6th Circuit Says Trustee Can Sell Debtor's Legal Malpractice Claims

Summary

---

An uncontested bankruptcy order authorizing the trustee's sale at auction of a debtor's legal malpractice claims against an attorney bars the debtor from pursuing the claims in state court, even though the debtor contended that at least one of the claims was not the property of the bankruptcy estate, the 6th Circuit has ruled.

The Kentucky debtor lost an estate case in state court against his siblings and was found liable for $165,000. Several months later he filed for Chapter 7 bankruptcy. He also fired his attorney and filed a malpractice case against him in state court, bringing two claims for malpractice and one for breach of fiduciary duty. The lawyer's malpractice insurer purchased the malpractice claim for $10,000 at the bankruptcy auction to foreclose the possibility of lengthy litigation.

See the full content of this document

Extract

---

6th Circuit Says Trustee Can Sell Debtor's Legal Malpractice Claims

The debtor argued that Kentucky public policy prohibited the...

See the full content of this document

---