Hypthetical:  Parties are working toward a settlement agreement, to be
incorporated in a Final Judgment for a contract dispute.  Defendant has
insufficient funds to make a lump payment of the Final Judgment and
requires a payment plan that will take years.  Plaintiff is concerned with
Defendant's ability to pay the judgment.  Is there any language that can be
placed in a settlement agreement that will protect Plaintiff in the event
Defendant files for bankrupty (non-dischargeable debt, secured creditor
status, etc.)?

Thanks,

Mark

Maybe if you can create secured party status, and they don't file
bankruptcy within 90 days (or 1 year if insider) - but if they do,
you're out of luck and the lien is avoidable.  You can't stipulate
around it.

Stipulating to non-dischargeability is a risky game.  It will be
re-examine by the bankruptcy court, which may or may not agree, and has
an independent duty to inquire because of its duty to ALL creditors.
Your best odds are to stipulate to the underlying facts which comprise
the elements that fit within one (or more) of the exceptions to
discharge, and then from an evidentiary standpoint you're dealing with
admissions.  But if you overdo it (several belts and suspenders) a
bankruptcy court is liable to find it contrived and just throw it out
and start over.  Remember, bankruptcy courts are fundamentally courts of
equity.

However, just like bankruptcy courts ignore (and properly so - duty to
all creditors as noted above) ipso facto clauses about bankruptcy, they
are not bound by a state court's determination on dischargeability or
even the underlying facts which would support it.  A good analogy is
alimony v. property settlement v. child support (and I'm NOT a divorce
lawyer).  Bankruptcy courts look beyond the language of the parties and
the court and can re-decide what box it "really" fits in.

So, what you can do, is to try stipulating to facts, without a lot of
inflammatory adjectives and adverbs, cross your fingers and hope for the
best.  You still have to file the dischargeability action timely and be
prepared to try the case.  With some admitted facts, you've got a leg
up, but it's not a lock.

Good luck.

Bruce D. Partington

Clark Partington

bpartington@cphlaw.com mailto:bpartington@cphlaw.com

Direct: 850-432-1399

Fax: 850-432-7340

*Board Certified in Construction Law

NOTICE: This e-mail message and any attachments are private
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From: clc-discussion-bounces@lists.flabarrpptl.org
[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Mark
Young
Sent: Wednesday, June 13, 2012 7:43 PM
To: Construction Law Discussion
Subject: [CLC-Discussion] Bankruptcy Proof Agreed Judgments

Hypthetical:  Parties are working toward a settlement agreement, to be
incorporated in a Final Judgment for a contract dispute.  Defendant has
insufficient funds to make a lump payment of the Final Judgment and
requires a payment plan that will take years.  Plaintiff is concerned
with Defendant's ability to pay the judgment.  Is there any language
that can be placed in a settlement agreement that will protect Plaintiff
in the event Defendant files for bankrupty (non-dischargeable debt,
secured creditor status, etc.)?

Thanks,

Mark

Mark:

You can keep the language of your Judgment clean and record it. Prepare
a separate Stipulation for Stay of Execution (that needs not be filed).
The Stip can provide for the discounted settlement.

If you go this route, add the following language in the Stip. "Should
the payment of this settlement be hereafter voided for any reason, then
the discounted settlement set forth in this Stipulation shall not
apply".  It's not full proof, but I always include it.

Feel free to call me if you have any questions about the structure.

Tracye K. Solove, Attorney at Law

Certified Civil Circuit Mediator

Tracye@solovelawfirm.com

Kendallwood Office Park One

12002 Southwest 128th Court

Suite 201

Miami, Florida  33186

Phone: (305) 612-0800

Facsimile: (305) 612-0801

http://www.solovelawfirm.com http://www.solovelawfirm.com/

Providing Statewide Legal Services in the areas of Commercial
Collections and Recovery, Creditors' Rights, Commercial Landlord/Tenant
and Real Estate Foreclosures

This transmission is intended to be delivered only to the named
addressee(s) and may contain information which is confidential,
proprietary, attorney work-product or attorney-client privileged. If
this notification is received by anyone other than the intended
recipient(s), the recipient(s) should immediately notify the undersigned
by E-MAIL and by telephone and obtain instructions as to the disposal of
the transmitted material. In no event shall this material be read, used,
copied, reproduced, stored or retained by anyone other than the intended
recipient(s) except with the express written consent of the sender.
Thank you.

From: clc-discussion-bounces@lists.flabarrpptl.org
[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Mark
Young
Sent: Wednesday, June 13, 2012 8:43 PM
To: Construction Law Discussion
Subject: [CLC-Discussion] Bankruptcy Proof Agreed Judgments

Hypthetical:  Parties are working toward a settlement agreement, to be
incorporated in a Final Judgment for a contract dispute.  Defendant has
insufficient funds to make a lump payment of the Final Judgment and
requires a payment plan that will take years.  Plaintiff is concerned
with Defendant's ability to pay the judgment.  Is there any language
that can be placed in a settlement agreement that will protect Plaintiff
in the event Defendant files for bankrupty (non-dischargeable debt,
secured creditor status, etc.)?

Thanks,

Mark

First recommendation: Get a Guarantor.
Second recommendation: Here is a clause that I recently put into a settlement agreement....

A.                If any claim is ever made upon Plaintiff or their agents for the repayment or return of any part of the Settlement Payment made hereunder, and Plaintiff repays or returns all or part of said money or property by reason of (a) any judgment, decree or order of any court (including bankruptcy) or administrative body having jurisdiction over Plaintiff or (b) any settlement or compromise of any such claim between the Plaintiff and such claimant, then in such event the mutual release portion of this agreement given by Plaintiff to Defendant herein shall be automatically null and void and unenforceable by Defendant and Guarantor, and Plaintiff may elect either or any of the following: (1) enforce this Agreement against any non-bankrupt party hereto which is a guarantor or otherwise jointly and severally liable hereunder, if any;  and/or (2) have any party to this Agreement returned to their pre-Settlement Agreement positions and pursue any and all claims against said party; and/or (3) Retain any portion of the Settlement Payment not repaid or returned, crediting same against those sums claimed by Plaintiff.

Sincerely yours,
Randall Gilbert, Esq.
Board Certified Construction Lawyer

[cid:image002.jpg@01CD4A2A.5FBD8470][cid:image003.gif@01CD4A2A.5FBD8470]

From: clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Tracye
Sent: Thursday, June 14, 2012 10:18 AM
To: Mark Young; Construction Law Discussion
Subject: Re: [CLC-Discussion] Bankruptcy Proof Agreed Judgments

Mark:

You can keep the language of your Judgment clean and record it. Prepare a separate Stipulation for Stay of Execution (that needs not be filed). The Stip can provide for the discounted settlement.

If you go this route, add the following language in the Stip. "Should the payment of this settlement be hereafter voided for any reason, then the discounted settlement set forth in this Stipulation shall not apply".  It's not full proof, but I always include it.

Feel free to call me if you have any questions about the structure.

[cid:image004.gif@01CD4A2A.5FBD8470]
Tracye K. Solove, Attorney at Law
Certified Civil Circuit Mediator
Tracye@solovelawfirm.com
Kendallwood Office Park One
12002 Southwest 128th Court
Suite 201
Miami, Florida  33186
Phone: (305) 612-0800
Facsimile: (305) 612-0801
http://www.solovelawfirm.comhttp://www.solovelawfirm.com/

Providing Statewide Legal Services in the areas of Commercial Collections and Recovery, Creditors' Rights, Commercial Landlord/Tenant and Real Estate Foreclosures

This transmission is intended to be delivered only to the named addressee(s) and may contain information which is confidential, proprietary, attorney work-product or attorney-client privileged. If this notification is received by anyone other than the intended recipient(s), the recipient(s) should immediately notify the undersigned by E-MAIL and by telephone and obtain instructions as to the disposal of the transmitted material. In no event shall this material be read, used, copied, reproduced, stored or retained by anyone other than the intended recipient(s) except with the express written consent of the sender. Thank you.

From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Mark Young
Sent: Wednesday, June 13, 2012 8:43 PM
To: Construction Law Discussion
Subject: [CLC-Discussion] Bankruptcy Proof Agreed Judgments

Hypthetical:  Parties are working toward a settlement agreement, to be incorporated in a Final Judgment for a contract dispute.  Defendant has insufficient funds to make a lump payment of the Final Judgment and requires a payment plan that will take years.  Plaintiff is concerned with Defendant's ability to pay the judgment.  Is there any language that can be placed in a settlement agreement that will protect Plaintiff in the event Defendant files for bankrupty (non-dischargeable debt, secured creditor status, etc.)?

Thanks,

Mark