Trustee Blog

Riverside Bankruptcy Chapter 7 Trustee Charles Daff

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Riverside Bankruptcy Chapter 7 Trustee Charles Daff

 

Charles Daff was a Santa Ana, CA Chapter 7 Trustee for many years. Mr. Daff knows all the Orange County bankruptcy practitioners and has been a debtor’s attorney for over 30 years. Mr. Daff knows all the tricks of the trade and has seen it all. Mr. Daff is especially vigilant when the debtor is operating a business during a Chapter 7.

I have heard him say more than once, “As soon as I leave the hearings today I am going to your business with a locksmith and we are pad-locking your business”.

For various reasons Chapter 7 Trustees do not want to operate a business in Chapter 7.

First and foremost, the Chapter 7 Trustee, like Mr. Daff, does not want to assume the personal liability for operating a business. If someone visits the shop and falls down when the business is in bankruptcy, the injured person could then sue the Chapter 7 trustee. Another reason is that if something happens to an employee of the business, then the employee could sue the Trustee. A third reason is that the Trustee would have to file a tax return for the business and also then be responsible for sales taxes generated. This is not to mention an environmental hazard that may be created by the business or an other potential liability.

Practice Pointer:

Be very careful when your client says he operates a business and he wants to file a Chapter 7 bankruptcy. The Chapter 7 Trustees, especially Riverside Bankruptcy Trustee Charles Daff, do not want to operate businesses. Mr. Daff will go the extra mile to make sure that he is not exposed to such liability. The other Riverside Chapter 7 Trustees will follow his lead.

Chapter 7 is a liquidation and is not for operating a business. If your client has a business, explore Chapter 13 or Chapter 11 as there are mechanisms in those Chapters to operate businesses.

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