Date of Decision:
July 24, 2009
Whether certain insurance proceeds being held in constructive trust pursuant to a state court order were property of Debtors' bankruptcy estate?
No. The subject insurance policy did not name Debtors as insureds, and nothing in the policy suggested Debtors were entitled to receive the proceeds. Consequently, neither the policy nor the proceeds were property of Debtors' bankruptcy estate. Moreover, even if Debtors had been named as insureds and would otherwise have been entitled to the proceeds, the constructive trust imposed on the proceeds by the state court would have had the effect of excluding the proceeds from Debtors' bankruptcy estate.
Full Bankruptcy Court Decision: