Citing concerns about the wording of the sale motion, a judge blocked the sale of the trustee’s rights in a former high-profile real estate developer’s bankruptcy case. The Arkansas developer’s legal claims were sold to an investment company in an auction in June. In July 2018, the real estate developer and his wife filed for Chapter 7 bankruptcy protection in Texas, claiming over $90 million in mainly business-related debt.
The deal required judicial approval
The deal could not be completed without the approval of a judge. The investment company and others had been identified as possible insiders by the bankruptcy trustee. This claim has been denied by the investment company in court documents and an earlier hearing.
The developer’s creditor had objections to the wording contained in the sale motion. The creditor’s contention was that while the trustee has the right to sell causes of action of the estate, those rights do not include the creditor’s civil conspiracy and fraud claims. The creditor has court filings contending that the developer and his wife attempted to hide their assets, including their interest in a development affiliated with the investment company that purchased their sale motion, as well as a Northwest Arkansas home described by the creditor as a multi-million-dollar mansion.
A new sale motion may be considered
In court documents, the former developer and his wife claimed they have committed no fraud. While the judge denied the sale motion, he said he would consider a new sale motion if it addressed several concerns.
Bankruptcy cases can be complex, especially if they involve multiple assets or other factors such as fraud allegations. An experienced and qualified attorney may help business owners navigate the challenges of filing for bankruptcy, including property sale and auction or allegations of fraud.