George Hathaway and G & K Bakery, Inc.
Bankruptcy – Western District of Pennsylvania
Situation: At the time Joseph Bernstein was appointed Operating Chapter 11 Trustee, these cases had been operated by the Debtors-in-Possession for sixteen months. The Debtors-in-Possession had incurred additional post-petition tax debt.
Hathaway was also engaged in contested litigation with Carol Hathaway, his estranged second wife, who held record title as co-owner of the business real estate and equipment. Additionally, Carol Hathaway held sole title to the liquor license which was worth $40,000.00 at the time it was transferred to her.
Action: The Trustee, Joseph Bernstein and Bernstein and Bernstein, P.C. commenced an adversary action to recapture those assets. With court approval, the matter was compromised and the bankruptcy estate obtained sole ownership of the business real estate, the business equipment and the liquor license.
The trustee detected a defect in the purchase money mortgage for the business real estate which claimed balance in excess of $130,000.00. The attorneys negotiated a full and complete settlement of the debt for $60,000.00, which the trustee promptly paid.
The attorneys of Bernstein and Bernstein, P.C. handled the sale of the liquor license; recovered funds which post-petition had been wrongfully paid to pre-petition creditors; resolved problems concerning credit; through litigation and negotiation, obtained substantial reduction in the rate being charged for unemployment compensation taxes; handled negotiations and renewal of leases for those business premises which were not owned by the bankrupt estate; arranged for striking of improper post-petition liens; and provided the ordinary and customary legal services of an attorney to a business operator.
Additionally, the attorneys of Bernstein and Bernstein, P.C., negotiated and settled problems concerning the rear-abutting property which involved encroachment problems and downspout and gutter discharge to the debtor’s real estate.
Joseph Bernstein successfully counseled and rehabilitated both the individual debtor and the debtor corporation, and thereby provided a plan of reorganization which will pay all claimants 100% over a six year period.