Bankruptcy, Probate, and Invalid Wills, Oh My!

In the case of Brown v. Sommers, No. 15-20034 (5th Cir. 2015), we look at how probate and bankruptcy interact. Michael Brown was a successful surgeon, accumulating a great deal of money for many years.  Unfortunately, he was not as successful in keeping his marriage together, and ended up moving from Texas to Florida while acrimonious divorce and child custody proceedings were pending.  In Florida, he filed a chapter 11 “with assets” bankruptcy.  He did not disclose what he should, however, and his case was dismissed for “significant misconduct,” with the court taking the unusual step of assigning a Chief Restructuring Officer (“CRO”) outside of the bankruptcy to operate Dr. Brown’s business and oversee his personal affairs.  Dr. Brown did not cooperate with the CRO, and the bankruptcy was reinstated and transferred to Texas (where most of the assets were held).

Dr. Brown died shortly thereafter.  He had numerous wills, but none of them appeared to be valid.  And since the divorce was not final, it was dismissed, leaving his wife as his lawful intestacy heir.  His chapter 11 was converted into a “sell everything” chapter 7 liquidation.

The rest of the case (here) deals with the wife’s efforts to get the bankruptcy court to pay several probate allowances from Dr. Brown’s estate: ultimately the court declined to give her the money, though she is entitled to any money left over after creditors are paid.  Can Wife still go through the Texas probate court to get her probate claims recognized?  Probably.  Will the Bankruptcy court then give her claims priority?  Maybe.  Will it cost a lot in legal fees?  Yep.

Let’s review: there is a stereotype that some surgeons believe they know everything and can do no wrong, sometimes called a God complex.  Dr. Brown thought he knew better than the bankruptcy court, better than his wife, better than the court assigned CRO, and better than any estate planning attorney (since he apparently drafted his own defective wills).  At the end of the day, he was wrong several times over.  He didn’t get a bankruptcy discharge, he didn’t get a divorce, he didn’t get control of his business or finances back, and he didn’t have his final wishes acknowledged or enforced by the probate court.  If only he could go back in time, perhaps he could fix it, but it appears he did not have a Delorean among his many assets.  Sorry, Doc Brown.

Leave a Reply