Lawrence v. Kentucky, No. 14-5197 (6th Cir. 2015)
Annotate this CaseUnder a 2007 “Purchase Agreement – Public Sale” Eagle agreed to pay $4,812,874.65 to purchase Louisville property owned by the Kentucky Transportation Cabinet. Eagle paid a good faith deposit of $962,574.93 to “KY STATE TREASURER.” The Agreement was assigned by Eagle to Shelbyville Road Shoppes, the debtor. Two days before the expiration of an 18-month extension to close the transaction, the debtor filed a voluntary Chapter 7 petition. The bankruptcy trustee unsuccessfully sought return of the good faith deposit from the Cabinet. The bankruptcy court found that neither the Agreement nor state law granted the debtor the right to have the deposit returned. The district court affirmed, finding: that the debtor had no right to possess or use the deposit prior to filing for relief, so the trustee had no right to request turnover under section 542; that the deposit was not held in escrow; that the transaction was not a contract for deed; and that the debtor did not retain an equitable right to the deposit as a vendee. The Sixth Circuit affirmed. The debtor did not possess either a legal or an equitable property interest in the deposit at the time of the Chapter 7 petition.
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