Friday, May 19, 2017

Our Address:

Kokoszka & Janczur, P.C.
19 South LaSalle Street
Suite 1201
Chicago, Illinois 60603-1419
312-443-9600 (phone)
312-443-5704 (fax)
312-254-3156 (efax)

Wednesday, April 12, 2017



Subject to Order of the Bankruptcy Court, Frank J. Kokoszka, as chapter 7 trustee of the Estate of P.J. Nagic, Inc., will sell the assets of P.J. Nagic, Inc.
The Trustee has retained American Auction Associates to conduct the auction/sale of assets.
The above link will provide further information and details about the upcoming auction.

Monday, March 6, 2017


Please note that as of March 24, 2017, our Chicago address will be as follows:

Kokoszka & Janczur, P.C.
19 South LaSalle Street
Suite 1201
Chicago, Illinois 60603-1419
312-443-9600 (main phone)
312-443-5704 (fax)

Wednesday, July 1, 2015


            Several years ago, a client contacted us because it suspected that it had been scammed by an individual it had trusted. After briefly investigating, we learned that the client’s suspicion was correct. The individual (who we’ll call John Smith) had collected well over $100,000 on debts owed to our client, a construction subcontractor, for extensive goods and services our client provided. For over two years, Smith, through his company (which we’ll call ABC Corp.), billed our client and accepted its payments for services purportedly performed in attempting collection of the debts on behalf of our client. He also repeatedly reassured our client that he was acting in its interests and on its behalf, and would notify it as soon as collection was made. Despite collecting approximately $130,000, Smith never notified our client and, when the client got word that Smith had collected some of the money and confronted Smith, he affirmatively denied any such recovery.
            Obviously our client had been defrauded, and we had to take action against Smith to protect our client’s rights. The only hitch was that both Smith and ABC Corp. filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. In fact, Smith’s petition was filed just four days after he obtained the vast majority of the $130,000, through another corporation he owned.
            It is well known that some debts are non-dischargeable in bankruptcy. Debts resulting from fraud are one example. So we knew we had a basis to file an “adversary proceeding” against Smith in the bankruptcy court, objecting to the discharge of the debt he owed our client as a result of his fraud. After looking at his bankruptcy schedules and statement of financial affairs, however, we realized that there were glaring omissions and misstatements that gave rise to an objection to Smith’s discharge entirely. So we filed a complaint against Smith, objecting both to the discharge of the specific debt owed to our client as well as to his discharge generally.
            At first, Smith failed to answer or otherwise respond to our complaint, and also failed to appear at the first scheduled hearing in the case. Only after we filed a motion for entry of default, did Smith appear. His attorney (different from the one who represented him when he filed the bankruptcy petition itself) asked the court for additional time to answer or otherwise plead, and the court granted it. A baseless motion to dismiss was filed, and after it was fully briefed, the court denied it. When Smith finally answered the complaint, he included some nonsensical affirmative defenses, requiring us to file a motion to strike such defenses. After that motion was fully briefed, the court granted it and struck the affirmative defenses, and so we were finally ready to move past the pleading stage almost a year after our complaint was filed. Unfortunately, our difficulties in dealing with Smith had just begun.
            Pursuant to court protocol, we had to exchange mandatory disclosures with Smith. We made our own disclosures to Smith, but he failed to reciprocate. Smith’s attorney contacted us to explain that he was having difficulty working with Smith, and shortly thereafter he withdrew as Smith’s counsel. Smith continued to ignore his mandatory disclosure obligation, just as he ignored our discovery requests. This went on for several months, despite our efforts to communicate with Smith and obtain his compliance. This necessitated motion practice, including a motion for default judgment. Again, only after forcing wasteful motion practice upon us and involving the court, and only after the court ordered him to comply, did Smith respond to our discovery requests and sit for his deposition. Even then, his responses were grossly inadequate and his deposition testimony was combative and, as would later be proved, dishonest.
            Smith then prevailed upon the court to appoint him pro bono counsel. Several excellent attorneys from a large firm filed their appearances on his behalf, and extensive discovery ensued. Smith, while living in a large home and driving luxury cars, now had lawyers devoting countless hours to his case free of charge, leaving no stone unturned.
            We made several efforts to settle on very reasonable terms, but Smith was determined to fight us to the end. After a trial, three years after the complaint was filed, Smith’s mendacious and pugnacious testimony, as well as the mountain of evidence against him, resulted in a judgment in our favor, denying Smith’s discharge. However, because it was unnecessary to the determination that Smith’s discharge must be denied, the court abstained from ruling on the claims for the debt that Smith owed to our client. Consequently, we had to initiate a new lawsuit, this time in state court.
            Smith was wily, and we knew that the sheriff would not have much luck serving him with summons. But with a little planning and coordination, we were able to serve Smith using a special process server. We were then well on our way to obtaining a money judgment against Smith and justice for our client. . . . Two days later, Smith died.
            Unsure of what assets might turn up for either the bankruptcy estate (whose administration is still ongoing) or the probate estate that was opened shortly after Smith’s death, we decided to continue the litigation, substituting the personal representative of the probate estate as the party defendant. Apparently the personal representative was uninterested in defending, and we obtained a default judgment, which included punitive damages.

            The above saga illustrates that you can never be sure what to expect in litigation, and what seems like a straightforward case can sometimes morph into an intense battle of wills, full of twists and turns. 

Tuesday, February 3, 2015

Upcoming Bankruptcy Trustee Sale of Assets

By Order of the Bankruptcy Court, Frank J. Kokoszka, as chapter 7 trustee of the Estate of RBK Enterprises, Ltd., has been authorized to sell the assets of RBK Enterprises, Ltd.
The Trustee has retained American Auction Associates to conduct the auction/sale of assets.
The following link will provide further information and details about the upcoming auction.


If you have specific questions for the Trustee, please contact:

Frank J. Kokoszka
Kokoszka & Janczur, P.C.
122 South Michigan Ave., Suite 1070
Chicago, Illinois 60603

Thursday, November 20, 2014

2014 Superlawyer Business Edition

2014 Super Lawyers Business Edition

Kokoszka & Janczur, P.C. is proud to announce that Frank J. Kokoszka has been included in the most recent edition of the Super Lawyers Business Edition.

Sunday, November 9, 2014

Recent Firm News

Kokoszka & Janczur, P.C. is proud to announce that Senior Partner Frank J. Kokoszka was recently appointed to the Panel of Chapter 7 Bankruptcy Trustees for the Northern District of Illinois. He will one of the trustees hearing cases in DuPage County, Illinois.

Wednesday, October 15, 2014

Monday, June 30, 2014

New Chicago Address

Effective July 7, 2014, the new address for our Chicago Office will be:

122 South Michigan Avenue
Suite 1070
Chicago, Illinois 60606

Our phone numbers, fax numbers and e-mail address shall stay the same.

Thursday, June 19, 2014

We Have Some Exciting News

In July, 2014, Kokoszka & Janczur, P.C. will be moving to a new Chicago location.
Kokoszka & Janczur, P.C. will be sharing that suite with another law firm that we highly respect, with attorneys that we have known for a long time.

As the official move date moves closer, we will post our new Chicago address.

Tuesday, April 29, 2014


                                                          Ten Bankruptcy Terms
                                                                     by Frank J. Kokoszka, Esq.
                                                                          Kokoszka & Janczur

            Almost every attorney, whether he/she be a litigator, corporate attorney or real estate practitioner, will be confronted with bankruptcy issues.  The following are ten (very simple) bankruptcy definitions or "terms of art," that every attorney should master, to know just enough about bankruptcy to be considered "dangerous."
1.          Adversary Proceedings:   An adversary proceeding or "adversary" is a lawsuit filed in or within a bankruptcy case (think of it as a "battle" within the "war").  Adversary proceedings are governed generally by Part VII of the Bankruptcy Rules (Rules 7001- 7087), which incorporate most of the Federal Rules of Civil Procedure.  Bankruptcy Rule 7001 lists what type of matters or disputes must be "fought" as an adversary;  i.e., commenced by the filing of a complaint.  Most issues in a bankruptcy case are not adversary proceedings, but are "contested matters" (defined below).
2.         Applicable Law:  Bankruptcy is governed by the Bankruptcy Code which is Title 11 of the United States Code, the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), Local Rules, and to a great, great, extent, case law.  As one of my bankruptcy mentors, a prominent bankruptcy attorney, once taught me, "some bankruptcy judges feel compelled to publish every decision they enter."  Bankruptcy law is constantly being shaped by new case law and the skilled bankruptcy practitioner must keep abreast of recent decisions.  Please note that state law does come into play in some instances, such as determining whether something is a valid security interest.
3.          Automatic Stay:  Generally, the automatic stay commences immediately with the filing of a voluntary bankruptcy petition and the entering of an order of relief in an involuntary case.[1] There are exceptions where an entity has filed for bankruptcy within certain time periods. The automatic stay operates as an injunction prohibiting any collection action against a debtor outside of the bankruptcy court.  See Bankruptcy Code Section 362.  This includes collection letters, telephone calls, repossessions or lawsuits against the debtor.  There are exceptions to the automatic stay, and situations in which a party can seek to have the automatic stay modified or "lifted."  The purpose of the automatic stay is to allow the bankruptcy to go forward in an orderly fashion.  Willful violations of the automatic stay can subject the violator to punitive damages.  Even innocent violations of the automatic stay (such as a repossession by a creditor who did not know of the bankruptcy) are void, and must be corrected (for example, by returning the repossessed collateral).
4.         Contested Matters:   When the resolution of a disputed matter in a bankruptcy case does not have to be brought as an adversary proceeding, then it is a "contested matter."  Contested matters are usually resolved by filing a motion and the opportunity for a hearing.  See Bankruptcy Rules 7001 (to determine whether something is an adversary proceeding), 9014, and 2002 (dealing with notice requirements).  For example, a creditor seeking relief from the automatic stay would file a motion, since such is considered a contested matter.
5.         Discharge:  A discharge is a permanent injunction against any action to collect a debt incurred before the bankruptcy filing, unless the debt was either (1) reaffirmed; or (2) excepted from discharge.  A bankruptcy discharge frees the debtor from the legal obligation to pay the debts which existed prior to the bankruptcy and provides the debtor with a "fresh start."  See Bankruptcy Code Sections 523 and 524.
            There are exceptions to discharge.  Corporations and other legal entities (non-individuals) do not get a discharge when they are liquidated in a chapter 7 case.  There are time limits to how often a Debtor can obtain another discharge.  Debtors who have committed illegal acts in connection with the bankruptcy or business debtors who cannot (or will not) explain their financial affairs and produce supporting records are also denied a discharge (See, pervious K & J Law blog entry: “Business Debtors Beware!”).  The Denial of Discharge requires the commencement of an adversary proceeding objecting to discharge.
            Second, some debts may not be included in a general discharge.  Some type of claims automatically are deemed "non-dischargeable."  For example, in general, most (but not all ) taxes, child support obligations and student loans are not discharged.  Additionally, the Bankruptcy Code and Bankruptcy Rules (and of course, case law) provide grounds for objecting to the dischargeability of a particular debt.  In order to do this, a creditor must commence an adversary proceeding.  Thus, a debtor may receive a general discharge but, an individual creditor may object to the specific dischargeability of the creditor's claim.
6.         Disposable Income: In a chapter 13 case, which is a repayment plan for individuals with "regular income," the debtor and the chapter 13 trustee negotiate a budget in order to determine how much the debtor can afford to set aside each month to pay creditors. The amount of the debtor's income above necessary expenses is known as "disposable income.The trustee receives the debtor's disposable income (often through payroll withholding), and distributes it to creditors per a chapter 13 plan approved by the bankruptcy court.  See Bankruptcy Code Section 1322.
7.         Exempt Property:  Just as certain property is "exempt" from judgment and collection by garnishment or citation, certain property of the debtor is "exempt" from turnover to the trustee in a chapter 7 case. While the Bankruptcy Code lists certain exemptions, the Code allows each state to choose whether its debtors will use the federal exemptions or state exemptions.  See Bankruptcy Code Section 522.  In Illinois, a debtor must use the state exemptions.  These exemptions are set forth in the Illinois Code of Civil Procedure at 735 ILCS 5/12-1001 et seq. (exemptions of personal property) and  735 ILCS 5/12-901 (homestead exemption), and include the following: necessary wearing apparel, up to $15,000 in value in a homestead property, up to $2,400 in value in one car, and $4,000 worth of other personal property (sometimes referred to as the "wild-card" exemption).  Only an individual and not a corporation can claim exemptions. 
8.         Preference:   A preference is a payment (or other "interest") made for an antecedent debt to a creditor while the debtor is insolvent.  See Bankruptcy Code Section 547.  An insolvent debtor is one who cannot pay all of its creditors, so if it pays some creditors, it is "preferring" them to the other creditors.  Every preference reduces the amount of assets available to pay the other, non-preferred, creditors.  The Bankruptcy Code presumes that most payments made by a debtor within 90 days of a bankruptcy filing are preferences which may be avoided (recovered by the bankruptcy estate), although there are defenses.  For payments benefiting "insiders," (relatives, partners, stockholders, officers, etc.) the 90 day period is extended to one year. 
            Preference law is also aimed to discourage extremely aggressive collection methods (such as repossessions, levys and garnishments) against debtors who are on the verge of bankruptcy.  This consideration sometimes restrains non-trade creditors, such as banks and mortgagees, and makes it easier to work out many situations. 
9.         Proof of Claim:  A proof of claim is an official form (Official Form #10) which creditors must file to share in any payments the trustee makes to creditors.  There are deadlines for filing proofs of claims, which are usually stated in the bankruptcy notices sent by the clerk of the bankruptcy court, (known as the "bar date.")
            Most consumer chapter 7 cases are "no asset" cases.  A creditor may get a notice stating that "at this time there appear to be no assets available from which payment may be made to unsecured creditors."  If so, unless the creditor receives a follow-up notice, there will be no payments to unsecured creditors by the bankruptcy trustee, and there is no need to file a proof of claim. 
            10.        Reaffirmation:  A reaffirmation is a promise by the debtor to pay a debt despite the discharge. There are two usual reasons why a debtor would enter into a reaffirmation: (i) there is collateral for the debt which the debtor wants to keep; or (ii) the debt may not be dischargeable and by saving the creditor the expense of an adversary proceeding, a debtor can usually get a compromise as to the amount of the debt, and/or a structured repayment plan, and also avoid the embarrassment of an adversary proceeding on the public record.  A reaffirmation agreement cannot place an undue hardship upon the debtor.
            Some big consumer creditors, like credit card issuers and department stores, routinely ask for reaffirmations of the entire pre-petition debt, even though there is no reason in the world why the debtors should agree.  They usually talk about maintaining "good credit" -- a foolish notion, considering that people with a recent bankruptcy don't have "good credit."    

[1] Creditors can file an involuntary bankruptcy petition against an entity.  In an involuntary case, the entity that the creditors put into bankruptcy is called the "alleged debtor."  The alleged debtor has time to respond to the involuntary bankruptcy filing. If the court determines or the parties agree that the alleged debtor should remain in bankruptcy, then an order for relief is entered.

Wednesday, April 23, 2014

Business Debtors- How Are Your Business Records?

Business Debtors Beware!
Author: Mark D. Liston, Kokoszka & Janczur, P.C.
Editor: Frank J. Kokoszka, Kokoszka & Janczur, P.C.

            The prime feature of a chapter 7 bankruptcy for most individual debtors is the discharge. However, there are exceptions to the discharge and these exceptions fall into two major categories. The exception of a particular debt from discharge and the denial of the debtor’s discharge entirely. These two exceptions serve different purposes. As for the first (provided for by Section 523 of the Bankruptcy Code), certain debts are deemed particularly important, so these debts cannot be dischargeable. Examples include generally child support, taxes, and student loans (this does not mean that taxes and student loans are always non-discharageable) . Additionally, debts incurred by criminal, immoral, or otherwise improper conduct cannot be discharged. Examples include theft, fraud, deliberate injury to person or property, and debts arising from drunk-driving accidents. The principle is that if you owe someone a debt because you wronged them, you do not deserve a discharge of that debt.
            With respect to denial of the discharge entirely (provided by Section 727 of the Bankruptcy Code), the policy is that a debtor who does something dishonest or knowingly improper within the bankruptcy process itself should not receive a discharge of any debts. Examples include transferring or concealing assets, failure to fully disclose the information required on the bankruptcy forms, testifying falsely, and refusing to obey a court order. Conversely, the general rule embodied in Section 727 is essentially that the “honest but unfortunate debtor” who cooperates with the trustee and the court should receive a discharge.
            However, one glaring exception to that general rule can be found in Section 727(a)(3), which provides for the denial of discharge where “the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case.” (Emphasis added.) Concealing, destroying, mutilating, and falsifying obviously involve a dishonest or wrongful motive, but that is not necessarily true of the mere failure to keep or preserve records. Indeed, the debtor’s intent is simply not a factor in determining whether they have failed to keep or preserve adequate business records. Instead, “[t]he statute places an affirmative duty on the debtor to create books and records accurately documenting her financial affairs.” In re Lindemann, 375 B.R. 450, 467 (Bankr. N.D. Ill. 2007). If the debtor has not done so, then her discharge must be denied unless she can show that her failure to create and maintain records was “justified,” a standard that is usually not satisfied by the debtor’s after-the-fact explanations. This is true regardless of whether the failure to keep records stemmed from any improper motive.
            Additionally, the records must be “comprehensible,” in that they clearly and intelligibly reflect the debtor’s business transactions. In re Juzwiak, 89 F.3d 424, 429 (7th Cir. 1996). Records are only adequate if they are organized and “provide the trustee or creditors with enough information to ascertain the debtor's financial condition and track his financial dealings with substantial completeness and accuracy for a reasonable period past to present." Lindemann, 375 B.R. at 468. And whether they are adequate is a question of quality, not quantity, so merely producing a large volume of confusing, incomplete, or unorganized records is insufficient. Courts have repeatedly stated that they should not have to sift through reams of complicated and poorly organized documents in order to reconstruct the flow of the debtor’s assets or financial situation. It has even been said that “‘too many’ is just as bad as ‘not enough.’” In re Vandewoestyne, 174 B.R. 518, 522 (Bankr. C.D. Ill. 1994).
            There are no types of records specifically required in every case, and what is adequate has to be decided based on the particular facts of the debtor’s case, such as the type, size, and complexity of the business. Nonetheless, something like a “morass of checks and bank statements” will likely be insufficient. Union Planters Bank, N.A. v. Connors, 283 F.3d 896, 899 (7th Cir. 2002). As for the period of time prior to the bankruptcy filing the records must cover, some courts have found two years to be sufficient, though it may be longer if warranted by the particular facts of the debtor’s case.
            It should be noted that the failure-to-keep-or-preserve prong of this exception is generally not implicated in consumer bankruptcies. In re Scott, 172 F.3d 959, 970 (7th Cir. 1999). Instead, its principal application is to business debtors. This tempers the harshness of the rule, but it will still come as a surprise to many business debtors to learn that they may be denied a discharge solely because they had been sloppy or careless in their recordkeeping. After all, the average business debtor had no intention of filing for bankruptcy before his business began failing or he suffered a sudden financial catastrophe, and therefore he didn't knowingly disregard the duty imposed on him by bankruptcy law to keep adequate records. Additionally many debtors are in bankruptcy because of their poor—yet not dishonest—handling of their finances, including poor record-keeping. To find out the very reason for their bankruptcy is also the reason they are denied a discharge will strike them as draconian, especially since the trustee will still liquidate all their non-exempt assets.  
            Courts have considered the seeming harshness of this rule and have tailored the application of the law accordingly, so that the education, experience, and sophistication of debtors are taken into consideration when determining the adequacy of their records. Lindemann, 375 B.R. at 468. So, for example, a bricklayer will not be held to the same standard as a lawyer or accountant. Nonetheless, there is still the potential for a simple, honest debtor to do his best to cooperate with the trustee and disclose fully but still walk away without a discharge because the trustee or a disgruntled creditor files an adversary proceeding and is able to show that the debtor’s business records are unsatisfactory.
            Under the statute, it is possible for a debtor to show that their failure to keep or preserve records was “justified under all of the circumstances of the case,” though it does not give clues as to when the failure is justified. In cases where courts have found a failure to keep or preserve adequate records, it is very rare that the debtor has been able to justify that failure. Explanations that documents were destroyed by flooding; destroyed by a landlord after an eviction; eaten by mice, and in the possession of a third party have all been rejected. In re Hansen, 325 B.R. 746, 762 (Bankr. N.D. Ill. 2005); In re Wasserman, 332 B.R. 325, 333 (Bankr. N.D. Ill. 2005); In re Costello, 299 B.R. 882, 889 (Bankr. N.D. Ill. 2003); In re Fink, 351 B.R. 511, 524 (Bankr. N.D. Ill. 2006).
            One argument in support of this exception to discharge is that creditors, the trustee, and the court have the right to know the financial condition of the debtor and how that condition came about, but the debtor’s failure to keep adequate business records effectively deprives them of that right. Additionally, the trustee and court may not be able to fully ascertain whether the debtor is truly “honest but unfortunate” if he did not maintain records of his business transactions sufficient to track his recent financial history. Others would respond that a discharge should only be denied on the basis of the failure to keep or preserve business records if there is some evidence that such failure was the product of a dishonest intent.
            At any rate, it is essential that individuals who owe primarily business-related debts and their attorneys do their best to ensure adequate records exist before filing for bankruptcy under Chapter 7.
            If you have any questions, either because you are considering filing for bankruptcy or you are a creditor of a business debtor, please contact Mark Liston or Frank Kokoszka at 312-443-9600.  


Wednesday, January 22, 2014

For Our Fellow Lawyers

Lawyers And Depression

CNN has a very enlightening and sobering article about the suicide rate in the legal profession.
The Law is a stressful profession, and hopeful attorneys faces with stressed of the profession will seek assistance to cope with the profession we have chosen.

Thursday, February 21, 2013

Can One Obtain A Non-Dischargeable Judgment Without Filing An Adversary

As with many things in Bankruptcy, the answer to a legal questions starts with the initial: "Depends on your jurisdiction and your judge."

Having said that, Kokoszka & Janczur, P.C., had such a Judgment entered in a Bankruptcy case in the Northern District of Illinois. Attached is a link to a copy of the Motion-

Motion For Entry of Order Non-Dischargeable Judgment.pdf

Monday, January 14, 2013

Questions and Answers on

Frank Kokoszka has been quite active in providing attorney responses to questions submitted on
We will try to link some of those questions and answers here for you.

Friday, January 13, 2012

The 2012 Illinois Superlawyer- Digital Edition- Is Available

We have attached a link to the Digital Edition of the 2012 Illinois Superlawyer Magazine:

Frank J. Kokoszka has once again been included under the category of "Bankruptcy and Debtor/Creditors' Rights."

Friday, December 23, 2011

Kokoszka & Janczur, P.C.'s New Address

Effective January 1, 2012, our new downtown address will be as follows:

318 West Adams Street
11th Floor
Chicago, Illinois 60606-2172

Phone numbers, fax number and e-mail addresses remain the same.

Tuesday, December 13, 2011

K & J Rings in the New Year with a New Address

Starting officially on January 1, 2012, Kokoszka & Janczur, P.C. will be moving our main office location (downtown Chicago).
New address and contact information to follow shortly.
Stay Tuned!
Phone numbers, fax numbers and other contact information (e-mail addresses) remain the same.