out Descriptive Words and Phrases
Your firm has been asked to represent O.J.
Simpson in an action in a federal bankruptcy court in California in
which creditors are attempting to seize assets of his profit-sharing plan.
O.J. Simpson had set up a corporation (which sponsored a profit-sharing plan)
for his commercial endorsements. There is approximately four million
dollars in the plan. The senior partner at your firm informs you that
the federal statute, ERISA, generally protects profit-sharing plans
from the reach of creditors. However, because O.J. Simpson was the
sole shareholder of his corporation, the plan is not deemed to have any employees,
and consequently does not fall under the exemption provisions (i.e., it is
not exempt from creditors under ERISA).
You have been asked to find out if, after 1990, any Federal bankruptcy court (or appellate court) in California
has applied exemptions under California law (Federal bankruptcy law allows
debtors to elect to use state exemptions under 11 U.S.C. 522(b)) to successfully
block creditors from reaching the assets of a profit-sharing plan (and specifically,
a “single-person” plan which didn't fall under ERISA). You are reminded
to search the Courts of Appeal for the Ninth Circuit, as bankruptcy matters
are often appealed to the Federal Courts of Appeal and District Court.