Court Order Sanctioning Attorneys on Objections to Claims

Chapter 13 attorneys must understand this case.

Judge Olson is one of the two bankruptcy judges based in Fort Lauderdale, FL. In a consolidated case, with lead case name and number In re MacFarland, Case No. 11-13345, Judge Olson sanctioned several chapter 13 bankruptcy attorneys suspending them from practicing in bankruptcy court from 30-60 days. The court concluded that attorneys acted either in bad faith or with concerted conduct amounting to fraud on creditors and the court by engaging in a pattern of filing baseless objections to claims.

Attorneys here and across the country have attempted to help their clients by objecting to claims to help meet chapter 13 jurisdictional limits or to reduce the amount debtors would have to pay during a chapter 13 plan to meet a “liquidation” test. Without advance warning, Judge Olson entered Orders to Show Cause which led to the order. According to the court, “The orders to show cause entered in these cases have a singular aim-to address what was become a pervasive problem within this district stemming from wholesale unjustified claim objections, and to stop that practice.” The sanctions were expressly imposed not just as sanctions against the “offending attorney”, but also to deter other attorneys from taking the risk of engaging in this conduct.

In other words, the Court concluded: don’t object to claims unless you really have what the court considers a basis to object.

This is a warning to any Fort Lauderdale chapter 13 attorney

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