In re Downey

261 B.R. 124 (2001)

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In re Downey

United States Bankruptcy Court for the District of New Jersey
261 B.R. 124 (2001)

Facts

Joseph and Mary Downey (debtors) filed for Chapter 7 bankruptcy. Lewis Golden was a taxi driver whom Joseph employed. Golden was injured while on the job and was issued a $38,225 workers’-compensation award against Joseph by the director of the Division of Workers’ Compensation (director). In connection with the award, the director issued findings of fact, conclusions of law, and a judgment. New Jersey filed the award, findings, conclusions, and judgment with the superior court. Joseph, who did not carry workers’-compensation insurance, defaulted on the judgment. The judgment was never levied upon, and Golden never received payment on the judgment. Seeking to sell property that the Downeys owned in New Jersey, the bankruptcy trustee filed an adversary proceeding against Golden, New Jersey, and others, seeking to establish the extent, validity, and priority of any liens. Only Golden and New Jersey responded to the trustee’s suit. The trustee contended that the workers’-compensation lien was avoidable pursuant to Bankruptcy Code (code) § 544(a)(1) because it was an unlevied-upon judicial lien. New Jersey responded that the workers’-compensation lien was an unavoidable statutory lien under code § 545.

Rule of Law

Issue

Holding and Reasoning (Lyons, J.)

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