interest as such.

Moreover, even if the Objecting Parties had met the standard under § 1109(b), they still would not have standing to object to confirmation as newspaper readers and community activists any more than they have standing to object as newspaper subscribers. Newspaper readers and community activists have no legally protected interest affected by confirmation in this case. The Objecting Parties are thus precisely the prospective litigants that the limits on standing were designed to exclude: the "clouds of persons indirectly affected by the acts and entitlements of others . . . [who] buzz about, delaying final resolution of cases"

Again, it is obviously no surprise that the group was denied standing to object to the Plan.  However, what if an "activist-minded" Congress decided that such groups did have standing?  What kinds of objections to Plans would we see in cases?  Environmental groups objecting to General Motors' filings because the cars do not meet a certain level of emission control? The local Homeowners' Association objecting to the plan of a business down the road?

Suntrust Bank v. Global One, L.L.C. (In re Global One, L.L.C), 411 B.R. 524 (Bankr. S.D. Ga. July 21, 2009).  SunTrust sought relief from stay on the grounds that the value of the real property ($460,000) was far less than the amount of the secured claim ($548,159).  "Debtor described the nature of its business as a "single asset LLC to develop property," admitted it is receiving no income from the operation of the business, and also identified its business as a "single asset real estate" business as defined in 11 U.S.C. § 101."

At the hearing, Sun Trust's only witness was Joel Crisler, an appraiser. Crisler stated that in his expert opinion the fair market value of the Property was $ 460,000.00, a value which is based upon a future value of $ 1,197,800.00 with a five year holding period at a discount rate of twenty percent. Debtor's first witness, Johnnie Ganem, who is also an appraiser but did not conduct an independent appraisal of the Property, testified that in his opinion a three year holding period and a twelve percent discount rate were more appropriate valuation parameters. Adapting Crisler's appraisal with these changes, Ganem testified the value of the Property would yield a value of between $ 750,000.00 to $ 800,000.00. Debtor's second witness, Derek Pommerenck, a principal of Debtor, testified in his opinion the property was worth $ 1,200,000.00...

After considering the expert testimony of appraisers for both parties, I conclude that SunTrust did not carry its  burden as of the date of the hearing. SunTrust's expert established a value of $ 460,000.00 utilizing what he believed the value of the property would be in five years and discounting it to present day value at twenty percent per year. Debtor's expert believed that a three year holding period with a discount rate in the range of twelve to thirteen percent was more appropriate and concluded to a value in the range of $ 750,000.00 to $ 800,000.00. I am unable to conclude what the proper discount rate would be after hearing the testimony of these two appraisers, but assuming a five year holding period at a lower discount rate of twelve percent, the value of the property today would exceed $ 600,000.00. Similarly, a shorter three year holding period at a twenty percent discount rate would yield a value of roughly $ 675,000.00. Without reaching a precise conclusion as to what the value of the property is, however, I am able to conclude, given a pre-petition SunTrust   debt totaling approximately $ 550,000.00, that there remains some equity in this property. As a result, the burden is not carried under § 362(d)(1), and I move on to the consideration of the Motion based on 11 U.S.C. § 362(d)(3)...

SunTrust's motion requests that this Court determine that the Property securing its claim is "single asset real estate." Unless I so find, SunTrust can not rely on § 362(d)(3) but only § 362(d)(1) and (2), which would impose the burden of establishing that there is no equity in the property to obtain relief, a burden that SunTrust cannot meet as described above. See 11 U.S.C. § 362(g).

There is no doubt that the property meets the definition. It constitutes a single project and is not residential, Debtor is not a family farmer, and no business is being conducted on the property. See Statement of Financial Affairs, Dckt.No. 8, pgs. 14 & 19. Therefore, the Property qualifies as a "single asset real estate."

However, Debtor argues that (d)(3) does not apply because it has a counterclaim against Portrait Homes in Superior Court, which "is clearly not real property nor is it an attachment or appurtenance to the property." Brief, Dckt.No. 71, pg. 6. This fact does not change this Court's finding.Go to the description of this Headnote.The focus of the definition is not whether the case involves a "single asset" but rather whether the stay applies to "single asset real estate" held by a bankruptcy estate.

 Having concluded that there is, at the present time, some equity in this property, although slight equity, I hold that while it is mandatory that I grant stay relief under § 362(d)(3), it is not mandatory that I grant unconditional relief from stay. Instead, I am permitted under that section to condition or modify the stay in accordance with the evidence.

Scott Riddle’s practice focuses on bankruptcy and litigation. Scott has represented Chapter 7 and 11 debtors, creditors, trustees and other interested parties in bankruptcy cases and bankruptcy litigation.  For more information, click here.

From Deal Watch Blog -

TitleMax, one of the largest title-lending companies in the U.S. and a frequent advertiser on Atlanta television stations, filed for bankruptcy in Savannah on Monday...The bankruptcy filing was triggered by the maturity of a $165 million loan from Merrill Lynch Mortgage Capital Inc. and Fortress Investment Group LLC.

Savannah-based TitleMax reported $100 million of debts and $100 million of assets. Several affiliated companies filed for Chapter 11 simultaneous with TitleMax, including CheckMax of Tennessee and TitleMax Funding. Fentress filed a motion for the court to jointly administer the cases...

 In re Molitor,  --- B.R. ----, 2008 WL 4155283 (Bkrtcy.S.D.Ga. Sep. 5, 2008) (J. Barrett).

The first issue was whether the United States Trustee (“UST”) was required to file the § 704(b) presumption of abuse statement within 10 days of the “Commencement” or “conclusion” of the § 341 meeting of creditors.

Debtor argues § 704(b)(1) requires the UST to file his statement of abuse within 10 days of the beginning, or “first” meeting of creditors. Conversely, the UST argues the 10-day period runs from the “conclusion” of the meeting of creditors. Resolving such disputes begins with the language of the statute... Debtor argues the language of § 704(b)(1)(A) means the UST's statement must be filed within 10 days after the actual “first” date of the meeting of creditors, namely September 19, 2007. In support of this position, Debtor cites In re Close, 384 B.R. 856 (D.Kan.2008) which provides:

[T]he statutory language of § 704(b)(1)(A) supports a plain language interpretation that “first” means “first.” In other words, the plain meaning of the phrase “date of the first meeting of creditors” refers to the first meeting date and not some later date. The language is not vague or ambiguous and does not need extraneous verbiage to clarify its meaning.

Close, 384 B.R. at 866.

Conversely, the UST argues the 10-day period runs from the “conclusion” of the first meeting of creditors. The UST argues “first meeting of creditors” is a term of art and does not mean the date the meeting of creditors is “first” convened. I agree.

After a 28-year hiatus, BAPCPA reintroduced the term “first meeting of creditors” into the Code. “When Congress amends the bankruptcy laws, it does not write ‘on a clean slate.’ ... Reviewing the historical usage of the term “first meeting of creditors” reflects it designates the type of creditors' meeting, not the first convening of such meeting. Specifically, “first” designates the initial “meeting of creditors,” as opposed to the “final” meeting, or a “special” meeting. However, the “first meeting” need not conclude in one session. The Rules provide “[t]he meeting [of creditors] may be adjourned from time to time by announcement at the meeting of the adjourned date and time without further written notice.” Interim Fed. R. Bankr.P.2003(e) ...Additional textual support is found in BAPCPA. For example, debt relief agencies are required to inform all debtors they must attend the “required first meeting of creditors.” 11 U.S.C. § 527(b). This requirement is not satisfied merely by showing up to only the first session of the meeting of creditors. Instead, the debtor must attend all sessions of the “first meeting of creditors.”

 When viewed in this context, I find the 10-day deadline in § 704(b)(1)(A) runs from the conclusion of the meeting of creditors.

The second issue was whether sufficient “cause” existed to extend the deadlines for the UST to file a § 707(b)(3) motion to dismiss and/or a § 727 objection to discharge. The timeliness of a § 707(b)(3) motion to dismiss is governed by Interim Bankruptcy Rule 1017(e)(1), which states in relevant part:

(1) Except as otherwise provided in § 704(b)(2), a motion to dismiss a case for abuse under § 707(b) or (c) may be filed only within 60 days after the first date set for the meeting of creditors under § 341(a), unless, on request filed before the time has expired, the court for cause extends the time for filing the motion to dismiss.

The UST requested the Court extend the time to file a motion to dismiss “for cause.” The UST has the burden of proof to show “cause,” which is not defined in the Code. 
 

[The] UST argues “cause” exists because he exercised diligence and because Debtor's assertion that her income and expenses would change significantly required the UST to wait until the anticipated changes were realized. I disagree... I find cause to extend the deadline does not exist. Debtor's counsel provided documentation to the UST .. more than 50 days before the deadline. The UST's October 12th email recognizes the presumption of abuse, and states the UST's intent to file a 10-day statement of abuse. The UST's email fails to request any additional documentation from Debtor. The closing line of the email notes “[i]f there is further information or documentation which you would like for our office to review ... please submit immediately and we will review.”

The UST argues he exercised diligence by pursuing information from the Debtor through informal means; however, no formal discovery requests were filed until after the deadline had expired. While the mere failure to attend the § 341 meeting of creditors or request a 2004 examination is not fatal, given the facts of this case, I find the UST has failed to carry his burden to show cause exists to extend the deadline. The UST had the necessary information on October 12th and waited until November 16th, the day before the deadline, to request an extension. The issues presented are not complex. There is no allegation Debtor has acted in bad faith. The UST points to the fact that his office has limited resources. While the Court is sympathetic to this position, Debtor and Debtor's counsel are in similar situations...  The Bankruptcy Rules strike a balance between these competing interests by providing the UST 60 days from the first date set for the § 341 meeting of creditors to review Debtor's filings, investigate, and if necessary, file a motion to dismiss. Interim Bankruptcy Rule 1017(e)(1). The UST may obtain additional time with a showing of “cause.” Allowing the UST additional time when he has failed to diligently investigate would ignore the mandated deadlines and diminish Debtor's legitimate interest in a prompt and speedy resolution of her bankruptcy case.... Thus, the UST's motion to extend time to file a § 707(b)(3) motion to dismiss is denied.
 

The Court also denied the UST's motion to extend the time to file a §727 complain on similar grounds.

In re Foreman, No. 01-21400, 2007 WL 4170629 (Bankr. S.D. Ga. Nov. 26, 2007).  From the Westlaw blurb -

Wrongful death action which arose postconfirmation, when Chapter 13 debtor's husband was killed, and which no party asserted would have to be successfully prosecuted to enable debtor to fulfill her plan, was not included in “property of the estate,” and debtor was not required to amend her schedules in order to disclose this postconfirmation asset to court.

In re McIntosh,  2007 WL 4146058 (Bankr. M.D.Ga., Nov. 19, 2007) --

Debtor has presented testimony that he did not operate a business after April 1996 and, thus, could not have incurred any sales tax after that date. Debtor further presented testimony that he met with representatives of Creditor on more than one occasion to determine the amount of outstanding sales tax he owed, and that he paid those amounts in full. The Court finds Debtor's testimony credible and sufficient to refute the prima facie validity of Creditor's claim for sales tax. Creditor presented no evidence in response to Debtor's testimony and, thus, cannot meet its burden to prove its claim by a preponderance of the evidence. Therefore, the Court will disallow Creditor's claim of $11,305 for sales tax. However, Creditor's $461 claim for income tax will be allowed because Debtor did not challenge that portion of the claim.

1By: Scott B. Riddle, Esq.

In re Hainlen, Case No. 06-10678, 2007 Bankr. LEXIS 1041 (Bankr. S.D. Ga. March 26, 2006)(Barrett).

Debtor's father was a teacher, and had a retirement annuity with the Teachers Retirement System of Georgia.  He designated his daughter, the debtor, as a beneficiary of 25% of the proceeds.  Upon his death, the debtor had the option of choosing a lump sum payout or monthly payments, and she chose monthly payments.

Debtor subsequently filed a bankruptcy petition and claimed that the retirement fund either was not property of the estate or was fully exempt.  The Court determined that Section 541(c)(2) excluded the fund from estate property as the funds, under state law, were part of a "plan or trust."  Further, the retirement fund includes a "spendthrift," or anti-alienation, provision.  The analysis does not change because the retirement funds arose from debtor's father's retirement plan, rather than from the debtor.  

By: Scott B. Riddle, Esq. 

In re James, 2007 Bankr. LEXIS 152 (Bankr. S.D. Ga. January 17, 2007)(J. Barrett).  Debtor filed her second case within a year, and filed a motion to continue the automatic stay beyond the thirty-day period of 11 U.S.C. §362(c)(3). The court denied the motion, as the debtor's circumstances had not changed since her last case was dismissed for failure to make plan payments and, in fact, her income had decreased and her expenses had increased.  "Upon the Court's denial of the Motion, Debtor's counsel immediately requested the Court deny the motion as moot, arguing that since no collection action was taken against the Debtor prior to the commencement of the current case, the automatic stay terminates as to no creditors, thereby mooting the motion."  The court denied the motion.

At issue is the meaning of the terms "action taken" in 11 U.S.C. § 362 (c) (3) (A) which provides in pertinent part:

(c) Except at provided in (d), (e), (f), and (h) of this section-

(3)if a single or joint case is filed by or against debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed . . . (A)the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case. . . .

11 U.S.C. § 362 (c) (3) (A) (emphasis added by court).

By: Scott B. Riddle, Esq.

In re Batten, 351 B.R. 256, 2006 Bankr. LEXIS 2524 (Bankr. S.D. Ga. September 29, 2006) (Dalis). 

Debtors filed a motion seeking authority to amend their schedules to reflect a tort claim that arose post-petition after the conversion from Chapter 13 to Chapter 7, and in the same month the debtors received a discharge. The motion was denied as unnecessary and improper, as there was no duty or obligation to disclose a post-petition and post-conversion asset that was not property of the estate.

Southeast Landco, LLC v. 150 Beachview Holdings, LLC, 2006 U.S. Dist. LEXIS 73098 (S.D. Ga. September 21, 2006) (Alaimo).

A lawsuit was filed in federal court alleging breach of a real estate contract.  The basis for federal jurisdiction, the plaintiff argued, was that an individual who had a leasehold interest in the real property** at issue was a debtor in a Chapter 7 case.  However, in the bankruptcy case, the Chapter 7 trustee had rejected the lease and entered a no-asset report. 

The court granted the motion to dismiss.  Although the plaintiff argued that the lease was rejected, but not terminated, the distinction was not relevant.  The rejection of the lease was irrevocable and removed the lease as property of the estate.  Therefore, a dispute between two non-debtors over the lease could not be "related to" the bankruptcy case, and federal jurisdiction did not exist.

** The property interest at issue was an "estate for years" under Georgia law, and could be passed as real property. O.C.G.A. 44-6-100.

11 U.S.C. §§ 105, 362(c); Automatic Stay; Extension of Stay for Repeat Filer

In re Whitaker, 2006 Bankr. LEXIS 796, Case No. 05-1416 (Bankr. S.D. Ga. April 20, 2006) (Dalis)

Debtors filed a Chapter 13 petition after the effective date of the BAPCA. The filing was their second within a year, the first case having been dismissed after the husband was laid off from his job. Debtors' lawyer filed for an extension of the automatic stay pursuant, but such motion was not filed until 27 days after the petition date, and a hearing was not held within thirty days of the petition date. No objections to the relief requested were filed.

The court's detailed opinion began by noting that the short trigger for filing a motion, requesting a hearing and obtaining a hearing date may violate the due process and equal protection clauses of the Constitution. A debtor may only have a window of a few days to file their motion, provide proper notice to all parties, and get on the court's calendar (which may be entirely beyond the debtor's control). However, only an Article II court may overturn a statute on these grounds.

The court then discussed the language of § 362(c) insofar as it applied to repeat filers. Section 362(c)(4), which applies to debtors who have had pending more than one prior case in the previous year, provides that the stay does not go into effect at all but there is no 30 day limitation on requesting imposition of the stay. Debtors who have filed only one prior case in the previous year have a strict 30 window in which to request an extension of the stay and the court must hold a hearing in that window. § 362(c)(3). Under the plain language of these statutes, the debtors were ineligible for relief under either subsection.

Notwithstanding debtors' ineligibility, the court discussed the good faith requirement of 362(c)(3)(C). Because the statute itself contains the evidentiary burden, the court declined to look to the good faith standards of § 1307(c) or § 1325(a), as other courts have done. The court concluded that the prior dismissal of the debtors' case was due to the loss of the joint debtor's job. As both debtors are now working and making sufficient income to fund a 100% plan, the presumption of bad faith was rebutted.

Notwithstanding the debtors' ineligibility for an extension or re-imposition of the automatic stay, the court exercised its broad authority under § 105 to re-impose the stay. No objections were filed to the debtors' motion, and a dismissal may lead only to another filing and move for re-imposition under §362(c)(4)(B). Moreover, as the debtors have proposed a 100% plan, both debtors and the estate may be harmed if the stay were not re-imposed.

Author Note: While Judge Dalis raises several significant and valid points, including the arguably better treatment of multiple repeat filers, it appears that he is using the broad authority of § 105 to effectively overturn and subvert the clear provisions of §362 and would impair rights or create additional rights not provided for in the Code. See, e.g., Tucker. However shortsighted Congress may have been, their intent and language appears to be clear. However, Judge Brizendine has also used similar reasoning to extend the stay in Reed.

11 U.S.C. §§ 1307, 1328(f); Confirmation of Chapter 13 Plan; Discharge; Good Faith

In re Lewis, 2005 Bankr. LEXIS 471, Case No. 05-14070, In re Tobias, 2005 Bankr. LEXIS 471, Case No. 14078 (Bankr. S.D. Ga. March 27, 2006)(Dalis)

Debtors each filed Chapter 13 petitions and 100% plans, even though they were ineligible for a discharge pursuant to §1328(f) (Chapter 7 discharge received within 4 years). The Chapter 13 trustee moved for dismissal of both cases, arguing that because debtors are ineligible for a discharge they are ineligible for Chapter 13 relief. Alternatively, the trustee argues that the petitions were filed in bad faith and constituted an unreasonable delay that is prejudicial to creditors.

The court found that eligibility to be a debtor is determined by §109(e), and that §1328(f) is not an eligibility provision. Because the debtors otherwise qualify under §109(e), they are eligible to be debtors. Further, under the test set forth in In re Kitchens, 702 F.2d 885 (11th Cir. 1983), the debtors filed their petitions in good faith. Eligibility for a discharge is one element under the test, but the debtors have proposed 100% plans that otherwise meet all of the elements of good faith. Under the circumstances, the plans were superior to a race to the courthouse, and confirmable

11 U.S.C. §§ 506, 1325; Secured Claims

In re Brown, 2006 Bankr. LEXIS 476, Case No. 05-21764 (Bankr. S.D. Ga. March 27, 2006)(Dalis)

Debtor purchased a personal vehicle within 910 days of filing a Chapter 13 petition, and the creditor filed a claim stating that the vehicle debt was 100% secured. The debtor proposed a plan that paid the creditor less than the present value of the claim and the creditor objected to confirmation. Debtor argued that the unnumbered paragraph added to §1325 in the BAPCPA regarding the purchase of personal use vehicles within 910 days of filing stated that §506 was not applicable and, therefore, the creditor did not have an allowed secured claim. Therefore, debtor argues, §1325(a)(5)(B)(ii), requiring the payment of the present value of secured claims, is not applicable to the claim.

The court found debtor's argument unpersuasive, finding that the unnumbered paragraph of §1325 does not alter the claims described in the paragraph as secured, and it does not exempt such claims from the present value requirements of §1325(a)(5)(B)(ii). Rather, it means that the secured claims it describes cannot be bifurcated into secured and unsecured portions pursuant to §506(a).

Note: For further discussion of this issue, see this article at the ABI BAPCPA Blog.

11 U.S.C. §§ 506, 1325; Secured Claims

In re Carver, 2006 Bankr. LEXIS 327 (S.D. Ga. March 6, 2006) (Walker)

Debtors filed a Chapter 13, listing a vehicle (purchased within 910 days of filing) with a current value of $14,500 and subject to a claim of $15,000. Debtors' plan proposed to pay the entire $15,000 claim in monthly installments, without interest.

The issue was whether debtors must pay interest to a creditor whose collateral is a "910 vehicle." The court ruled that the "test of the statute plainly prevents 910 claims from being treated as secured under a Chapter 13 plan…. By creating a special provision solely for 910 claims, Congress has demonstrated an intent to treat them differently that other unsecured or secured claims, but it has not provided a basis for treating them preferentially." Therefore, in a Chapter 13 plan, a 910 claim must receive the greater of 1) the full amount of the claim without interest, or 2) the amount the creditor would receive if the claim were bifurcated and crammed down (secured portion with interest, unsecured portion pro rata). Since the creditor in this case would receive more than $15,000 if the secured portion were paid with interest, its objection was sustained.

Note: For further discussion of this issue, see this article at the ABI BAPCPA Blog.

11 U.S.C. §541; Property of the Estate; Judicial Estoppel

Wooten v. Altahama Bank and Trust, 2005 U.S. Dist. LEXIS 36186, Case No. CV203-100 (S.D. Ga. October 4, 2005)(Alaimo)

Plaintiff filed a complaint against former employees and others for numerous state law claims, including fraud and conversion, and civil RICO. The defendants moved for summary judgment on the grounds that the plaintiff had previously filed a Chapter 7 petition, and failed to identify the claims as an asset of the Bankruptcy estate. As a result, the claims belonged to the estate and the plaintiffs lack standing to pursue them.

The court noted that the accrual of a cause of action for purposes of triggering the statute of limitations may be different than the accrual of a claim for purposes of determining ownership under §541. Under Georgia law, claims for fraud and conversion accrue on the dates of the alleged false representation and the date of the actual conversion, respectively. These alleged acts took place prior to the bankruptcy filing and, therefore, were property of the estate and Chapter 7 trustee, and not the plaintiff. With respect to Civil RICO, however, the claim "begins to accrue as soon as the plaintiff discovers, or reasonably should have discovered, both the existence and source of his injury and that the injury is part of a pattern." Plaintiffs did not discover the alleged activities, injuries or pattern until after the bankruptcy was filed. Therefore, Plaintiffs, and not the trustee, had standing to pursue the RICO claims.

11 U.S.C. §101(12A); Debt Relief Agencies; Attorneys

In re Attorneys at Law and Debt Relief Agencies, 322 B.R. 66 (Bankr. S.D.Ga. October 17, 2006) (Davis)

Although the language defining the term "debt relief agencies" in §101(12A) was broad enough to cover attorneys, the court held that members of the bar of the court, or attorneys admitted pro hac vice, are not covered by the provisions of the Code regulating debt relief agencies.