Whoomp! (Where’d It Go?): Disappearing Assets in Bankruptcy

August 8, 2021

by: Brian Walsh

In a recent post, I discussed three situations in which a debtor in bankruptcy might find itself dispossessed of assets that appeared to be property of the bankruptcy estate.  This article expands on that general idea and presents a compendium of situations in which creditors or circumstances may deprive a debtor of assets or their value.

  • Adverse possession. Adverse possession is technically an application of the statute of limitations, discussed more generally below. In re Colarusso, 295 B.R. 166, 173 (B.A.P. 1st Cir. 2003).  The expiration of the statutory period to recover possession, as extended by 11 U.S.C. § 108(a), may shift ownership and control of real property from the bankruptcy estate to others.  Reported decisions often arise in the context of a debtor’s efforts to sell property free and clear of the interest of the adverse possessor. See, e.g., In
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