Facts:
Since 1983 debtor ran a legal brothel. On July 30, 1997, debtor
filed under Chapter 11. On June 2, 1998, the county revoked the
debtor’s brothel license for associating with the Hell’s Angels.
Bankruptcy court denied the request to undo the revocation of the
license and debtor appealed.
Issue:
Under §362 was the debtor entitled to a reversal of the revocation
of his license and damages? Was the license property or personal
privilege?
Holding:
Brothel license is more like a liquor license than a license to
practice law.
Analysis:
§541 creates the estate w/ all property of the debtor. While state
law creates the right, federal law determines whether it is property
for purposes of the federal bankruptcy laws, tax laws, etc. Similar
licenses issued by state agencies are property for bankruptcy
purposes. Most courts hold that liquor licenses are property under
bankruptcy laws. Licenses to operate a track or casino are property
of the estate. Some courts consider licenses to sell lottery
tickets, airport slips, and driver’s licenses as not property.
Attorney license to practice is not property.
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