BLT: June 2012



Business & Corporate

What Just Happened? How Asset Forfeiture Affects Bankruptcy Distributions

This article examines how the fundamentals of the compensatory regime under bankruptcy law are affected by federal asset forfeiture law. Although this article focuses on the bankruptcy system, similar competition for assets occurs in the context of receivership proceedings (either under state or federal law, such as those commenced by the SEC or the CFTC), or statutory liquidations under the Securities Investor Protection Act.

Business & Corporate

What Do You Do When the Feds Come For Your Assets? Third-Party Claims in Forfeiture Proceedings

This article discusses competing claims to forfeited assets and the range of potential outcomes. The matter of third-party claims to forfeited assets has become an issue of great significance in the administration of assets in a fraudulent scheme, particularly where a parallel bankruptcy or receivership action is pending regarding the same fraud and the same assets. Conflicts arise when the government enforces the criminal and drug control laws containing provisions for asset forfeiture, while bankruptcy trustees and regulatory receivers seek to fulfill their mandate by marshaling and liquidating assets for the benefit of the creditors of the estate.

Business & Corporate

Coordination Agreements in Parallel Forfeiture and Bankruptcy Proceedings

When a Ponzi scheme collapses, the result is often two or three parallel proceedings--a forfeiture action filed by the Department of Justice, a civil securities enforcement action filed by the Securities and Exchange Commission, and a bankruptcy proceeding. This article explores “coordination agreements” between the Department of Justice and and bankruptcy trustees. Coordination agreements divide and assign the responsibilities for recovering and distributing assets.