In re METROPOLITAN ADJUSTMENT BUREAU, a corporation, Metropolitan Adjustment Bureau, S.J., Inc., dba Metropolitan Adjustment Bureau, Debtors; L. Scott McCLANAHAN, Appellant, v. METROPOLITAN ADJUSTMENT BUREAU, a corporation, Metropolitan Adjustment Bureau, S.J., Inc. dba Metropolitan Adjustment Bureau, Appellees, 22 B.R. 67

Summary

The Director of the Department of Consumer Affairs appointed appellant, as conservator of the debtors and their collection agency businesses. The collection agencies then filed Chapter 11 petitions. Appellant challenged an order requiring him, as a custodian, to deliver all of the debtors' property to the trustee under 11 U.S.C.S. § 543(b)(1). The court held that the administration of the debtors' assets by a trustee under the Bankruptcy Code rather than a state appointed conservator did not interfere with the state's police and regulatory power. The court held that the turnover order was proper because the debtors held legal title and their possession interest was genuine for certain funds held in trust for the debtors' clients. There was no evidence the trial court abused its discretion in failing to permit the conservator to retain the funds per § 543(d).