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APPELLANT COULD NOT PURSUE COUNTERCLAIMS AND CROSS-CLAIMS WHICH WERE NOT LISTED AS ASSETS IN APPELLANT’S BANKRUPTCY PETITION; THE CAUSES OF ACTION REMAIN VESTED IN THE BANKRUPTCY ESTATE.

The Third Department determined appellant was precluded from raising counterclaims and cross-claims in a matter which was stayed when appellant filed for bankruptcy. The causes of action were not listed as assets and therefore became the property of the bankruptcy estate:

 

It is fundamental that, “[u]pon the filing of a voluntary bankruptcy petition, all property which a debtor owns . . ., including a cause of action, vests in the bankruptcy estate” … . Such a cause of action “can only revert to the debtor to be pursued in his or her individual capacity if the claim is 'dealt with' in the bankruptcy, which necessitates it being listed as an asset [in the schedule of assets] and either abandoned by the bankruptcy trustee or administered by the bankruptcy court for the benefit of the creditors” … . Accordingly, “a debtor's failure to list a legal claim as an asset in his or her bankruptcy proceeding causes the claim to remain the property of the bankruptcy estate and precludes the debtor from pursuing the claim on his or her own behalf” … . Central Natl. Bank, Canajoharie v Scotty's Auto Sales, Inc., 2016 NY Slip Op 02876, 3rd Dept 4-14-16


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