Forms 1, 2, and 3
Questions and Answers - Set #4 (7/15/99)
Recording Abandonments on Form 1
85) In some jurisdictions, a trustee can abandon an asset as part of the § 341(a) meeting report. Would this be recorded on Form 1 as a formal abandonment "OA"?
86) A trustee consents to a relief from stay motion filed by a secured creditor. How should this be reflected on Form 1?
An order granting relief from stay does not remove property from the estate. Handbook 8-3. If the property may expose the estate to some type of liability (such as a large tax liability from a foreclosure sale), the trustee should abandon the property under § 554(a). If so abandoned, this would be reflected on Form 1, Column 4 with an "OA"; otherwise, "DA".
Recording Values in Columns 3 and 6 on Form 1
87) The Instructions for recording values in Column 6 on Form 1 appear to be inconsistent. See Forms - 6 in the Handbook. The first sentence of the second paragraph states: "For assets still being administered by the trustee, Column 6 should reflect the trustee's current best estimate of the gross value remaining to be collected or administered." Immediately below this sentence, at the first bullet, the Handbook states: "If the asset has not been liquidated, normally the value from Column 3 should be entered in Column 6."
However, on the Form 1 itself, Column 3 is described as the Estimated Net Value determined by the trustee and Column 6 is supposed to be the Gross Value of Remaining Assets. Therefore, it appears unlikely that the values in Columns 3 and 6 would be the same. Is this interpretation correct?
Yes. The Handbook will be updated to clarify what should be reported in Column 6. The bullets on Forms - 6 will be changed as follows:
88) A particular asset has a petition value of $25,000. It has an exemption claimed of $7,000, and a lien of $11,000. By the end of the 3rd reporting period (20 months later), the asset has a fair market value of $18,000. The Column 2 value would be $25,000. What values are recorded in Columns 3 and 6?
1st reporting period: Assuming the petition value of $25,000 was a reasonable estimate at the time of filing, the trustee would have initially reported $7,000 ($25,000-$7,000-$11,000, or less if other costs needed to be considered) in Column 3 and $25,000 in Column 6.
3rd reporting period: Based on the facts presented in the question, the trustee would report a value of $18,000 in Column 6 for the 3rd reporting period. The Column 3 value would still be $7,000, because it is not to be changed after the 2nd reporting period.