Tales from Tennessee Lawyers

16. Bankruptcy

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16 BANKRUPTCY The New American Heritage Dictionary defines “bankrupt” as “an individual or corporate debtor, who, upon voluntary petition, . . . is judged legally insolvent and whose remaining property is therefore administered for the creditors or distributed among them in accordance with the law. . . .” The three stories in this category, all told by the same attorney, fit nicely within this definition. The first focuses on a goat brokerage company whose owner paid for nonbusiness, personal items with checks written against the business account. The lawyer’s advice on how to handle monetary matters worked things out successfully. The second story begins by describing the steps taken to collect money owed to a bankrupt hospital and ends by looking at the deeds of a young man. The third account deals with a bankruptcy trustee account working with a family estate. All these are very serious accounts, although humor enters the picture at the conclusion of the final story. 230. “STUMPED BY THE OBVIOUS” As every lawyer knows, there is no better way to see what is happening in another lawyer’s case than to attend the motion docket. One of the things I have to do as bankruptcy trustee every month is go to Cookeville for the motion docket. For several months, I watched hearings in the matter of D & R Livestock, Inc., Sparta, Tennessee, a goat brokering company. Donnie Richards ran it, and it seemed as if he could not do anything right. Creditors were pouncing on him every month about some- 200 Tales from Tennessee Lawyers thing he had done, or not done. They pleaded with the judge to make D & R follow appropriate bankruptcy procedure. After three or four months of Donnie Richards almost being tossed to the wolves, I walked into court one morning to find D & R Livestock first on the docket. Donnie Richards rose one more time to try to explain to the court how everything he was doing was just and right. He attempted to convince the court creditors were losing patience for no reason. The judge looked around, pointed to me, and said, “Mr. McLemore, I’m appointing you as trustee of D & R Livestock”; then with emphasis he said, “Straighten this mess out!” At least that temporarily blocked all the attacks on D & R. “I’m continuing everything that’s on the docket for today until Mr. McLemore can familiarize himself with this case,” the judge added and moved directly to the next matter. I was a young lawyer, and this was an opportunity to be a trustee in a real Chapter 11 reorganization. As soon as court was over, I drove to Sparta to see Donnie Richards and to take control of the goat brokering operation. I didn’t really know what to do. I knew nothing about buying and selling goats. Before we left the court, I had told Donnie to be in his office shortly after noon, that I would meet him there, and that he had better be on time. He was. I stood on one side of his desk. Donnie sat on the other. “I want to see your books and records,” I began. That seemed like a good place to start. Donnie chewed a little on his tobacco and spit. “All right,” he said, pulling out a desk drawer and placing two checkbooks on the desktop . I took the first one—a great big daddy checkbook with three checks on the right-hand side and the stubs of checks already written to the left. I looked through the stubs. There I found the stubs recording the purchase of fifty goats; another for thirty-five goats; another for feed; and others for electricity, Kroger, a contribution to the local Catholic church, and his wife’s car payment. I had very little experience at what I was doing, and I certainly was not an accountant, but I knew Donnie was not supposed to buy groceries and give to the church out of the business account. I picked up the other checkbook, and check 101 was still in it, never written. “Donnie, explain these books to me,” I said, sincerely interested in the ridiculous answer I knew was coming. “This one is my business checkbook,” Donnie said, pointing to the first book. “This one is my personal checkbook,” he said, pointing to the checkbook that had never been used. BANKRUPTCY 201 “Why are personal checks being written out of your business checkbook...