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BNPC Amicus Brief Gets National Attention

An amicus brief authored in part by Barron & Newburger attorney Stephen W. Sather has received national attention.    The brief filed by Mr. Sather, Prof. Chris Bradley, Hon. Leif M. Clark (ret.) and Michael Baumer, urged the full Fifth Circuit to reconsider the opinion in Hawk v. Engelhart.  The Hawk decision had found that property claimed as exempt by a debtor could lose its exempt status if it changed form during the course of a bankruptcy proceeding.

On August 10, 2017, Bill Rochelle, editor at large for the American Bankruptcy Institute discussed the case in his daily column.   He wrote:

In an amicus brief supporting the debtor, a professor, a former judge, and two lawyers argue that Hawk and Frost use an “extratextual contrivance” to “revest property in the estate” that had been taken out of the estate when there was no timely objection to the claimed exemption.

The amici argue that Hawk and Frost ultimately will mean that no exemption will become final if the property is sold after bankruptcy. Applying the rule from those cases, they say that an automobile or life insurance policy, despite being exempted, can be glommed by a trustee if they are sold after bankruptcy. Indeed, they say, the proceeds cannot be reinvested in property of the same type because Texas law does not provide a grace period for reinvestment like it does for IRAs and homesteads.

Contending there is a split of circuits, the amici say they are “aware of no other circuits allowing a trustee to pursue an exempt asset after the objection period has run.”

According to Mr. Sather, “Hawk presents an important issue because the Fifth Circuit has gradually moved away from granting finality to exemptions.    This is one of the rare cases where the court as a whole should reconsider a prior decision and I am glad to have been a part of this effort along with my co-authors.”