RECEIVERSHIP A Publication of the NEWS · 2012-11-17 · mail the notice – via certified mail – to these local Insolvency Groups. The regulations also allow the receiver to mail

5

Winter 2007 • Issue 27

A Publication of the

California Receivers Forum

RECEIVERSHIP

I n s i d e

Ask the Receiver

6

Bankruptcy

Department

What Does “Means”

Mean in Deducing the

“Plain” Meaning of

Means Testing Under

Bankruptcy Code

Section 707(B)(2)?

14 The List

NEWS

RECEIVERSHIP PROFILE

Jeanne Sleeper —

Administrator Par

Excellence of the

California Receivers

Forum—Has a Secret

Avocation (and Love)!

BY JEANNE SLEEPER*

(Editor’s note: Ms Sleeper is many things, not theleast of which is an accomplished writer andauthor. The Receivership News is very pleased toprint this profile about her professional life — inboth business and her primary love, the sea, in herown words.)

There is always one kid in theneighborhood who has the lemonade stand,who whips everyone into shape for the two-block-long Fourth of July Bicycle Parade and whotakes off swimming all the way across the lake though strictly forbidden to do so. Well, thatwas me as a kid —an organizer, an entrepreneur and an adventurer (much to the frequentdistress of my parents). This pretty well set a trend for the years that followed. When only 18

Continued on page 4...


CHUCK DOES TAXES

Does the IRS Want to Know About YourAppointment as a Receiver? Absolutely!BY CHARLES E. ROSEN*

have been asked many times whether a receiver (or other fiduciary) is required tonotify the I.R.S. of his or her appointment. Unfortunately the question is almostalways asked after the receiver is under audit by an I.R.S. agent who would like toknow why the receiver didn’t register his or her appointment with the Service.This kind of puts the receiver on the defensive. No fun.

Internal Revenue Code § 6036 andregulations promulgated thereunder at Rev.Reg. 301.6036.1 require the receiver to notifythe Service within 10 days of being appointed.This is also required of any other fiduciary —including assignees for the benefit of creditors,conservators, executors, guardians — and anyother individual, trust, estate, partnership

I

Jeanne–diver with blue fins–prepares to photograph Scar, a 30-plus foot male Sperm Whale, in the West Indies.

appy Holidays Everyone! Our Editor, Kirk Rense, and I wish you all apleasant and safe holiday season. Another year is about to pass, there aresigns that 2008 may be an excellent year for the statewide receivershipcommunity. The declining economy suggests that demand for receivers(and members of the general receivership community) may be greater in

coming months. Whether (and to what extent) steps being taken by the Federal ReserveBoard and other federal agencies will ameliorate the downturn remains to be seen. SamBiggs, a receiver and accountant in Southern California sent me a holiday greeting card afew years ago that asked the question, “Do you think it is good form to pray for a recession?”Well, Sam, you may have your wish. Time will tell.

In our lead story our tax expert Chuck Rosen answers the question “Does the IRS Wantto Know About Your Appointment as a Receiver? Absolutely!” Chuck discusses some basictax regulations every Receiver needs to know and follow. This is informative and timely –a must read for Receivers and their counsel and accountants.

For the second straight issue, we are featuring an article dealing with bankruptcy issuesfor the benefit of those many members of the receivership community who moonlight inbankruptcy matters and the 1,700 members of the California Bankruptcy Forum. James J.Joseph, Esq. a senior bankruptcy attorney and 26-year Trustee, addresses a feature of therecent Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that has beencausing substantial head scratching by consumer insolvency practitioners — what does the“means test” mean?

As always, Peter Davidson, Esq. contributes anotherinformative “Ask the Receiver” column. This issue he addressesthe ability (or inability) of an arbitrator in a mandatoryarbitration proceeding to appoint a receiver.

Our member profile this issue is a bit unusual from twoperspectives. By a unanimous vote, the LA/Orange CountyChapter board of directors, opted to feature a profile of our long-time chapter (and California Bankruptcy Forum) administrator,the very able Jeanne Sleeper, rather than profile a judicialofficer or receiver. We are breaking precedent for two reasons.First, Jeanne is as important to the California Receivers Forumas any member or judicial officer. Second, because Jeanne leadssuch a very interesting life. In addition to being a crackerjackevents organizer with her firm JBS & Associates, Jeanne leads asecond life that includes deep sea diving, underwaterphotography, marine research, whale interactions andheightening the public’s awareness of the overarchingimportance of the ocean to life on our planet. Jeanne is quite adedicated and determined person.

Finally, I am pleased to report positive feedback from theCalifornia Central District’s newest Federal Judge, AndrewGuilford. I ran into Judge Guilford recently and he reported thathe enjoys receiving and reading Receivership News – he evenmentioned the “list that’s not a list.” We always enjoy receivingcomments from our readers, so I encourage anyone with a strongpoint of view on an issue of interest to the receivershipcommunity to send a letter to the editor. We will try to printyour comments, space permitting.

Have a happy holiday season and a prosperous and healthyNew Year!

H Receivership NewsPublished by

California Receivers Forum954 La Mirada St.

Laguna Beach, CA 92651949.497.3673 x 200

PublisherRobert P. Mosier

[email protected]

EditorKirk S. Rense, Editor

[email protected] Collins, CPA

Associate Editor

Associate PublishersKenton Johnson

Beverly McFarlandRon Oliner

Rob Warren, III

Contributing ColumnistsAlan Mirman

Heard in the HallsPeter DavidsonAsk the Receiver

Charles F. RosenTaxes and the Receiver

OfficersMarilyn R. Bessey, Chair

Martin Goldberg, Chair ElectRon Oliner, Treasurer

Robert Mosier, SecretaryJames Lowe, Project Director

Receivership News is publishedquarterly by the California

Receivers Forum, a not-for-profitassociation. Articles in this

publication express the opinions of their authors and do not

necessarily reflect the views of thedirectors, officers or members ofthe California Receivers Forum.Articles are intended as a source

of general information and shouldnot be construed as specific advice

without further inquiry and/orconsultation with professional

counsel.

© copyright 2007 California Receivers Forum.

All rights reserved.

Publisher’s CommentsBY ROBERT MOSIER, PUBLISHER*

Page 2 • Winter 2007

Mr. Rense is a lawyer specializingin insolvency and in representingcourt-appointed fiduciaries, withmore than 20 years' experience.He was a journalist beforeattending law school at theUniversity of Southern CaliforniaLaw Center. Kirk is a CaliforniaReceivers Forum, LA/OCChapter Board Member.

Kirk Rense

Robert P. Mosier

*Robert P. Mosier is a SouthernCalifornia trustee and receiver andprincipal of Mosier & Company,Inc., a firm that has specialized inmanaging and turning aroundtroubled companies for more than25 years.

association, company or corporation who or which enters intoa fiduciary relationship to act on behalf of another entity.

Don’t feel alone if you haven’t filed the required notice inthe past. My experience is that receivers occasionally file therequired notice, but I cannot remember the last time I heard ofan assignee for benefit of creditors who gave any notice to theService, and I have been involved with the processing of theseforms since the 1970’s. This is not a new procedure, yet Iknow of no case where the Service has attempted to penalize afiduciary for failing to file the required notice. Nonetheless,the requirement to file is the law.

Ever helpful, the Service has provided a form for thispurpose: Form 56, Notice Concerning Fiduciary Relationship.This form was last revised in 2004 and is available via theI.R.S. website.

Once you bring up the form you will be able to complete itonline, but you must then print out the completed documentand mail it to the Service. Instructions for completion of theform are on the back (which is extremely inconvenient if youare attempting to fill in the blanks while online).

The form must be filed with the IRS service center in mostcases. However, under applicable regulations as misinterpretedon the back of the form, receivers are required to file the formwith either the local Special Procedures Staff or the IRS areaoffice with jurisdiction over the entity over whom the receiverhas been appointed. Rev. Reg. 301.6036-1(a) (2) actuallystates that the notice is to be filed with the “District Director.”This is interesting since the IRS no longer has a SpecialProcedures Staff, or area offices, or district directors. All weredone away after passage of a 1998 congressional act thatreorganized the Service.

The IRS continues to maintain “Insolvency Groups” in thesame places it used to have Special Procedures Staffs as part ofthe districts over which the former district directors presided,however. I recommend that receivers (and similar fiduciaries)mail the notice – via certified mail – to these local InsolvencyGroups. The regulations also allow the receiver to mail theform to the IRS service center, but this is in addition to – notin lieu of – providing the local notice.

Note that a copy of the appointing order must be attachedto Form 56. Arguably, but not practically, this should put theService on notice of the receiver’s inherent power of attorneyand thus not require the filing of additional Form 2848,“Power of Attorney,” but this would be too much to hope for.

Changes in status must also be communicated to the IRS.If a receivership is terminated or a successor receiver isappointed a new Form 56 must be filed with the Service

advising the IRS of the termination or change. Again, sendthe form via certified mail.

Can a receiver send the IRS a letter with the requiredinformation rather than use the form? While the answer is“probably,” a letter most likely will not reach the appropriateemployee(s) at the Service, may get misinterpreted, or it maybe delayed in processing. Bottom line: Don’t mess with thesystem. Use the form.

Another question I’ve been asked is whether the filing ofthe form exposes the receiver to any personal liability? It is atenet of basic receivership law that every receiver has certainobligations placed on him or her upon appointment — by thecourt making the appointment, by provisions of the InternalRevenue Code and, possibly, by state statutes if theappointment is made by a state court. These obligations mustbe complied with, as all receivers know. And, just like anyother taxpayer who fails to follow tax laws, a receiver can beexposed to criminal liabilities contained in the InternalRevenue Code if he or she doesn’t comply. Fortunately, simplyfailing to file Form 56 with the Service does not expose areceiver to any new or additional potential liabilities.

One potential benefit of filing Form 56 to announce to theService the receiver’s appointment (and filing again toannounce termination of the appointment) may be to reducethe potential liability of the receivership estate arising fromthe new and amazing interpretation by the Service of a specialtax liability to be levied on the estate solely because it is areceivership and has funds passing through it.

An in-depth discussion of this quixotic tax liabilityapplication appeared in two articles in prior issues of theReceivership News. The first is an article I wrote for the Fall2006 issue entitled “IRS Says All Receivership Estates areQualified Settlement Funds and Receivers Must File Form120-SF [sic - should have read Form 1120-SF] Returns or FacePersonal Tax Liability.” The second is a retort written by PeterA. Davidson titled “An Analysis of United States v. Brownand Its Probable Impact on Receiverships Within the NinthCircuit” appearing in the Spring 2007 issue of theReceivership News (an article with which I do not completelydisagree). Both these issues of the Receivership News shouldbe available on the “Newsletters” sub-page of the CaliforniaReceivers Forum’s website.

Winter 2007 • Page 3

Continued from page 1.

Chuck Does Taxs...

*Charles F. Rosen is an attorney with the firm LawOffices of A. Lavar Taylor and is an expert in receivershipand bankruptcy tax law. Mr. Rosen served as bankruptcyadvisor for the Special Procedures Branch of the InternalRevenue Service for more than twenty years.

Charles F. Rosen

“Form 56: Use It”

“Use It to Reduce Your Liability”

years old I co-founded the Minnesota Coalition to Lower theVoting Age, which lobbied for a state ballot initiative to do so. Ithen raised the funds for and ran a successful statewide campaignthat lowered the Minnesota voting age to eighteen. This effort,in turn, set the stage for the enactment, on July 1, 1971, of theTwenty Sixth Amendment to the U.S. Constitution, whichstates:

“The right of citizens of the United States, who are eighteenyears of age or older, to vote shall not be denied or abridged bythe United States or by any State on account of age.”

So before turning 21 I had been a driving force for significantnational change. Pretty heady stuff. This was an early exampleof my life-long commitment to causes, and willingness to workhard and long to achieve the goals I set.

I began teaching high school students in Robbinsdale,Minnesota after receiving my Bachelor of Science Degree withhonors in Political Science and Journalism (with a secondaryteaching credential) from the University of Minnesota. I foundthat it is hard to get someone to hire you when, at age 21 yourmost recent gig was amending the US Constitution. Even moreintriguing to me than teaching in a high school classroom wasteaching the joy of scuba diving to students and teaching scubadiving instructors how to train safe divers about the underwaterenvironment.

I learned to scuba dive in Minnesota’s land of 10,000 lakesand became an instructor in 1971. The National Association ofUnderwater Instructors (NAUI) quickly recognized me as anambitious source of free labor and made me the “Mid-AmericaBranch Manager,” invited me to staff instructor courses andadvised me not to get a big head over my $ 200 monthly stipend.

I had the perfect job from 1975 to 1980 – working at NAUIheadquarters in California (for a more reasonable paycheck),learning association management, and helping NAUI expandwith Canadian and Japanese affiliates. NAUI’s Californiaheadquarters eased open the doors for me and other women in

diving when I became the first woman to assume severalprofessional diving leadership roles.

My advocacy had moved from voting rights to open accessand opportunity based upon relevant skills, not gender. Dr.Susan Bangasser and I co-authored Women Underwater, arelatively daring book in 1979. NAUI gave me the opportunityto edit and write technical publications, and the NAUI NEWSmonthly magazine. I also produced its IQ internationalconferences.

Over the years I have been honored by the diving industrywith the prestigious (if I do say so myself) NAUI Service Award,the SSI Platinum Pro 5000 and was selected as an inauguralMember of the Women Divers Hall of Fame in 2000. To date Ihave logged more than 8,000 scuba dives in places as diverse astropical paradises to the Mississippi — zero visibility — River.

I decided in 1980 that, no matter how much I loved mycareer in diving and association management, I wanted to startmy own business. My first big client was a company thatproduced Supercross motorsports events in NFL stadiums. Istarted as a consultant, eventually took my little marketingcompany in-house and within two years became president of thatorganization. But it was not my creation.

So I resigned that great-paying job in 1985 (parental distresscontinued) and started re-building my own company, JBS &Associates. I decided to specialize in event and associationmanagement and implementation of multi-disciplinarymarketing, advertising and public relations programs…and Iwould have control over my schedule so I could spend more timein the ocean.

When no longer a corporate road warrior I finally had theflexibility to make a living while diving, writing and sharing mylove of the ocean. As an associate editor of Skin Diver MagazineI authored the “Advanced Diving” feature — 84 articles of 2500words with accompanying photographs — and published manyother magazine articles. Finally I was back to teaching, tomolding attitudes and to opening minds to the importance of theworld’s oceans.



Receivership Profile...


Scar is a 30+ ft long male sperm whale who is resident in the pod off Dominica, WestIndies.In his teens he will soon be forced out of the resident pod to roam the world untilachieving sexual maturity and finding a new pod to join. Surfacing after a dive to over2,000 ft, he has a giant squid tentacle stuck in his teeth.

Jeanne took this photo during a photography expedition to sheltered Mexican sites to filmbaby gray whales soon after birth.

My client is involved in a partnership dispute. The partnership agreement provides all disputes areto be resolved by binding arbitration. I may want to have a receiver appointed to operate thepartnership property pending resolution of the dispute and if we win to fix up and sell the property.How do I do this in an arbitration?

You don’t. This issue was decided a number of years ago in Marsch v. Williams, 23 Cal. App. 4th 238 (1994). Therepartners had a dispute that was submitted to arbitration and the arbitrator appointed a receiver. The appellate courtreversed holding that Code of Civil Procedure §564 vests the power to appoint a receiver in the superior court andthat power does not extend to arbitrators, even by agreement. C.C.P.§564(b)(1) provides a receiver can be appointed“by the court in which an action or proceeding is pending, or by a judge thereof”’.

This issue recently came up again in Baron v. First Insurance Exchange, 154 Cal. App. 4th 1184 (2007). There, a disputeinitially arose under a joint venture agreement relating to real property that was damaged by fire. The parties’ agreement providedthat all disputes were to be resolved by arbitration. The arbitrator reached a decision and pursuant to a stipulation of the partiesappointed a receiver to take possession of the property and all insurance proceeds and claims. Two years later, the winning partyfiled a petition in the superior court to confirm the arbitration award and the appointment of the receiver, which the court granted.

In the intervening period the receiver had worked with the insurance carrier and started restoration work on the property.Disputes developed and the receiver sued. Suit was filed three months prior to the superior court’s confirmation of the arbitrator’sorder appointing the receiver.

The receiver’s lawsuit went to trial two years later and the receiver obtained judgment for $96,462.00 in compensatory damagesand $1.5 million in punitive damages. The insurance company appealed, arguing the receiver had no standing to sue it because thereceiver’s appointment was void because the appointment was made by an arbitrator, citing Marsch v. Williams. The Court ofAppeal, however, affirmed.

The receiver argued that Marsch was distinguishable because the attack on the receiver’s appointment there was by a party tothe arbitration and not by a third party trying to collaterally attack the order. He also argued his appointment was valid because thesuperior court confirmed it when it confirmed the arbitrator’s award. The Court, however, did not reach these issues. Instead, itheld the challenge to the receiver’s appointment was precluded because of the failure to attack it earlier. In effect, the insurancecompany was estopped to challenge the receiver’s appointment and standing because it did not seek dismissal of the lawsuit based onthe invalidity of the receiver’s appointment. The Court cited a California Supreme Court case Hise v. Superior Court, 21 Cal. 2d614 (1943) [estoppel to deny validity of appointment, based on failure to make timely objection and affirmative acts recognizingauthority of receiver].

The insurance company argued that because the receiver’s appointment was void it could be attacked at any time. The Courtheld that the order of appointment was not void, just voidable, and hence was valid until successfully challenged. The Court heldthe order was merely voidable because the superior court had jurisdiction over the parties to the underlying dispute and the subjectmatter when the order was issued.

The correct way to get a receiver appointed if you are involved in an arbitration is to go to the superior court and ask that itappoint a receiver. Like with most prejudgment remedies, this can be done while the arbitration is proceeding because only thecourt can grant these remedies (e.g. attachment). If a receiver is to be appointed as part of an arbitrator’s award, it should providethat the superior court is to appoint a receiver and the court can then decide whether it is proper to do so, and do so, as part of theconfirmation of the arbitrator’s award.


Q

A

ASK THE RECEIVERBY PETER A. DAVIDSON, ESQ.*

*PETER A. DAVIDSON, with Moldo Davidson Fraioli Seror & Sestanovich LLP located in Los Angeles, is a receiver and an attorney whospecializes in representing receivers in state and federal court.

Peter A. Davidson


INTRODUCTIONThe focus of what follows is a controversy which has sprung

up in the bankruptcy courts in interpreting a portion of Section707(b)(2) of the Bankruptcy Code [11 U.S.C. § 707(b)(2)],enacted as part of the Bankruptcy Abuse Prevention andConsumer Protection Act of 2005, or BAPCPA, which becameeffective (as to most of its provisions) on October 17, 2005.

The power to dismiss debtors’ Chapter 7 bankruptcy casesfor “abuse” if their debts were primarily consumer debts isnothing new. Before the headline generating passage ofBAPCPA, that power resided in Section 707(b) and itcontinues to reside there today, after BAPCPA’s enactment.

What has changed the landscape so markedly after the passageof BAPCPA are the crucial shifts in the matters of substantialityof abuse and presumption of abuse. Section 707(b) used tomandate that the court presume debtors were entitled to thebankruptcy relief they sought and permitted dismissal only for“substantial abuse.” BAPCPA eliminated presumption ofentitlement to relief and added a new subsection (2) to 707(b)which requires that debtors’ finances be submitted to a “test”which, if failed, causes a reverse presumption to arise – that thecontinued pendency of such cases would constitute “abuse” andsubject cases to dismissal. The “abuse” which would justifydismissal no longer needs to be “substantial” after BAPCPA.

Bankruptcy Department

What Does “Means” Mean in Deducingthe “Plain” Meaning of Means TestingUnder Bankruptcy Code § 707(B)(2)?BY JAMES A. JOSEPH, ESQ.*

(Mr. Joseph, a senior bankruptcy attorney of counsel to the Los Angeles firm Danning, Gill, Diamond & Kollitz, LLP and 26-yearmember of the Panel of Bankruptcy Trustees in the Central District of California, explores the status of judicial interpretation of a key provisionof the recent overhaul of the bankruptcy laws impacting the issue of who may remain a debtor under Chapter 7 of the Bankruptcy Code.)

“Maximum Value and Preferred Deal Terms… Isn’t that what you want for your asset?” Phil Seymour

“Service is more than just closing… its about understanding where the market has been, where it is and most importantly where its going” Phil Seymour

Whether it’s selling a home, apartment building or a commercial property—

and whether it’s interest rates, environmental issues, zoning, leases, or court

requirements—The Seymour Group works to ensure that your deal closes

and your objectives are met.

Please contact: Phil SeymourExecutive Vice President/Managing Director

Phone 310.271.4040 Ext. 130

Email [email protected]

Member: California Receivers Forum & California Bankruptcy Forum

The Seymour Group Elite Properties Realty www.theseymourgroup.net

148 South Beverly Drive, Beverly Hills, California 90212

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The “test” designed by the drafters ofBAPCPA in Section 707(b)(2) and whichis the lynch-pin to effectuating one of thekey purposes of the legislation, namelythat debtors who can “pay something” totheir creditors either do so through aChapter 13 plan or have their Chapter 7cases dismissed, is mechanical and onesuspects that those who designed it andpassed it into law had the same hope alllegislators harbor for their legislation –that it be so clear in its language andrequired application that judicialinterpretation would be uniform.

Yet, as to a crucial part of the “test”designed to cull from the mass ofconsumer debtors those who are presumedto be abusing the system and whose casesshould therefore be dismissed, any suchhopes for judicial uniformity have beenrather clearly been disappointed.

THE WORKINGS OF THEMEANS TEST

Present Section 707(b)(2) containsfour sub-paragraphs, ten sub-sub-paragraphs, and thirteen sub-sub-sub-subparagraphs.

Subject to the disclaimer that nosummary of such a complex piece ofdrafting can possibly be precisely accurateand that recourse must be had to thestatute itself, Section 707(b)(2) issupposed to work something like this.

Consumer debtors first must calculatetheir “current monthly income”, a termdefined in Section 101(10) of the Code,generally their income (taxable or not)from all sources during the six monthspreceding the filing divided by six. If thatfigure multiplied times twelve is equal toor less than the median annual income forsingle persons or families, as appropriate,in the state where the debtors live, thenthe inquiry ends (usually) and the debtorsget to remain in their bankruptcy case(usually).

The complexities arise when thedebtors’ annual income exceeds the statemedian.

If the state median income isexceeded, then the debtors are subjectedto what is called “means testing”, a termnot found in the Code but rather inOfficial Form 22A entitled Chapter 7

Statement of Current Monthly Incomeand Means – Test Calculation which waspromulgated as the primary analytical toolto determine whether Chapter 7 consumerdebtors are or are not permitted toproceed with their cases. I have includedseveral pages of the six page Official Form22A for a single debtor withoutdependents in Southern California (nameand bankruptcy case number redacted) toillustrate.

For means testing, the Code takes“current monthly income” as the startingpoint and then permits deduction of aseries of monthly expenses to determinewhether after all permitted deductions,debtors still have sufficient money leftover to “pay something”, that apresumption should therefore arise thatthey not be permitted to remain inChapter 7 cases and that their cases

Contact: Zeev Haskalzeev@megagroupinvestigations.comwww.megagroupinvestigations.com • (888) 988-00751903 W. Silver Lake Drive, Los Angeles, CA 90039

Contact: Zeev Haskalzeev@megagroupinvestigations.comwww.megagroupinvestigations.com • (888) 988-00751903 W. Silver Lake Drive, Los Angeles, CA 90039


Bankruptcy Department...



Page 1: Calculating Income


Andrew R. Zimbaldi

Alden Management Group

Tel: 714-751-7858

[email protected]

is pleased to announce

the completion of his duties as

Equity Receiver for

Hartt vs. Lopez

Superior Court

County of Los Angeles

Michael A. Grassmueck

Grassmueck GroupTel: 213-999-7821

[email protected]

is pleased to announcethe change in his appointment

from Corporate Monitor to Full EquityReceiver for

Securities and Exchange Commissionv. Global Online Direct

07-CV-0767

U.S. District Court of GeorgiaAtlanta Division

Edythe L. Bronston

Law Offices of Edythe L. Bronston

Tel: 818-528-2893

[email protected]


her appointment as

Equity Receiver for

Truley v. Truley

Superior Court


Thomas Henry Coleman

Coleman Law



Winding Up Receiver for Innovative

Construction Partners, Inc.

Superior Court

Ventura County

Thomas Henry Coleman

Coleman Law



Equity Receiver for Parr

Development Company of

Santa Monica

Superior Court


Kevin Singer & John Rachlin

Receivership SpecialistsTel: 310-552-9064 or [email protected]@ReceivershipSpecialists.com

is pleased to announcetheir appointment as

Rents and Profits Receivers for a200 unit Public Storage Complex,

100,000 sq ft of Office and IndustrialSpace, a Gas Station, a 40 unit

Parking Lot, and 28 Apartment Units

Superior Court of San Francisco

William J. Hoffman

Trigild, Inc.

Tel: 858-720-6700

[email protected]


his appointment as

Rents & Profits Receiver for HLH

Properties, an apartment complex

Circuit Court

County of Lake, Florida

William J. Hoffman

Trigild, Inc.

Tel: 858-720-6700

[email protected]


his appointment as

Rents and Profits Receiver for

Solitaire Properties, an apartment

complex

Circuit Court

County of Osceola, Florida

William J. Hoffman

Trigild, Inc.

Tel: 858-720-6700

[email protected]


his appointment as

Rents and Profits Receiver for TW

South, four casual dining

restaurants in OK, LA, and AK

U.S. District Court

Northern District of Texas

Robert P. Mosier

Mosier & Company, Inc.Tel: 714 432-0800 x222

[email protected]

is pleased to announce his selection as Expert Witness

In the matter of theBecker Filter Litigation

(Alleged theft of corporate assets,trade secrets and client lists)

Superior CourtCounty of Orange

Robert P. Mosier

Mosier & Company, Inc.Tel: 714 432-0800 [email protected]

is pleased to announce his selection as Consultant to the

Provisional Director and Board

in the matter of Spec Formliners (To evaluate Management

Contributions, Competency andCompensation)

Superior CourtCounty of Orange

Robert P. Mosier

Mosier & Company, Inc.Tel: 714 432-0800 [email protected]

is pleased to announcehis appointment as Receiver for

the Estate of Isabel E. Gimenez (Involving Sale of Disputed

Residence With Charitable Pledges)

Superior CourtCounty of OrangeProbate Division

Douglas P. Wilson

Douglas Wilson Companies

Tel: 619-641-1141

[email protected]

is pleased to announce the completion

of his duties as Receiver for

SoCal Housing Partners, LLC

construction and sale of 300 single

family homes

Superior Court


Douglas P. Wilson

Douglas Wilson Companies

Tel: 619-641-1141

[email protected]


his appointment as

Receiver for Rock Island Homes

a 58 lot residential subdivision in

Oakley, CA

Superior Court of CA

Contra Costa County

‘Tis The Season! Having to avoid loitering reindeer onthe 405 reminds me that this is the Holiday Season – thatcalendral time when people of good cheer bestow gifts of

warmth and affection on those closest and dearest (andmost important business-wise) to them. Joyeux Noel(or, as the Canadians say it, “Happy Xmas, Eh.”)!

Rest assured those persons you have gifted in the past are just plaindead tired of Cartier and Dom Perignon. Every year the same thing —Bruce Springsteen tickets, Lakers Season passes, blah, blah, blah.Fortunately for all you enlightened celebrants of “The Happiest Time ofthe Year” (notice how Disney co-opted this phrase for the Park? Publicdomain, baby.) there is a new stocking stuffer to give this year (and wedon’t mean Tinactin). Yes – a membership in the California ReceiversForum!

What conjures up frosty woods and roaring fireplaces quicker thanknowing that you have a 365-day personal relationship with arguably thefinest professional association in America? Arguably. Pretty sure aboutthat. The benefits are beyond description (so I won’t try). There may evenbe a money-back guarantee (although no one has said anything about thisto me, so maybe not). Just $125 for new members and $100 for renewingmembers (with reduced rates for same-firm multiple members andgovernment employees) payable in ever depreciating, Raleigh Cigarettecoupon-like Greenbacks. Cheap at twice the price. Visitwww.receivers.org for registration data.

But even better than being a card-carrying CRF’er is having your veryown expanded bio on the CRF website. Drop a few hints to your possethat nothing would warm the cockles of your heart (check “cockles” inGray’s Anatomy – very interesting) more than having your bona fidesreplete with expansive adjectives of your choosing plus your photo inpixels par excellence linked to the CRF! Toni Spangler of JBS &Associates amplifies:

“This is a great way to market yourself to prospective clients in need ofreceivership services. By listing in your expanded bio the many typesof business in which you have performed receivership duties yourexpertise will be easily accessed. The $15 monthly fee provides:

• Expanded, Searchable 500-Word Biography on the CRF web site.

• Includes an opportunity to have your name appear in twoadditional “service type” categories in the electronic directory.

• Includes a link from your expanded bio to your firm’s web site.”

Just visit www.receivers.org for all the details. Givethe gift that keeps on giving to your receivershipprofessional friends and see what you get next year!Season’s Greetings. – Ed.

David P. Stapleton

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Tel: 760-602-3792

[email protected]

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Mr. Stapleton will focus on

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should be dismissed unless they convertto a Chapter 13 case where they mustpropose a plan to pay their creditors atleast a portion of what they owe.

One of the more controversialfeatures of the means-testing process isthat many of the permitted expenses arenot debtors’ actual expenses, but arerather derived from National and LocalStandards developed by the InternalRevenue Service. Line 19 of the formsets forth the permitted NationalStandard for “food, clothing, householdsupplies, personal care andmiscellaneous”, the sum of $621.00. It isof no consequence to the test that thedebtor may actually spend $721.00 amonth on these items; only $621.00 is apermitted deduction for test purposes.

That means testing employs, in manycategories of expense, a national or localnorm as opposed to the debtors’ actualexpenses is hardly surprising. It wouldnot serve the intent of the BAP(Bankruptcy Abuse Prevention) portion

of BAPCPA if a hypothetical singledebtor were spending $2,000.00 a monthfor food on account of a predilection forbeluga caviar and were allowed such anexpense, as opposed to the $621.00permitted by Section707(b)(2)(A)(ii)(I).

Though many permitted expenses arepre-set and may not exceed IRS NationalStandards and Local Standards, certainexpenses that constitute permitteddeductions are actual and among thoseare payments on secured debt. Section707(b)(2)(A)(iii) permits deduction formonthly payments on secured debts,including on a primary residence, motorvehicles and other household property,including presumably, televisions,washing machines, and other consumerelectronics where the lender or seller hasretained a lien to secure payment.

The sample form reflects that ourconsumer debtor does not have a houseon which he is making mortgagepayments nor a car on which he is




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Page 2: Does the (shudder) Presumption Apply?


making payments, so he is permittedonly the IRS Local Standard for housingexpense on line 20Ba, $1,395.00 and theLocal Standard transportation ownershipexpense on lines 23a and 24a for the twocars he owns free and clear. But if hewere buying a house and had a $3,000.00a month mortgage payment and if hewere making $1,200.00 a month carpayments on two cars, then he wouldplace these monthly payments on lines20Bb, 23b and 24b, and deduct them,thereby wiping out the IRS LocalStandards deductions permitted from hismonthly income but would then placethe very same amounts on line 42,“future payments on secured claims”resulting in permitted deductions of$4,200.00 versus $2,188.00,approximately double the amountsallowed if he were not making paymentson a house or cars.

THE CONTROVERSYHomebuyers and car purchasers, as a

general matter, are going to have a mucheasier time “passing” the test than rentersand those who own their cars free andclear, but what if the facts show that thedebtors are going to be surrendering theirhouses and cars to the lenders becausethey cannot keep up the payments? Theissue now dividing the bankruptcy courtswith the United States Trustees in thevarious regions of the country on oneside and debtors’ lawyers on the other issimply put: are debtors entitled todeduction for payments on secured debtson their houses and cars if, at the timethey file their bankruptcy cases, they arebehind on their payments, will in allprobability lose these assets throughforeclosure or repossession, and will notbe making payments on them in thefuture? Should our debtor be entitled toa $3,000.00 deduction for his mortgagepayment rather than the $1,395.00monthly deduction a renter is permittedwhen, in a couple of months after filinghis bankruptcy case, his house will likelybe lost through foreclosure and he will bea renter again?

Despite the fact that Chapter 7trustees and creditors have standing to

seek dismissal of a case for presumedabuse under 707(b), the United StatesTrustees are the primary enforcers ofthese provisions of BAPCPA.

Section 707(b)(2)(A)(iii)(I) permitsdeduction from monthly income forpayments on secured debts “scheduled ascontractually due . . . in each month ofthe 60 months following the petitiondate.” As far as statutory construction inbankruptcy matters is concerned, thestarting point since 2004 has been the U.S. Supreme Court case of Lamie vs.United States Trustee, 540 U.S. 526,534, 124 S.Ct. 1023, 1030, 157 L.Ed.2d1024 (2004): “It is well established thatwhen the statute’s language is plain, thesole function of the courts – at leastwhere the disposition required by thetext is not absurd – is to enforce itaccording to its terms.”

Debtors being means-tested areentitled to deduct from their monthlyincome payments on secured debt“scheduled as contractually due”; thelanguage seems “plain”, but has provento be anything but plain to thebankruptcy courts trying to apply it.

In In re Skaggs, 349 B.R. 594(Bkrtcy. E.D.Mo. 2006), the UnitedStates Trustee moved to dismiss thedebtors’ case for substantial abuse,contending that their taking deductionsfor monthly payments due on theirencumbered motor home and automobilewas impermissible because the debtorshad stated in their bankruptcy papers,specifically in their Statement ofIntention, Official Form 8 (whichalthough it must be completed and filedto commence a bankruptcy case is not a“schedule”, such as Schedule “A”, where


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My ocean advocacy for the past ten years has been focusedthrough two great institutions: the Aquarium of the Pacific inLong Beach, California, where I serve as a volunteer diver andalso as Trustee of the Pacific; and through Scripps Institution ofOceanography in La Jolla, California. There I have had thehonor of serving on the Scripps Director’s DevelopmentCommittee and on the Birch Aquarium Board of Advisors.

There is no greater joy or source of drive in my life than as anocean advocate. Our well being as a planet is tied to cleandrinking water and healthy ocean ecosystems. Opening eyes andhearts through my photographs, adventure stories and throughassisting institutions in creating wonder and stewardship of theoceans and all its inhabitants, is a major focus for me. My currentproject is photographing whales in the wild – free diving in theopen ocean with 30-ton mammals that choose to approach meand let me swim near them and capture their beauty. I hope togather enough special images for a book.

As in the ocean, where organisms interact to thrive, mycompany has grown as various parts of my life intertwined. Afterexiting the race production business, I met Bill Lobel, who hadformed a new law firm and needed assistance managing thebankruptcy fee application process for his boutique bankruptcydebtor firm (back in the days of plentiful chapter 11 bankruptcycases). Bill volunteered to chair the California BankruptcyForum’s fledgling annual conference, and talked his partners into

paying me for two years to do the event production after heraised the sponsorship money.

I eventually left that part-time firm position and was hired bythe California Bankruptcy Forum to manage the statewideorganization. It is hard to believe that the upcoming 2008California Bankruptcy Forum conference will be the eighteenth Ihave managed, and that I have proofed so many years ofCalifornia Bankruptcy Journals.

In working with bankruptcy lawyers and trustees I met manyof the founders of the California Receivers Forum. When thegroup decided to start a formal organization, I was honored whenasked to be its administrator. The California Receivers Forumten year anniversary is on the horizon.

JBS & Associates has grown in staffing and services. We nowalso produce conferences, trade shows and special events forclients such as the Specialty Coffee Association of America, theRecreation Vehicle Industry Association, the Boys & Girls Clubsof America national golf tournaments, the HMO ResearchNetwork and advertising for Yamaha Motorcycle dealer groups.

It has been a remarkable journey, building a business andbeing of service to my clients. It is humbling to think of howmany people in the bankruptcy and receivership communitieshave become friends and have mentored me.

With this article, my habit of spending Tuesday afternoonsout of the office is finally explained – I am diving at theAquarium of the Pacific, hand feeding fish and rays, movingsharks, and washing exhibit windows on the wet side, alwayshoping to ignite in the visitors, young and old, a sense of wonderin the marine environment and its many varied creatures,because people protect and cherish what they know and love.

Jeanne Sleeper


Receivership Profile...

Jeanne Sleeper inspects flourishing marine life in Papua New Guinea–in this case aGiant Clam

Contact us for further information at:

T:303.759.9500 • F:303.759.9600 • [email protected]

We are principals who acquire the following

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Minimum transaction size $50,000.References are available upon request.

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Jeanne Sleeper is the founder and director ofJBS & Associates, a Laguna Beach firm thatproduces conferences and trade showsnationwide for a variety of clients as well asproviding administrative services to the CRFand many other trade organizations

debtors are to list any real property theyown or Schedule “F” where they are tolist their unsecured creditors) that theyintended to surrender the motor homeand automobile back to the lenders.

The court agreed, holding that“scheduled” meant how the debtorstreated the contractually due paymentsin the bankruptcy “schedules” whichthey filed: “Accordingly, the Debtors’schedules and statements form the basisfrom which the Court should determinewhether a debt is ‘scheduled ascontractually due.’” Id. at page 599.Because the debtors’ Statement ofIntention indicated the mobile homeand vehicle were going to be returned,the payments were not “scheduled” to bemade, were not proper deductions frommonthly income, resulting in the debtorshaving enough income to render theircase presumptively abusive and subjectto dismissal.

The court in In re Walker, 2006 WL1314125 (Bkrtcy, N.D.Ga. 2006) facedwith virtually the same facts as the courtin In re Skaggs came to a completelyopposite result on the issue of what“scheduled as contractually due” means.The debtors had taken deductions ontheir means test for mortgage paymentson their house and payments on one oftheir vehicles. On their Statement of

Intention, they indicated they weregoing to surrender these items to thelenders. The United States Trusteemoved to dismiss, contending that themortgage payments and car paymentswere not proper deductions, and thatwithout them, the debtors would havesufficient monthly income to makepayments to creditors subjecting theircase to the presumption of abuse.

The court in Walker believed thatthe proper resource to determine theplain meaning of “scheduled” wasWebster’s Dictionary – “Webster’sDictionary defines the word ‘schedule’ as‘to plan for a certain date’...”Accordingly, payments that are‘scheduled as contractually due’ are thosepayments the debtor will be required tomake on certain dates in the futureunder the contract.” Id. at page 2. Thecourt held that the debtors’ deduction of

the payments was proper.

To the United States Trustee’sargument that permitting means testdeductions for payments that probablywere not actually going to be madeundermined Congressional intent thatdebtors who had disposable futureincome be required to devote thatincome to creditors in a Chapter 13 orsuffer dismissal of their cases, the courtrejoined that the means test was notdesigned to produce a prediction of whatdebtors could, in the real world, afford topay their creditors in the future, pointingout that the means test requires thatdebtors must use a presumed monthlyincome amount which is the average ofsix months’ income preceding thebankruptcy filing, not what they areearning at the time the bankruptcy isfiled, let alone what they will likely earnper month in the future. On the expense




McKenna Long & Aldridge offers a proven track recordin the areas of receivership, bankruptcy, and creditors’ rights.

Contact:

GARY CARIS 213.243.6107 phone

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A L B A N Y AT L A N TA B R U S S E L S D E N V E R LO S A N G E L E S N E W YO R K P H I L A D E L P H I A S A N D I EG O S A N F R A N C I S C O WA S H I N GTO N , D C


Page 3: First of Four Pages to Calculate Debtor’s“Means”


AREA PHONE E-MAIL

Bay Area

� David A. Bradlow 415-206-0635 [email protected]

� Dennis P. Gemberling 415-434-0135 [email protected]

��• Beverly N. McFarland 916-783-3552 [email protected]

• Donald G. Savage 510-547-2247 [email protected]

� Kevin Singer 415-848-2984 [email protected]

David A. Summers 925-933-2875 [email protected]

Douglas P. Wilson 619-641-1141 [email protected]

Sacramento Valley

��• Marilyn Bessey 916-930-9900 [email protected]

Robert C. Greeley 916-484-4800 [email protected]

��• Scott Sackett 916-930-9900 [email protected]

� Kevin J. Whelan 916-783-3552 [email protected]

Fresno Area

� Clifford Bressler 559-298-1089 [email protected]

�• Steve Franson 559-930-8119 [email protected]

� James S. Lowe II 559-269-0484 [email protected]

�• Hal Kissler 559-435-1756 [email protected]

AREA PHONE E-MAIL

Los Angeles/Orange County/Inland Empire

��• Edythe L. Bronston 818-528-2893 [email protected]

Robert Crane 949-646-2903 [email protected]

Joseph DeCarlo 714-751-2787 [email protected]

�� James H. Donell 310-207-8481 [email protected]

�� Steve Donell 310-207-8481 [email protected]

� Louis A. Frasco 818-449-5129 [email protected]

�• David A. Gill 310-277-0077 [email protected]

Richard Hollowell 949-222-2999 [email protected]

Andy Lim 310-471-8015 [email protected]

Michael D. Myers 909-398-4200 [email protected]

�• George R. Monte 626-930-0083 [email protected]

��• Robert P. Mosier 714-432-0800 [email protected]

��• David J. Pasternak 310-553-1500 [email protected]

�• James L. Peerson, Jr. 323-954-7575 [email protected]

� Theordore G. Phelps 213-629-9211 [email protected]

�� Gary A. Plotkin 818-906-1600 [email protected]

John Rachlin [email protected]

��• David L. Ray 310-481-6700 [email protected]

� Thomas A. Seaman 949-222-0551 [email protected]

� Kevin Singer 310-552-9064 [email protected]

�• William E. Turner 714-228-9153 [email protected]

�� David D. Wald 310-979-3850 [email protected]

��• Robert C. Warren III 949-585-7660 [email protected]

�• Adrian Young 909-945-4586 [email protected]

Andrew R. Zimbaldi 714-751-7858 [email protected]

San Diego Area

�� M. Daniel Close 858-792-6800 [email protected]

�• William J. Hoffman 858-720-6701 [email protected]

Douglas P. Wilson 619-641-1141 [email protected]

Santa Barbara/Ventura County Area

Dennis Diacos 805-445-9391 [email protected]

Robert Gonzales 805-445-9182 [email protected]

David Mitchell 805-445-9182 [email protected]

• The bullet indicates those receivers who completed a comprehensive16-hour course on receivership administration and procedurespresented at Loyola Law School in April 2000.

� The diamond indicates those receivers who completed a comprehensive16-hour course on receivership Administration and procedures presentedat Loyola Law School in October 2004.

� The square indicates those who facilitated the October 2004 LoyolaLaw School course.

THE LIST WHILE THERE IS NO COURT-APPROVED LIST OF RECEIVERS, THE FOLLOWING IS A

PARTIAL LIST OF RECEIVERS WHO ARE MEMBERS OF THE CALIFORNIA RECEIVERS

FORUM AND HAVE CONTRIBUTED TO THIS PUBLICATION.

FRANDZEL ROBINS BLOOM & CSATO, L.C.

6500 Wilshire Blvd. Seventeenth Floor

Los Angeles, CA 90048 Telephone: (323) 852-1000

Fax: (323) 651-2577

100 Bush Street Twenty-third Floor

San Francisco, CA 94104 Telephone: (415) 788-7400

Fax: (415) 291-9153

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side, the court noted that many of the basic expense deductionspermitted by the means test are hypothetical, not actual – “Themeans test also relies on the use of living expenses set by the IRSNational and Local standards, which may be either significantlyless than or greatly in excess of the debtor’s actual expenses.” Id.at page 6.

The court in In re Osborne, 374 B.R. 68 (Bkrtcy. W.D.N.Y.2007), decided on August 28, 2007, permitted the deduction ofpayments on secured debt for means test purposes even if thecollateral securing the debt was going to be surrendered afterconducting a survey of all the cases it could locate on the issueand opined that the Walker reasoning was the majority view andthat a minority of decisions reached the same result as In reSkaggs.

CONCLUSIONIt is likely that the United States Trustees throughout the

country will continue to advance what appears to be theminority position represented by In re Skaggs, supra. unless anduntil the appellate courts settle the issue in favor of the majorityposition. They will also attempt to have cases dismissed under

the “totality of the circumstances” standard in Section 707(b)(3)whose operation is outside the scope of this discussion, butwhose provisions, while permitting the court to dismiss debtors’cases for abuse, do not accord the United States Trustees withthe extremely powerful presumption of abuse to which they areentitled when debtors flunk the means test.



James A. Joseph, Esq.

Mr. Joseph was admitted to the California Bar in 1972.Mr. Joseph has specialized in insolvency matters during theperiod of his practice, and is qualified for appointment as atrustee and receiver in the United States District Court,United States Bankruptcy Court, and Superior Court ofthe State of California. He is a member of the State Bar ofCalifornia.

Documents

RECEIVERSHIP A Publication of the NEWS · 2012-11-17 · mail the notice – via certified mail – to these local Insolvency Groups. The regulations also allow the receiver to mail