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Section 7: Bankruptcy Checklist

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Overview

When any person or entity (e.g., landowner, lienholder, mortgagee, tenant) who is in bankruptcy, has an interest in the property to be acquired, it is important to proceed with caution. Actions against a bankruptcy "debtor" or the debtor's "property" are prohibited by the automatic "stay" which goes into effect at the time the bankruptcy case is filed. Unless an order "lifting" the stay is obtained, certain actions (including condemnation) could be deemed to be void, as in violation of the automatic stay, and could subject TxDOT to sanctions by the Bankruptcy Court. If you have a case, which involves a bankruptcy, the following information needs to be acquired from the Bankruptcy Court Clerk in order to determine the best way to proceed. This information will alert the Assistant Attorney General (AAG) as to whether or not further proceedings in the bankruptcy court are required. Remember, that a Motion for Relief from Stay requires a filing fee, a substantial sum for mailouts, and very possibly a hearing, so the expense is not trivial.

Obtain:

  • Style of case including name of Debtor, Court where filed, case number, and chapter filed under (e.g., 7, 11 or 13).
  • Date the Petition was filed with the Bankruptcy Court.
  • Name of the Bankruptcy Judge to which the case was assigned (individual judges may have different local rules).
  • Name, address and telephone number of any Chapter 7 or 13 Trustee. Also, check to see if a Trustee has been appointed in a Chapter 11 case. (This is rare, but it does happen and does make a difference as to how the AAG will proceed.)
  • Name, address and telephone number of debtor's attorney of record.
  • The date of the §341 meeting of creditors. (This triggers the countdown for the claims bar and other actions in some cases.)
  • NOTE: All of the above information should be contained on the Court's Order for Relief/Notice of Bankruptcy Filing form.

  • The Court's Order for Relief/Notice of Bankruptcy Filing.
  • Docket sheets.
  • Copy of the mailing matrix. (This is a list of creditors to be used for mailing; may also be called the creditor's matrix.)
  • Copy of any Request for Notice filed in the case. (This is filed when a creditor is not actually included on the initial mailing matrix filed by the Debtor; however, these persons must also be served for any mailout to be valid, so it is important to know who they are.)
  • List of 20 Largest Unsecured Creditors (if there is one) and the contact name, address and telephone number of any Creditor's Committee (if there is one).
  • A copy of the Debtor's schedules filed in the case. These items will describe all the Debtor's property, income, expenses, lienholders, etc. They are very important in determining the nature of the Debtor's interest in the property we are seeking, and how the Debtor proposes to deal with it.
  • Several copies of the Houston Division's Notice of Hearing on Relief from Stay. This is a multi-part form that must be filled out and filed without any Motion for Relief from the Stay. (This applies only if the bankruptcy case is filed in the Southern District.)

If you have any questions, please contact the AAG in charge of your case before proceeding - there are several traps for the unwary in bankruptcy law.

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