[CLC-Discussion] Bankruptcy Proof Agreed Judgments

[Bruce Partington]

Maybe if you can create secured party status, and they don't file
bankruptcy within 90 days (or 1 year if insider) - but if they do,
you're out of luck and the lien is avoidable.  You can't stipulate
around it.

 

Stipulating to non-dischargeability is a risky game.  It will be
re-examine by the bankruptcy court, which may or may not agree, and has
an independent duty to inquire because of its duty to ALL creditors.
Your best odds are to stipulate to the underlying facts which comprise
the elements that fit within one (or more) of the exceptions to
discharge, and then from an evidentiary standpoint you're dealing with
admissions.  But if you overdo it (several belts and suspenders) a
bankruptcy court is liable to find it contrived and just throw it out
and start over.  Remember, bankruptcy courts are fundamentally courts of
equity.

 

However, just like bankruptcy courts ignore (and properly so - duty to
all creditors as noted above) ipso facto clauses about bankruptcy, they
are not bound by a state court's determination on dischargeability or
even the underlying facts which would support it.  A good analogy is
alimony v. property settlement v. child support (and I'm NOT a divorce
lawyer).  Bankruptcy courts look beyond the language of the parties and
the court and can re-decide what box it "really" fits in.

 

So, what you can do, is to try stipulating to facts, without a lot of
inflammatory adjectives and adverbs, cross your fingers and hope for the
best.  You still have to file the dischargeability action timely and be
prepared to try the case.  With some admitted facts, you've got a leg
up, but it's not a lock.

 

Good luck.

 

Bruce D. Partington

Clark Partington

bpartington at cphlaw.com <mailto:bpartington at cphlaw.com> 

Direct: 850-432-1399

Fax: 850-432-7340

*Board Certified in Construction Law

 

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From: clc-discussion-bounces at lists.flabarrpptl.org
[mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Mark
Young
Sent: Wednesday, June 13, 2012 7:43 PM
To: Construction Law Discussion
Subject: [CLC-Discussion] Bankruptcy Proof Agreed Judgments

 

Hypthetical:  Parties are working toward a settlement agreement, to be
incorporated in a Final Judgment for a contract dispute.  Defendant has
insufficient funds to make a lump payment of the Final Judgment and
requires a payment plan that will take years.  Plaintiff is concerned
with Defendant's ability to pay the judgment.  Is there any language
that can be placed in a settlement agreement that will protect Plaintiff
in the event Defendant files for bankrupty (non-dischargeable debt,
secured creditor status, etc.)?

 

Thanks,

 

Mark

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