Bankruptcy Litigation / Post Judgment Proceedings

Bankruptcy Litigation:

The lawyers comprising PJJ’s Bankruptcy Litigation/Post Judgment Proceedings team are litigators, and as such, have substantial trial experience in nearly all types of creditors’ rights and other commercial litigation.  PJJ takes a broad view of collection and has assisted its clients in fraudulent conveyance actions, recovering property for the estate, securing injunctions, obtaining declaratory relief, determining the priority of liens and seeking relief from the automatic stay.

Our attorneys have successfully pursued insurance agencies for coverage of debtor’s losses, represented clients seeking to remove claims and assets from the automatic stay of the Bankruptcy Code and prosecuted/defended creditors utilizing the theory of fraudulent transfers under the Bankruptcy Code and State fraudulent transfer laws.

Representative Client Services:

Adversary Proceedings

Lawsuits filed within a bankruptcy case to, among other things, recover property for the estate, secure injunctions and obtain declaratory relief, and determine the priority of liens (Fed.Rule Bankr.Proc. 7001)

  • Represented debtor’s shareholders in an adversary proceeding objecting to Trustee’s Motion to Settle claims against federal agencies.
Insurance Recovery:
  • Farmland: Pursued coverage for losses resulting from a fire that destroyed one of the debtor’s manufacturing plants
  • Bridge: Evaluated and assessed a debtor’s claim for business interruption coverage for losses resulting from the 911 terrorist attacks
  • Bridge: Pursued coverage for alleged liability relating to the murder of debtor’s employee in a foreign country

Relief from Stay to pursue claims and asset protection (11 U.S.C. §362).

  • Representation of clients seeking to remove claims and assets from the automatic stay of the Bankruptcy Code.
Fraudulent Transfers: Defense of creditor under 11 U.S.C. §548 and 740 ILCS 160/5 claims.
  • Successfully defended financing subsidiary of Fortune 50 multinational technology and consulting corporation in a bankruptcy adversary proceeding, where trustee sought the recovery of approximately $4.7 million in lease payments on the theory of fraudulent transfers under the Bankruptcy Code and State fraudulent transfer law.

Fraudulent Transfers

  • Prosecution and Defense
  • State and Federal
  • Claims involving Ponzi Schemes
    • In a bankruptcy adversary proceeding, the Plan Administrator relied on the "Ponzi scheme presumption" to establish that the transfers to the Defendant were made with actual intent to defraud debtor's other creditor instead of alleging any badges of fraud.  The court agreed with our argument that the alleged claims were not plausible because the plaintiff failed to plead plausible facts to demonstrate the Defendant's liability for the misconduct alleged and granted our motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted or to plead fraud with the particularity required by Rule 9(b). 

Post-Judgment Proceedings:

PJJ also represents commercial financial institutional clients to coordinate judgment recovery.  Our team has substantial experience in post-litigation collection of large judgments.

Representative Client Services:


Priority of Claims: Article 9 (810 ILCS 5/9-101, et seq.)

  • Judgment creditor had obtained a final judgment of more than $7 million against judgment debtor in North Carolina, from which judgment debtor timely appealed but failed to post the bond necessary to stay execution of the judgment.  As a result, PJJ registered the judgment in Illinois and served third-party citation respondent (one of the country's largest financial institutions) and judgment debtor with citations to discover assets.  Third-party citation respondent and judgment debtor asserted that third-party citation respondent had a prior perfected security interest in all judgment debtors' assets, under Article 9, pursuant to its UCC registration and a security agreement.  We successfully argued that the third-party citation respondent failed to establish that its security interest had priority over our judgment lien, as the priority claim ran afoul of the terms of the credit agreement and third-party citation respondent had not enforced its rights in the collateral; its UCC registration did not create a lien in all debtor's assets such as real estate; third-party citation respondent failed to exert, and therefore forfeited, its right to set off; and, in any event, we had a right to reach any of judgment debtor's equity in the collateral and to use the citation proceedings to discover more about judgment debtor's identity, relationship with co-borrowers to the security agreement, and assets.

Registration of Foreign Judgments

  • Represented judgment creditor who had obtained a final judgment against judgment debtor in another state.  As a result, judgment creditor registered its judgment in Illinois and served third-party citation respondent with a citation to discover judgment debtor's assets.  Judgment creditor subsequently served another citation to discover assets on judgment debtor itself. 


State to Federal 

  • In an action where plaintiffs alleged intentional interference with economic relations, defamation, conspiracy, and antitrust claims, defendants removed the case based on complete preemption on the ground that ERISA preempted all of the state law claims.  The court denied stating that because the plaintiffs were not suing as assignees or participants of an ERISA plan, or to enforce a remedy under ERISA, ERISA complete preemption did not apply and the matter was remanded.  Defendants subsequently removed the matter again based on diversity jurisdiction.  Defendants argued that grounds existed requiring the dismissal of the non-diverse defendant under the doctrine of fraudulent joinder.  As a result, diversity jurisdiction would exist.  
  • The judgment debtor removed a judgment enforcement action based on diversity jurisdiction.  The district court declined to remand and, less than three months later, dismissed the case in its entirety.  The Seventh Circuit reversed the district court's dismissal order and remanded the case with instructions to send it back to state court.  The Seventh Circuit held that our client raised a timely and sound objection to removal, concluding that: (1) absent the presence of third-party citation respondent, federal subject matter jurisdiction would be lacking over the supplemental proceedings between judgment debtor and judgment creditor; and (2) because of the presence of third-party citation respondent, an Illinois citizen, removal was improper under the forum-defendant rule.