Saturday, December 1, 2012

In re Mitchell case brief

 In re Mitchell (Bankr. WD Tex. 1989)
Bankruptcy Law
Facts: Bank objects to the claimed exemption of the debtor for a 6.18 carat ring worn regularly. Bank argues for a FMV standard of valuation, and the debtor argues for a distress or liquidation value, because the reality is that if it is not retained by the debtor it will only realize for the estate what the trustee can get for it, which is liquidation price. Ring was purchased for their 25th anniversary for $30,000. It was deemed “clothing reasonably necessary for the family.” Bank uses “estate value” which is the jewelry company attaining price of $42k and a FMV of $36k. Debtor’s expert said he’d offer no more than $7,800 for it.
Issue: What is the proper standard for valuation of property claimed as exempt?
Holding: FMV must incorporate an appropriate market with a reasonable time frame.
Analysis: Federal and state exemption use the FMV standard. Walsh doesn’t use liquidation value per se. It speaks of using an applicable market available to the trustee. The court adopts the fair market values with an exposure of the item to the appropriate market for an appropriate time. The ring is valued at $36k.
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