Section 16.25 Introduction

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

A. (§16.25) Introduction

Bankruptcy trustees can abandon property of the estate back to the debtor or another party having a possessory interest in the property—such as a secured creditor—if the property is burdensome to the estate or otherwise of inconsequential value to it. 11 U.S.C. § 554(a); see also
S. Rep. No. 95-589, at 92 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5878. The policy justification for allowing trustees to abandon property out of the estate is to maximize the value of the estate for the debtor’s creditors. See, e.g., In re Terjen, 154 B.R. 456, 458 (E.D. Va. 1993), aff’d, 30 F.3d 131 (4^th Cir. 1994) (unpublished table decision).

An abandonment revests title to the property in the debtor, although the bankruptcy court continues to have jurisdiction over the property to decide issues such as whether debts encumbering the property are dischargeable as well as violations of the automatic stay. See In re
Nevin, 135 B.R. 652, 653 (Bankr. D. Haw. 1991) (citing Mason v. Comm’r, 68 T.C. 163 (1977), aff’d, 646 F.2d 1309 (9^th Cir. 1980
(per curiam))); see also In re Dunmore, 254 B.R. 761, 763 (Bankr. N.D. Cal. 2000) (mem.). Once trustees abandon property out of the bankruptcy estate, the abandonments are irrevocable. See 15 Myron M. Sheinfeld et al., Collier on Bankruptcy ¶ TX2.03[1][b][iv]...