Over the years, the bankruptcy bar has been divided into two areas: commercial business specialists who represent companies in and out of court restructurings and Chapter 11 bankruptcy cases and consumer bankruptcy matters involving individual debtors in Chapter 13 reorganizations and Chapter 7 liquidations. The co-authors are business specialists and, consequently, we rarely dare to venture into the world of Chapter 13. But today we report on a decision issued Feb. 29 by U.S. Bankruptcy Judge Ashely M. Chan of the Eastern District of Pennsylvania in In re Rosenblum, Case No. 14-19756-AMC. The court held that creditors could pursue a fraudulent transfer action in state court on behalf of the estate during the pendency of the bankruptcy case to avoid transfers of property by Steven Rosenblum to a friend and his father. In order to reach this decision, the court was required to address a number of legal issues frequently encountered by both commercial and consumer practitioners.
Extreme Caged Combats in Bankruptcy
According to the opinion, in 2012, Ryan Kerwin and Xtreme Caged Combat (the plaintiffs) filed a trademark infringement action against Rosenblum (the debtor) and Extreme Cage Combat Fitness (ECC Fitness), a gym purportedly owned by the debtor, and an employee of ECC Fitness. The plaintiffs obtained a judgment against the debtor and the other defendants in the action in the amount of $76,800. The debtor filed a Chapter 13 case while the plaintiffs were conducting discovery in aid of execution on the judgment and filed a Chapter 13 plan. The plan provided for payment of $34,666.80 to the Chapter 13 trustee, of which $31,200 was to be distributed to the IRS, the Pennsylvania Department of Revenue, the city of Philadelphia for real estate taxes and his attorneys, leaving a total of approximately $3,466 for all of his other creditors, including the plaintiffs.
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