Summary

Trustees in bankruptcy can often come up against challenges in dealing with obstructive bankrupts. A bankrupt might ignore communications and requests for interview, fail to disclose information about their assets, or provide partial cooperation which fails to offer any substantive assistance.

The District Court for the Northern District of Ohio recently clarified the applicable requirements for post-petition severance payments to a debtor’s former officers. In the case of In re: Forum Health, et al.1, the debtor sought authorization from the Court to make a severance payment in the amount of $18,126.00 to its former Chief Executive Officer. The Trustee objected, asserting that the debtor’s motion was not based on a program that was generally applicable to all full-time employees as required by 11 U.S.C. § 503(c)(2)(A).