guarantees you get in the hot seat and here i am well good morning may i please the court my name danny crowder and i represent alan wisdom be a pawn here in the debtor below i'd like to reserve two minutes for rebuttal and and his duty here for his versatility is to this day well really his only duty is to the estate and to distribute assets in a way that's beneficial to everyone who's interested now those interested parties include the creditors and they include the debtor and in appropriate fiduciary duty to the debtor just like they do to creditors just like they do to the state and it's our position that the trustee had a so do share a duty to mr wisdom in this case that he failed to uphold and the way that he did that was failing to provide notice in the opportunity for a hearing before he liquidated mr wilson's policies now there's a clear statutory provision eleven u s c three six three b that requires he provide notice and a hearing in circumstances like this one which is i got you notice he received a letter from new york life now he received that letter on june thirteenth and if you look at the letter you'll see your honor new york life in the case is going to liquidate the policies on june twenty for that seven days later but three six three b doesn't require notice from someone else it requires notice from the trustee and the trustee under bankruptcy rule two thousand and two is required to provide twenty one days notice and including to that twenty one days notice he's required to provide the debtor and the creditors and the court a timeline for filing objections and if an objection is filed the court has a duty to hold the hearing and in this case the trustee provided notice to nobody and the fact that mr wisdom received a letter from new york life a week before his policies were liquidated is not the procedure that the bankruptcy court requires that the banks the rules require and the reason for that is as mr wisdom noted in his argument  the bankruptcy court when he received a letter from new york life that said we're going to liquidate your policies because the trustee told us to he thought if he did anything aside from passing that knowledge on to his attorneys and asking them to take action he would be obstructing the trustee that's what he really thought now that would have been a different situation if he had received a letter from the trustee that says i'm going to liquidate your policies in twenty one days you have twenty one days to object and if you object will go before the court and i can hear what you have to say on the issue you may have  maximum under subsection ten and rather than proceed under subsection nine and now the trustee getting th schedule looked at apparent at it apparently and said there's clearly a misunderstanding here of the law because the five thousand dollar limit as i understand  t goes to all the policies combined so as i understand it the trustee agreed that he would grant the five thousand dollars exemption as to three forty four but therefore there would not be any exemptions for the other fo exemptions which the trustee i which would be the total of the claimed exemptions and the trustee agreed to five thousand so  as i understand it filed with the bankruptcy court a determination on that  decision and it was under the bankruptcy rules did mr did the trustee have an obligation to let your  respect to the trustees decision there was a rule that said mr was them could object and respond within thirty days to the trustees decision is that correct that's correct and did it you know he did not ok so you invoked three sixty three which is the separate action that the trustee and followed which was to let quit date immediately the three forty four policy and so in order to come within three sixty three b you have to establish that that was an action that was the use or lease property you think you come in you can qualify for that absolutely on a there's a seventh circuit case right on point where they've held that the liquidation of life insurance counted under three six three b and brought in those requirements and they also held that those requirements were a fiduciary duty now i want to make sure that we're clear on the facts here because the bankruptcy court was not the trustee asked for liquidation on may twenty fourth not the same day he filed his objections mr wisdom had thirty days to object to those objections but by june twenty third the big policy's already gone and the bankruptcy court didn't approve or sustain those objections until june twenty ninth so the trustee who literally acted before mr wisdom had even an opportunity to object but that's not the bigger point the bigger point here is as you noted there was some confusion and if you look at mr wilson's first two schedule cs he notes on both of them that he wants his life insurance to be one hundred percent exempt and then he claimed word vision to do that on the second on the first one your honor he listed the total value of his life insurance loan value and he listed that exact same amount as the amount he wanted to be exempt and then like you said on the second schedule c he noted both on the docket and on the schedule c itself that the purpose was to make his policies one hundred percent exempt and he believed that applying six l five ten to each one of those policies would prevent liquidation because the corollary federal statute that congress enacted was also intended to prevent liquidation but the broader point here is that had the trustee simply provided that is like i said we are zero ninety seven and in the documentary itself it says life insurance amended to state one hundred percent exempt and again i just want to keep bringing it back to the notice and hearing issue sir i just want to understand what the posture this was that's not what the schedule c says as the value of going to these action is five thousand dollars you're talking about the third schedule c in march or i'm sorry  bankruptcy he was invoking idaho code exemptions intending to prevent liquidation of his policy and had the trustee simply provided the notice that he's statutorily required to provide mr wisdom could have raised an objection and said no i don't want you to liquidate my policies and there's a mechanism under the bankruptcy code you explain to me i did i don't understand the bankruptcy proceedings so that's why i'm asking these questions i'm trying to figure out with the trustee would have looked of the trustees sees a claim of five thousand dollars as seems to be redundant of the promise that he was claiming the entire policy so how would he understand that this was a continuation and the listing of five thousand dollar claim was in addition to or somehow tied to the earlier hundred percent claim share your honor he could have looked at the chapter seven trustee handbook which lays out the policy the process for accessing the loan value so that five thousand dollars was directed at the interest loan and dividends under the policy and that's the language used in the statute not cash surrender value so when mr wisdom claimed five thousand dollars he was intending to prevent liquidation and reserve five thousand dollars within the policy but again regardless of the operation of success five ten had he provided notice in a hearing and said i'm going to liquidate your policies mr was some kind of claim six zero five nine everyone agrees that would have protected his policies ok days ago the bankruptcy courts to a sponsor dismissed his claims against his attorneys and does he have a cause of action for malpractise is separate and apart from that i haven't looked into the statute of action that the dismissal was was based on the bankruptcy courts conclusion that then after stiction over the case so the case has simply been dismissed for that reason there's been no education of the underlying malpractise claim or the education policies in the view of my client and and we believe under the bankruptcy code that is exactly precisely what he was saying was that he would take the money if you think there's any ambiguity in the chain of events on exhibit c file and know you're no judge the bankruptcy the bankruptcy trustee can only go off of what the most recent amended version of the schedule is there and there is the obligation i don't understand that's what puzzled in this case the trustee you say would go only off of the schedule c and yet the trustee has an obligation which courting that handbook to look out whether or not he has a fiduciary duty is a job as trustee is not to run roughshod in the interest of creditors over legitimate interests of the  and what i've been troubled by is apparently the trustee never picked up the phone call mr wisdoms warrior and said i understand now that were present in the case and you know maybe one could understand but i find very curious that the trustee would decide and schedule see the amended schedule see where the debtor is on the face of it as i understand schedule c fifteen thousand dollars in exemptions decides on his own that that's not legal and therefore he's going to restrict the exemption is to five thousand that's a radical decision the notice where the objections as they were searched by the trustee yes it's true that under the under the record judge there's no on this record there is no evidence regarding phone calls made to made by my client rules that once those objections were made by the trustee that they had an obligation to respond to those objections the rules are crystal clear ok that was my question and i don't didn't hear your answer  what notice did he give to counsel that he had made that decision that he had looked at the schedule and decided that it was only worth by a thousand not the full fifteen and all i can say judge is the only notice were the objections of themselves and the objections ejections themselves to the exemptions by the trustee that is the notice there was i'm sorry there were objections filed by the trustee so he filed those and gave those objections copy of those objections to was in scouts on a timely basis yes see how the bankruptcy court ruled on his objections in our view that it's not that it's not germane to the issue before the court or wait a minute wait a minute i really don't understand this you talk about the burden on the trustee in turning the bankruptcy proceeding on its head the debtor exercising his right claimed the teen thousand dollars that may have been a conscious decision decide to rely on that and so the subsection nine but the journey gets no does that he's wrong so maybe it would cast him in a position of oh i better rethink what i want to do with that whole life policy maybe i should proceed under nine to protect that claim to five thousand dollars out o f the remaining policies you never get an opportunity to engage in that kind of tactical analysis and i just don't understand why he should not have had that opportunity there has to be a statutory basis for him to get it is as notice under three sixty three big and we disagree with that grinder stand you disagree but that's the legal basis  give the debtor additional time to amend yet again i noticed that the bankruptcy court never ruled on this if you if you look at and i have to sit down and find and find the page site but if you look at the transcript from the hearing on the t f r jackson filed by mr wisdom there was a discussion about the fact about exactly that issue and it was rather clear that the bankruptcy court because at that point time mr was it was saying give me the opportunity to amend and i should have been given an opportunity before the bankruptcy court said no you're not going to get that opportunity essential so if i can explain why in our view three liquidation of a policy is not any of those things it's not the sale of a policy it's not the use of a policy it's not the lease of a policy the press and the purpose of that notice provision is so that those involved in the process in particular creditors have the opportunity to  if an asset isn't being put to appropriate use or if for example a piece of property is being sold but but not enough money is being gained in the sale that's the reason for that notice provision it's not to in a situation like this where you have a the briefing not in the record not in the record but it's in it's in the briefing begging the question of why it's in the briefing and i understand the motivation to do it and mr wisdom clearly based on what's in the briefing and what he wanted including the record claims that he told his lawyers to make the appropriate claim of exemption under eleven six zero five nine and according to him and never got done so i think we just by saying this is essentially an adversarial and adversarial process the trustee is not obligated to look after the debtor to protect the debtor from his or her own bad decisions or the bad decisions of coun his job is to marshal assets reduce them to cash distribute them to creditors if the debtor doesn't like what's going on the debtor has ample opportunity to respond and jeff why that's i was focusing on the decision to liquidate the nodes ok thank you nothing ok now it's just this idea that of placing a burden on the trustee to provide notice with turn the bankruptcy rules on its head it's a statutory requirement that that the trustee provide notice that's not turning anything on its head that's a requirement and the idea that this doesn't apply to liquidation if you look your honour's at the trustee seven handbook page four dash fourteen the united states trustee says and i quote a trustee therefore must comply with the notice and hearing acquirements of section three six three b before liquidating an estate asset this was a liquidation of an estate asset the idea that a liquidation is different than a sale or use and so it doesn't come under this notice provision is just simply incorrect now our position is had mr wisdom received the notice he deserved he could have amended his schedule c and the bankruptcy court said after his policies were liquidated it's too late but it certainly wouldn't have been too late if his policies were still there and bankruptcy r one thousand nine a says specifically a debtor has the right to amend his schedule c at any time before the case is closed and it's our position that had mr was and received the notice he was entitled to he could have done that and he would still have life insurance today