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New York Court Finds that Attorney’s Fee Structured Annuity Not Available to Creditors in Bankruptcy
The ruling
In re John J. Lynch, Debtor, 321 B.R. 114 (S.D.N.Y., Feb. 10, 2005) found that that the CNA annuity from an attorney fee structure, which attorney.John Lynch accepted in settling a 2003 case, was not available to creditors in bankruptcy.Lynch filed for bankruptcy in 2004.
When the Bankruptcy Trustee tried to use the annuity to pay Mr. Lynch’s creditors, Mr. Lynch resisted, arguing that to do so would pose a hardship on him.
Applying New York law, the U.S. Bankruptcy Court sided with Mr. Lynch and ruled that the annuity was exempt from the reach of creditors. A similar conclusion under Louisiana law was reached in Canfield v. Orso, 283 F.3d 686(5th Cir. 2002). In that case, the Court of Appeals for the Fifth Circuit also held that an attorney fee structure was beyond the reach of the attorney ’s creditors.
These rulings are helpful but readers should realize that each state has its own bankruptcy exemptions that might be applied to reach a different result.
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