- Lack of Equity: The Westport property, appraised at$1 million, was encumbered by a first mortgage of $5 million and the Sire Spirits lien of $6.9 million, leaving no equity.
- Nonessential Asset: Under11 U.S.C. § 541(b)(2), a debtor’s interest in property may be excluded from the bankruptcy estate if it is “prohibited by any applicable law.” Because fraudulent debts are non-dischargeable, Sire Spirits maintained that Green’s home should not be shielded.
- Homestead Exemption Limit: Connecticut law permits a homestead exemption of up to$75,000 for debtors whose misconduct was the root cause of the debt. Green’s admitted fraud disqualified him from claiming the full exemption of $250,000, reducing any protection.
- Public Policy: Allowing Green to keep the home undermines the policy that wrongdoers should not benefit from bankruptcy to escape accountability.
On May 28, 2024, Judge Azrack signed an order lifting the stay, explaining:
“Given that the debt owed to Sire Spirits is the direct result of debtor’s willful fraudulent acts, the Court finds that the property at 299 Main Street holds no equity for the estate and is not necessary for debtor’s reorganization. Accordingly, the stay is lifted, and Sire Spirits may proceed under Connecticut foreclosure law.”
Judge Azrack also waived the standard 14-day stay under Fed. R. Bankr. P. 4001(a)(3), enabling Sire Spirits to move forward immediately.
