Does it belong to the estate?

The Cantus filed for Chapter 11 bankruptcy, and after their case was converted to Chapter 7, sued their bankruptcy attorney for malpractice.  That suit settled for roughly $300,000, leading to a dispute between the Cantus and the Chapter 7 Trustee as to who should receive the proceeds.  The Fifth Circuit found that the estate suffered pre-conversion injury as a result of the alleged misconduct, including diversion of assets, time wasted with an unconfirmable Chapter 11 plan, and additional attorneys fees.  Therefore, the causes of action against the attorney “accrued prior to conversion and belong to the estate.”  Cantu v. Schmidt, No. 14-40597 (April 17, 2015).

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