470 B.R. 638
Bankr. M.D. Ga.2012Background
- On Feb. 9, 2012, Rogers filed an involuntary Chapter 7 petition against Fachini seeking relief based on a $10 million claim.
- Rogers attached a UCC-3 amendment to a financing statement and three Treasury-directed documents demanding payment and a chargeback from a U.S. Treasury trust account.
- The Treasury documents reference HJR-192 and describe a bill of exchange, a chargeback, and a related correspondence to the Secretary of the Treasury.
- Rogers filed the UCC-3 with the Crisp County, Georgia Clerk, asserting a collateral change and partial release related to the transaction involving the debt to Fachini.
- The Court distinguishes the purported UCC Contract Trust Account as fictitious and holds the petition invalid on its face because the documents do not create a valid claim under 11 U.S.C. § 101(5).
- The Court dismisses the case as the petition does not meet the requirements of § 303(b) to commence an involuntary petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the involuntary petition was properly commenced | Rogers argues he holds a noncontingent $10M claim against Fachini | Fachini argues the claim is invalid and petition improper | Petition dismissed; no valid claim exists |
| Whether the UCC documents create a valid right to payment | Rogers maintains the UCC-3 and related instruments establish a debt | Fachini contends the instruments are worthless and do not create a claim | Instruments are fictitious; no valid claim under §101(5) |
Key Cases Cited
- McElroy v. Chase Manhattan Mortg. Corp., 134 Cal.App.4th 388 (Cal.App.4 Dist. 2005) (bills of exchange against Treasury deemed worthless)
- Bryant v. Washington Mutual Bank, 524 F.Supp.2d 753 (W.D. Va. 2007) (Bills of exchange not legitimate negotiable instruments)
- Trusted Net Media Holdings, LLC v. The Morrison Agency, Inc. (In re Trusted Net Media Holdings, LLC), 550 F.3d 1035 (11th Cir. 2008) ( sua sponte review of §303(b) not required; but may be in exceptional circumstances)