Chapter Fourteen. Property of the
Estate and Turnover Complaints
 After reading this chapter, you will be able to:
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Define “property of the estate”
Identify those assets which are not property of
the estate and therefore not subject to the
trustee’s administration
Describe the trustee’s various rights to recover
estate property, the turnover rights and the
avoiding powers
Property of the Estate
 All property in which the debtor has a legal or
equitable interest at the commencement of a
case is property of the estate.
 During the course of the case, the trustee
must “administer” all the property.
 The figure (next slide) illustrates a typical
consumer no-asset Chapter 7 where all
property is either collateral for one or more
secured creditors, exempt, or abandoned by
the trustee as burdensome or of
inconsequential value to the estate.
Avoiding Powers
 The ability of a trustee to set aside certain
pre- or postfiling transactions that might
otherwise be valid under nonbankruptcy law.
 Preferences, fraudulent transfers, and the
ability to set aside unauthorized postpetition
transfers are the most common of the
trustee’s avoiding powers.
Property of the Estate
Ipso Facto Clause
 A clause in a contract defining insolvency or a
bankruptcy filing as an act of default.
 These clauses generally are not enforceable
in bankruptcy proceedings.
Spendthrift Trust
 A trust containing a clause precluding
invasion of the trust assets to satisfy the
debts of a beneficiary.
Included as Property of the Estate
 Community property
 Property recovered by the trustee
 Property acquired within 180 days of filing by
bequest, inheritance, or devise, domestic
property settlement, life insurance proceeds
 Proceeds, product, or offspring from property
of the estate
 Property subject to an ipso facto clause
Excluded as Property of the Estate
 Personal postfiling earnings of an individual
Chapter 7 or 11 debtor
 Powers exercisable for the benefit of another
(e.g. power or attorney)
 Interest in an expired nonresidential lease
 Principal assets of a spendthrift trust
 Property in which the debtor holds bare legal
title
Turnover
 The concept of turnover is simple.
 Someone has property of the estate: It may
be the debtor, it may be a third party, it could
be anyone.
 If the third party refuses to voluntarily turn the
property over to the trustee, the court can
order the third party to turn it over.