Wednesday, June 24, 2015

(Unpublished) - In re Samuel Jesse Christian Morreale, No. 13-27310 TBM (Bankr. D. Colo. May 28, 2015) (Chapter 7 debtor's standing to challenge the Chapter 7 trustee's administration of the case).

The Chapter 7 debtor objected to the Chapter 7 trustee's efforts to sell property of the estate. To shore up his standing, the debtor acquired the claim of a pre-petition, unsecured creditor. The trustee objected to the debtor's standing and to the validity of the claim the debtor had acquired. The Court conducted an evidentiary hearing to determine: (1) whether the debtor held a "pecuniary interest" sufficient for purpose of standing, particularly whether there was a "reasonable possibility of a surplus" in which the debtor might ultimately share (the standard invoked for determining standing to appeal adopted by the Tenth Circuit in Co-op Mining Co. v. Aquila, Inc. (In re Matter of C.W. Mining Co.), 636 F.3d 1257, 1260 (10th Cir. 2011) ); and (2) the validity of the claim the debtor had acquired.

The Court concluded upon the facts of the case that: (1) there was not a reasonable possibility of a surplus in which the debtor might participate; and (2) the claim upon which the debtor relied for his standing was not a valid claim against debtor's estate. Thus, the Court held the debtor did not have standing to challenge the efforts of the trustee to marshal and liquidate the assets of debtor's estate. Among the legal conclusions reached, the Court held that a debtor cannot obtain standing by bringing a claim against himself.

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