Bought boat, paid for it, dealer files for bankruptcy

[Home Cookin']

Re: Bought boat, paid for it, dealer files for bankruptcy

11 USC ?101 (10) Creditor = entity with a claim; 101(5) claim= (A) right to payment, , or (B) right to an equitable remedy for breach of performance if breach gives rise to right to payment, both including unliquidated, contingent, unmatured or disputed claims. Right to equitable relief is reduced to money under 11 USC 502(c)(2).
When the case was filed, the debtor (dealer) owed the creditor (buyer) his boat or his money back. You're right, after he has his boat and if there is nothing left for the seller to do, his claim is satisfied and he is no longer a creditor. If the seller has remaining responsibilities, though, such as processing the title/registration, warranty and break-in work, then the buyer still has a claim, although unliquidated, unmatured and contingent, and therefore is still a creditor.
The priority claim for his payment treated like a deposit is found at 11 U.S.C. ?507(a)(7), again satisfied by delivery.
The risk of taking delivery post-petition is found at 11 USC ?549, although he would have an "ordinary course" defense.
That's the general skinny; the details get complicated.
(to the guy who got the boat--don't sweat it).

 

[DianneB]

Re: Bought boat, paid for it, dealer files for bankruptcy

A little excitement just makes it all the more satisfying!

 

[jay_merrill]

Re: Bought boat, paid for it, dealer files for bankruptcy

Yup, the details do get complicated.

I haven't done a lot of work in the world of bankruptcy, but I did once get hired to help bring a company out of Chapter 11. Our judge was a character and known to have an explosive temper.

One of the funnier circumstances that we ran into, was that the IRS thought that we owed some back payroll taxes, after a name change. Without getting into the details, suffice it to say that we didn't owe the IRS a dime. None-the-less, it puts liens on our bank accounts. That meant we couldn't pay creditors, under the court approved plan.

I called the IRS and suggested, that unless they had the permission of the U.S. Bankruptcy Court, Eastern District of Louisiana to take the money, they might want to release it immediately. They did!

On the boat situation, as a matter of routine, I just don't see a judge taking it from a private buyer, when the debtor has the cash in hand. From the standpoint of the bankruptcy and protecting the creditors, the cash is worth more than the boat. Had the payment for the boat not been made, I can see your point and suspect that the court would react differently.


PS: You sound like you have some legal background in this, so a question ... why would an "11" start as a liquidation? I can see a debtor trying to go the "11" route and having the court tell it that there isn't enough financial ability to do so, but I would think that this would not be determined, until the Schedules/Statements of Financial Affairs were submitted.



???

 

[Home Cookin']

Re: Bought boat, paid for it, dealer files for bankruptcy

going WOT*, the answer to the PS is "control." In a chapter 7 liquidation, a random trustee is appointed. IN an 11 liquidation, the debtor in possession (bankrupt company) controls the process and conducts the liquidation. Sound like the fox guarding the hen house? It is. So that's when you need to guard the fox!

many years ago 7-11's parent company filed chapter 11, had the liquidation completed in a couple of weeks, and the new company carried on, with no interruption in operations. Few consumers even knew. Pretty slick.

OK that's enough on this one. Rather talk about boating than sinking ships!

*way off topic

 

[Fireman431]

Re: Bought boat, paid for it, dealer files for bankruptcy

Holy Crap!! Isn't this thread dead yet? Don...where's the lock?

 

[jay_merrill]

Re: Bought boat, paid for it, dealer files for bankruptcy

While a discussion of bankruptcy laws may seem off topic, it really isn't, because it provides information, if faced with what the OP faced. Having learned a couple of things as a result of reading this, just might save someone a lot of headaches in the future.

Boat related problems do not always have to do with bilge pumps and bolts!



???

 

[Nandy]

Re: Bought boat, paid for it, dealer files for bankruptcy

All you have to fear is fear itself, or something like that.

Relax, go and get your boat. Don't waste a couple of days asking everyone questions and panicking. It should be okay. Call to make sure someone will be there around your expected arrival (during business hours) time.

You real problem may be dealing with warranty issues and such. But, the big concern about it being tied up in bankruptcy will be resolved once you pick it up. (usually). But quit worrying about it.

You might be a little late... did you read 4 post above yours before posting?

UPDATE -

Sorry to keep you all waiting. Thankfully the owners were really dealing in good faith. Turns out my boat was inside the building all clean and shiny, waiting for me to pick it up! It was in perfect shape, not a single scratch or accessory missing.

Oh, and so you all know, I didn't even go there finally. Instead of "waiting" the 20 hour drive, I got in touch with a local boat surveyor who was able to get to the dealership immediately. The owner arranged for someone to be there and meet with him. The surveyor called me while he was there and we went through a checklist of things together.

At the same time, I arranged for my transportation guy to go there and pick the boat up after the inspection (under the watchful eye of my surveyor)

The boat is on it's way, it should arrive in it's new home tomorrow!

One big saga, but thankfully I dealt with very honest people. Actually, everything finished exactly according to the original plan, with only one exception, that is I got the boat two weeks earlier, and (ouch!) I didn't get a chance to get it shrink-wrapped before transport. So I guess I'll be over budget by the cost of one good boat wash!

Thank you all for your input. I'll post pics as soon as I get the chance.

 

[CaptainSkip]

Re: Bought boat, paid for it, dealer files for bankruptcy

Sounds like you got a few grey hairs on that ordeal...glad it all worked out. Nice boat! Now you can go have fun!

 

[cwhite6]

Re: Bought boat, paid for it, dealer files for bankruptcy

That is one happy dude in that picture!!