488 B.R. 628
8th Cir. BAP2013Background
- Debtor filed Chapter 7 petition 1/19/2009; discharge entered April 2009.
- Trustee asserted postpetition IBM bonuses (Excellence Award $8,000; GDP $16,072) were property of the estate.
- Bonuses were discretionary and awarded postpetition; no prepetition right or enforceable claim as of petition date.
- Debtor failed to disclose eligibility/receipt of the bonuses on schedules; later communications with Trustee occurred.
- Bankruptcy court held bonuses were property of the estate and revoked discharge, and allowed avoidance/recovery and costs; on appeal, court reverses.
- Arguments focus on whether IBM bonuses were property of the estate and the accompanying consequences of 727(d)(2), 549, and 550; the court reverses the judgment as the bonuses were not estate property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are postpetition IBM bonuses property of the estate under § 541(a)? | Seaver argues bonuses were contingent prepetition and became property of the estate. | Klein-Swanson argues IBM discretion means no estate interest existed at petition. | Bonuses not property of the estate |
| Do §§ 541(a)(6) and (7) apply after ruling of non-estate property? | Seaver contends the bonuses are estate proceeds or postpetition acquired property. | Klein-Swanson asserts no estate interest existed to render §541(6)/(7) applicable. | §§541(a)(6)/(7) do not apply when bonuses were not estate property |
| Did the bankruptcy court err in revoking discharge under § 727(d)(2)? | Seaver seeks revocation based on concealment of bonus receipts. | Klein-Swanson argues there was no estate property to revoke discharge. | Discharge revocation reversed; not satisfied due to lack of estate property |
| Is there an avoidance/recovery under § 549/550 for the bonuses? | Seaver sought avoidance/recovery as a transfer of estate property. | Klein-Swanson argues there was no estate property to transfer. | §549/§550 not applicable; bonuses not estate property |
| Should costs be awarded under Rule 7054(b)? | Seaver prevailed below. | Klein-Swanson was the prevailing party on reversal. | Costs not awarded; reversal of prevailing party status |
Key Cases Cited
- In re Wick, 276 F.3d 412 (8th Cir. 2002) (stock option proceeds limited to prepetition services; distinction from postpetition rights)
- Vote (In re Vote), 276 F.3d 1024 (8th Cir. 2002) (no estate interest in postpetition payments where applicable law not in place at petition date)
- Segal v. Rochelle, 382 U.S. 375 (1986) (loss-carryback refund claim sufficiently rooted in pre-bankruptcy past; not always create estate rights)
- Booth v. Vaughan (In re Booth), 260 B.R. 281 (6th Cir. BAP 2001) (profit-sharing payments postpetition not necessarily estate property; distinguishable facts)