Ch 7 - Motion for Discovery after 341 and Discharge?

[MarkV]

I did the 341 meeting and have received a discharge notice already. Conversely, my lawyer told me that the discharge is not final yet because the Trustee hired a 3rd party law firm and said law firm filed a motion for discovery. The motion for discovery was filed 3 days after I received the discharge notice and I am scheduled to appear for a deposition in late March. I have submitted through my lawyer all docs that the law firm asked for.

What is the purpose of further discovery process?

Has anyone been through something like this?

[keepmine]

Sounds like you may not be closed.
The motion for discovery is likely an attempt to identify assets you may have not listed or, undervalued.
You really need to ask your lawyer what's going on.

[justbroke]

Yes, very interesting. Are you and your attorney fighting with the Trustee over some property? Is the Trustee just trying to get more documentation? It's a stretch to go to discovery if they had not already made a formal request for additional documentation. Are you an asset case? Did the Trustee inform you at any time about being an asset case or seeking documentation? Did you sell (or give) something to a family member or insider?

I have more questions than answers at this point.

[MarkV]

Yes, very interesting. Are you and your attorney fighting with the Trustee over some property? Is the Trustee just trying to get more documentation? It's a stretch to go to discovery if they had not already made a formal request for additional documentation. Are you an asset case? Did the Trustee inform you at any time about being an asset case or seeking documentation? Did you sell (or give) something to a family member or insider?

I have more questions than answers at this point.

My fault. -- I forgot to mention that this 3rd party law firm have requested supporting docs from me i.e. bank stmts, docs pertaining to a business share I sold, 3 years tax returns, etc. I have submitted through my lawyer all the docs they requested.

Prior to BK, I sold my share of a business for a small amount. All proceeds from that sale was spent on paying monthly mortgage and debt while I was attempting to get back on track. I believe I have broken down in detail where the proceeds went and that was submitted to the trustee beforehand.

No, my lawyer has not mentioned anything about being an asset case. Neither was there an issue between the trustee and my lawyer regarding any property.

[justbroke]

I don't know what the Trustee is up to, other than looking at recovering (avoiding) the transfer. The Trustee must be confident because if the Trustee can't find any money, then the Trustee just wasted money doing the Discovery. Did the Trustee also issue a Motion to Employ Counsel?

You say for a small amount and you don't say how long ago that was (before filing). Perhaps the Trustee thinks you didn't sell your shares for market value and is looking to claw back some of that value.

[MarkV]

I don't know what the Trustee is up to, other than looking at recovering (avoiding) the transfer. The Trustee must be confident because if the Trustee can't find any money, then the Trustee just wasted money doing the Discovery. Did the Trustee also issue a Motion to Employ Counsel?

You say for a small amount and you don't say how long ago that was (before filing). Perhaps the Trustee thinks you didn't sell your shares for market value and is looking to claw back some of that value.

No sir. All I got was Motion for Discovery.

I sold my shares at least a year before the BK. I had no plan to file BK and was hoping I'd be able to get back in track even after letting go of my business. It would appear that the $ I got for selling the biz was less than market value but at the time I just wanted out of that business due to my partner's character so I just accepted what he offered me.

I don't see how they can make me go after whatever I lost in that biz because I have already agreed to the buy out price.

[justbroke]

I don't see how they can make me go after whatever I lost in that biz because I have already agreed to the buy out price.

If what I think is happening, the Trustee isn't going after you. The Trustee may ask you some questions, try to dig into the deal, and see what the value actually was. This is considered an "insider" transfer for purposes of bankruptcy. The Trustee is trying to make sure that you didn't "give" it away to family, friends or a business partner in anticipation of bankruptcy (or simply to avoid letting creditors get to the value).

You wrote, "I just wanted out of that business due to my partner's character so I just accepted what he offered me"... Is that what you said to the Trustee when you were asked about the sale of the business interest (stock)?

Again, if it is an avoidance action, the Trustee isn't going after you for the money. This may lengthen the period of time to get to closing, but should not affect anything else. It is interesting that you did this more than a year before filing. Maybe the Trustee doesn't think it was actually done at the time that it was stated; that it was actually within the 365 days prior to filing.

[MarkV]

If what I think is happening, the Trustee isn't going after you. The Trustee may ask you some questions, try to dig into the deal, and see what the value actually was. This is considered an "insider" transfer for purposes of bankruptcy. The Trustee is trying to make sure that you didn't "give" it away to family, friends or a business partner in anticipation of bankruptcy (or simply to avoid letting creditors get to the value).

You wrote, "I just wanted out of that business due to my partner's character so I just accepted what he offered me"... Is that what you said to the Trustee when you were asked about the sale of the business interest (stock)?

Again, if it is an avoidance action, the Trustee isn't going after you for the money. This may lengthen the period of time to get to closing, but should not affect anything else. It is interesting that you did this more than a year before filing. Maybe the Trustee doesn't think it was actually done at the time that it was stated; that it was actually within the 365 days prior to filing.

I don't remember stating that to the trustee. If I remember correctly, the only question that came up pertaining to my selling if the biz was how much I got from it and where it went.

Do you think it would've been bad if I made that statement. I am not in full understand of inside transfer but I told myself, I am not hiding anything and I have been honest with all the proceeding relative to my BK filing.

[justbroke]

I'm just wondering if the Trustee is looking at that transfer specifically. Also I wonder how the Trustee may have come to the conclusion that you may not have received market value. I really have no clue what the Trustee is doing.

[despritfreya]

I forgot to mention that this 3rd party law firm have requested supporting docs from me i.e. bank stmts, docs pertaining to a business share I sold, 3 years tax returns, etc. I have submitted through my lawyer all the docs they requested.

1. You had a business. Your case is not a “cookie cutter” run of the mill bk. The Trustee hired an attny because he is too busy to deal with your case by himself. Nothing to be concerned over.

2. You ran a business and sold your interest. There is nothing unusual in the Trustee, through his attny, investigating your business and financial affairs. Again, nothing to be concerned over.

3. What you received sounds like nothing more than a Motion/Order for a Rule 2004 Examination. The production request contained in the Rule 2004 pertains to your financial condition. Presumably, and, if necessary, after producing those documents, a deposition will be held. This is not unusual however, depending upon the complexity of your case and the documents you produce, once the Trustee or his attny reviews those documents he may not have many questions. If he only has a few questions you may be able to answer them more informally over the phone, assuming your attorney has a good relationship with the Trustee.

Your job is to assist the Trustee in doing his. This is nothing to panic over.

Des.

[AngelinaCatHub]

FYI

I had a 2004B and on PACER I saw the action to hire attorney. I made a (ignorant, not stupid) preferential payment. My lawyer was like less than desirable. I/we went to the lawyer and on tape, we swore to the truth, and answered in jagged and stuttering terms all his questions. We were entirely terrified and did not know what was going on. It cost me 5K in settlement so my god-daughter was not sued for recovery. Sooooo I paid twice on that one. 'Hub

[justbroke]

Then why don't they just say Rule 2004. I'm besides myself at this point!

[despritfreya]

Then why don't they just say Rule 2004. I'm besides myself at this point!

Don't be. It is quite possible that OP simply did not know the "formal" name - assuming it is a 2004 exam.

So the question to MarkV is "what is the exact name of the document - legal pleading - that was filed/sent to you or your attny?"

Des.

[MarkV]

Don't be. It is quite possible that OP simply did not know the "formal" name - assuming it is a 2004 exam.

So the question to MarkV is "what is the exact name of the document - legal pleading - that was filed/sent to you or your attny?"

Des.

You are correct Sir. I went back and looked at the paper - it says BR 2004 Motion for Discovery.

[justbroke]

Well, 'Hub can tell you all about a Rule 2004 examination! I still think that it's related to the sale of the business interest and you should be just fine if all your papers are in order.