Bankruptcy clouds judgment

by Baylen Linnekin on September 22, 2008

Last year a Connecticut court convicted Illinois contractor Mark R. Koch of larceny and ordered him to repay nearly $40,000 given him by Connecticut businessman Mark Poveromo to construct a building to house the latter’s pet food shop. So why did a Missouri bankruptcy judge order Poveromo to pay the money back to Koch? (John Christoffersen, AP, “Bankruptcy judge orders victim to pay back thief”, Sept. 22).

{ 4 comments }

1 Bill Poser 09.22.08 at 6:47 pm

I don’t see how the Missouri court has jurisdiction over a resident of Connecticut. Also, wasn’t it the duty of Koch or his lawyer to notify the Connecticut court of the bankruptcy petition?

2 Todd Rogers 09.23.08 at 1:08 pm

Bankruptcy courts have federal jurisdiction.

3 Walter Olson 09.23.08 at 7:10 pm

I think the article may provide you with one possible answer: “The judge said Poveromo intentionally violated the bankruptcy stay on claims by causing Koch’s arrest to collect on the debt.” While the dictates of bankruptcy law may sometimes come across as arbitrary, violating them is a good way to get your wrist slapped, whatever the equity of your underlying claim. And while I don’t have any definite opinion on whether criminally adjudicated liabilities should be made senior to other debt claims, I would want to learn a lot more before jumping to that conclusion based on a single fact pattern, especially if such a rule were to encourage creditors to invoke criminal process against debtors for tactical advantage.

4 Bill Poser 09.25.08 at 2:56 pm

Okay, I see now that it was a federal bankruptcy court, not a Missouri state court. But if the notice was sent to Proveramo’s old address, he wasn’t actually notified. And even if he had been notified, wouldn’t the effect be simply to stay execution of the award made by the criminal court? Surely a bankruptcy action doesn’t prevent a creditor from cooperating in a criminal prosecution.

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