The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.
Minnesota Bankruptcy Case:
Chrysler Financial v. Hecker (In re Hecker), 414 B.R. 499 (Bankr. D. Minn. 9/25/09) (Kressel, J.).
Lake Home not Owned by the Debtor is not his Homestead
Chrysler Financial objected to Hecker’s claimed Minnesota homestead exemption in a luxury home in Cross Lake, Minnesota. Hecker satisfied the statutory requirement of occupancy under Minn. Stat. § 510.01 but did not personally own it. The home was owned by an LLC he had created in order to shield the asset from his wife. Hecker owned a majority interest in the LLC and asserted an ownership interest through the doctrine of “reverse piercing the corporate veil” pursuant to Cargill, Inc. v. Hedge, 375 N.W.2d 477 (Minn. 1985). The court considered: the degree of identity between Hecker and the LLC; the extent to which the LLC is an alter ego of the debtor; whether others, such as creditors or other shareholders, would be harmed by a pierce; and whether it was unfair and unjust not to pierce the corporate veil. The court found that the limited liability companies were not Hecker’s alter egos, that creditors and shareholders would be harmed by the pierce, and that it would not be unfair or unjust not to pierce the veil. The court declined to pierce the veil to allow Hecker the homestead exemption because it found that Hecker had not met his burden.
Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.