Thank you for reporting about the Hollinet bankruptcy case.
However, some errors in the reports need to be corrected.
Bankruptcy is hard enough for the bench and bar to teach to the
public without needless complications from the press.
Dear Editor:
Thank you for reporting about the Hollinet bankruptcy case. However, some errors in the reports need to be corrected. Bankruptcy is hard enough for the bench and bar to teach to the public without needless complications from the press.
As we celebrate the 25th anniversary of the enactment of the Bankruptcy Code, your readers deserve accurate reports of bankruptcy cases. As we saw with California Canners and Growers, Churchill Nut, Corbin and other bankruptcies, assets are sold off from the bankruptcy estate for the benefit of creditors. Just so, Hollinet does not have a “new owner,” but rather, someone else now owns some of the corporation’s assets.
What we saw in Judge Morgan’s Courtroom, where Judge Weissbrodt held court last Thursday, was a properly conducted sale of part of the assets of the corporation, as authorized by the Bankruptcy Code and the Bankruptcy Rules of Procedure.
The stock of the corporation was not sold. Neither were leased assets, as the Trustee’s attorney told His Honor when Judge Weissbrodt questioned him. The corporation’s stock is still in the bankruptcy estate of the corporation’s shareholders in their Chapter 7 (liquidation).
The winner at the auction conducted by Judge Weissbrodt bought some of the corporation’s tangible (e.g., office equipment) and intangible assets (e.g., service contracts). If it had acquired the debtor corporation, then presumably it would also be liable for the debtor’s debts, and I don’t think that is what any of the parties intended. The net sales proceeds will be subsequently distributed by the Trustee to creditors pursuant to the priority scheme in the Bankruptcy Code.
Additionally, it is incorrect to report that the corporation recently filed its bankruptcy petition. Legally, it has been under the protection of the Bankruptcy Court since it filed its Chapter 11 (reorganization) petition, just as Aromas Water District and Orange County were in bankruptcy since filing Chapter 9 (municipal) bankruptcy petitions, and just as the City of Hollister or San Benito County would be in bankruptcy if either one of them sought relief under Chapter 9.
Family farmer bankruptcy (Chapter 12) and individual reorganization (Chapter 13) are versions of bankruptcy in with the debtors enjoy the protection of the Bankruptcy Court, and have the rights, duties and responsibilities found in Chapters 3, 5 and 7. While a debtor’s case may be converted from a reorganization chapter to liquidation under Chapter 7, the jurisdiction of the Bankruptcy Court is invoked upon the filing of the petition regardless of the chapter selected.
Insolvency and business failure are difficult enough cases just from what Congress and the higher courts have dealt us, so please assist the bench and bar with accurate reports of these cases.
Joe Thompson,
Tres Pinos
