Thursday, November 29, 2012

In re Burgess case brief (licenses in bankruptcy)

In re Burgess (Bankr. D. Nev. 1999)   -->
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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