New York homeowner could lose building after filing wrong type of bankruptcy
(The real deal) – There is an old saying that anyone who represents themselves in court has a fool for a client. A Bronx homeowner couple are learning this lesson the hard way.
If Alejandro and Rosa Quito had retained a lawyer before filing for bankruptcy in May, they might have been advised to pursue Chapter 11 instead of Chapter 7. Now an upcoming auction could see the couple lose their property at 540 Concord Avenue in the Bronx. Mott Haven piece.
It is not known if the Chapter 7 filing was an error.
“In a scenario like this, I’ve never seen a debtor file a Chapter 7, and they’ve done it professionally,” said Rosewood Realty Group bankruptcy and restructuring president. Greg Corbin, which markets the Iowa bankruptcy sale. “Someone in his position almost universally seeks protection under a Chapter 11 filing.”
While the word bankruptcy appears in both, chapter 7 and chapter 11 are not at all similar.
Chapter 11 bankruptcy is a common protection sought by homeowners facing foreclosures. Homeowners file for bankruptcy through their legal entities and can restructure their debt and delay pending foreclosures. It also gives borrowers more time to find another source of funding.
Often these cases end in the Westchester County Bankruptcy Judge Robert drain, which is known to be favorable to debtors.
The objective of Chapter 7, on the other hand, is liquidation. The court appoints a trustee who determines what to do with the assets of a debtor. The interests of the trustee and the debtor do not necessarily coincide. In some cases the two are almost contradictory.
This was the case with the Quitos. In August, trustee Howard Magaliff filed a motion to dismiss the Chapter 7 case. Magaliff said he was unable to reach debtors by phone or mail and they missed the deadline for file their financial statements, according to court documents.
That same month, lender Rapid Funding sued the Quitos and asked the judge to dismiss their bankruptcy request. The lender claimed he owed him $ 1.5 million, including interest, on a $ 1.47 million judgment against the Quitos in Westchester County in 2017.
After Rapid Funding’s lawsuit, the trustee withdrew the motion to dismiss the Chapter 7 case and filed a motion to manage the Quitos business.
Magaliff alleged that the Quitos did not disclose all of their assets, which included the ownership of two companies, properties at 31 Brandon Road and 29 Brandon Road in Yonkers, New York Taxi medallions and a 2005 Porsche Cayenne. The trustee asked the judge for the possibility of operating the Quitos businesses until they could be sold to pay the creditor.
Judge Drain approved the petition on September 7 and Magaliff hired MYC & Associates as the property manager of the Bronx property in Quitos, which consists of 32 residential units and 6 business units.
But the Quitos did not give up easily.
MYC & Associates has not been able to collect rent or manage the property because Alejandro Quito has told tenants not to cooperate or not to pay rent to the trustee, according to Magaliff and an affidavit from the property manager . Magaliff further alleged that many tenants were withholding rent because essential repairs had not been made.
The trustee said he plans to sell shares of a company that owns the Concord property at an auction on December 21. By taking over the shares, the successful bidder could take control of the property.
On October 21, the debtors finally hired a lawyer, Richard Feinsilver, more than five months after the Chapter 7 filing.
Perhaps the move was too late. The trustee brought in Corbin and Rosewood Realty Group to market the debtors’ shares in Mel Service Inc., the company that controls the Bronx property. Judge Drain approved the date of the auction in November. Documents from Rosewood Realty show the auction could start at $ 5.2 million.
When asked to comment, Feinsilver, Quitos’ lawyer, referred TRD to the court role. Alejandro Quito could not be reached immediately.