August 8, 2011
By: Brenna Lemieux
Two years after the collapse of fraudulent New Hampshire mortgage company Financial Resources Mortgage (FRM), the company’s bankruptcy case still isn't settled. According to reports from Fosters.com, one of the "most complicated bankruptcies in New Hampshire history" is causing trouble for its trustee and the people who lost money to FRM's schemes.
The problems boil down to how the court defines the defunct company's bankruptcy estate:
The bankruptcy court's requests for funds from those who already lost money to FRM investments have understandably ruffled feathers. But the court legally has a right to distribute funds from the bankruptcy estate among creditors.
In most business bankruptcy liquidations, the bankruptcy estate consists of any money the business has in its coffers plus any money the trustee can raise by selling off equipment, leases, merchandise or parts of the company itself.
In this situation, where the business in question was never legitimate (in that it never actually turned a profit, just operated a complex Ponzi scheme), figuring what's part of the estate and what isn't has proven much more difficult.