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NDNY: Class-action claim was pre-petition asset

In re: Borchert (NDNY Chap. 7 Bk 04-65653 (Hon. Diane Davis; decision Jan. 8, 2010):

The issue in this case was whether a class-action settlement was a prepetition or postpetition asset. The debtor filed bankruptcy August 6, 2004, seven months after he started taking the drug Vioxx. Two months later he had a heart attack. The bankruptcy case was originally closed as a no-asset case, but was reopened with a trusty found out about a class-action settlement in Vioxx disputes. The most significant case on this issue was a Supreme Court decision Segal v. Rochelle, 382 U.S. 375, 380 (1966), which looked to what extent was the claim "rooted in the prebankruptcy past". The debtor's position was that the heart attack was postpetition; the trustee noted that a majority of the time the debtor is used to the drug was pre-petition. The court sided with the trustee as 7/10th of the time. The debtor took the drug was prepetition.

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