Next Meeting of Creditors Date for Trustee Frank J. Kokoszka

Next Meeting Date:

Monday, September 23, 2019

Continued Date:

Monday, October 28, 2019 at 10:30 am 

Next Meeting of Creditors Date for Trustee Frank J. Kokoszka

Next Meeting Date:

Tuesday, May 28, 2019

Continued Date:

Monday, June 24, 2019 at 10:30 am

Upcoming Trustee Sale of Assets

https://heathindustrial.com/event-pro/lingraph-packaging-services-company/

Frank J. Kokoszka to Speak at DuPage County Bar Association Bankruptcy Law MCLE Meeting

DuPage Bar Association Meeting Notice

Speaker: Frank J. Kokoszka - Kokoszka & Janczur, P.C. - Chapter 7 Trustee

Topic: Not Your Everyday, Usual Assets and Objections to Exemptions

A discussion on some recents developments in bankruptcy cases, particularly those in DuPage
County with potential assets of the estate. These "unusual" assets raise issues in cases including: the
reopening of a closed bankruptcy case; what constitutes property of the bankruptcy estate; and, what,
if any exemptions apply to such assets.

Time: 11:45am to 1:00 pm

Location: DuPage Bar Center - Lower Level

Credits: 1 Credit MCLE

For more information, please access the link

2019 Super Lawyer

Frank J. Kokoszka has once again been included among Illinois Super Lawyers in the category of Bankruptcy: Business

https://digital.superlawyers.com/superlawyers/ilslrs19/MobilePagedReplica.action?fbclid=IwAR2Rx7nKQ8ROu47jqb4pvw7DtTFt0e0QUVS1Dp241p_I7cCJFgLdrrM-TSE&pm=2&folio=24#pg24

Upcoming Trustee Sale of Assets

http://heathindustrial.com/event-pro/lingraph-packaging-services-company/

Lingraph Packaging Services Company

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)

UPCOMING TRUSTEE SALE OF ASSETS- P.J. Nagic, Inc.

AMERICAN AUCTION ASSOCIATES- P.J. NAGIC, INC.

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.

NEW ADDRESS- STARTING MARCH 24, 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)

Kokoszka & Janczur, P.C. Facebook Page

Please visit our Facebook Page for frequent updates:

Kokoszka & Janczur, P.C.

NLRB Decision On Northwestern Football

  NLRB Northwestern decision

THE UNEXPECTED TWISTS AND TURNS OF LITIGATION

            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. 

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.

AMERICAN AUCTION ASSOCIATES- RBK ENTERPRISES

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
312-443-9600
trustee@k-jlaw.com

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.

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.

REMINDER- OUR CHICAGO ADDRESS

Reminder, we have moved and our Chicago Office is:


Kokoszka & Janczur, P.C.
122 South Michigan Avenue
Suite 1070
Chicago, Illinois 60603-6270

The Sometimes Unseemly World of Debt Collection

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.

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.

SIMPLE DEFINITIONS OF TEN BANKRUPTCY TERMS

                                                          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."    

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[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.