The Debtor filed Chapter 7 in 1998 and received a discharge shortly thereafter. In 2009, the Debtor commenced litigation in Florida regarding 24,000 shares of SafeCard, Inc. stock, purchased for approximately $120,000.00 in November 1977, upon which the Debtor had never received distributions or dividends. The Debtor had not listed this asset in his petition and accordingly, the Chapter 7 Trustee reopened the case in September 2012, but took no subsequent steps to administer the asset. In April 2013, the Debtor sought to have the lawsuit abandoned pursuant to 11 U.S.C. § 554, asserting that the prosecution of these claims by the trustee would not be economically feasible nor in the best interest of the estate.
Following In re Locklair, No. 03–50924, 2006 WL 1491440, at *1 (Bankr. M.D.N.C. May 18, 2006), the bankruptcy court held that § 554 provides for three methods by which property of the estate may be abandoned:
(1) property may be abandoned by the trustee after notice and a hearing;
(2) the court may order abandonment upon the request of a party in interest; or
(3) property scheduled but not otherwise administered at the time of the closing of a case is abandoned to the debtor. 11 U.S.C. § 554, i.e. “technical abandonment”.
Based on the lack of affirmative prosecution of the claims by the Trustee and his lack of objection to the motion, the bankruptcy court held that continued administration of the claim in the state court litigation by the trustee would be burdensome and of inconsequential value to the estate and, were accordingly deemed abandoned to the debtor.
For a copy of the opinion, please see: