Bankruptcy probably not an option for Colorado marijuana shops

Posted on November 11, 2014. Filed under: Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Consumer Alerts, Consumer Bankruptcy Attorney | Tags: , , |

marijuana

A Colorado bankruptcy Court, In Re Arenas (2014 WL 4288991) has recently held that a person who owns a state authorized marijuana shop in Colorado can not stay in an asset Chapter 7 bankruptcy because the sale and administration of the assets would involve both the Chapter 7 trustee and the court in a violation of federal law. Likewise, the Court held that the debtor could not convert to a Chapter 13 bankruptcy because the plan would be funded by unlawful means.

The court appeared to leave open whether a Chapter 7 debtor who operated a marijuana shop could proceed to discharge in a no asset case.

So, until federal law is changed to conform with Colorado law in regards to marijuana possession and sale, the bankruptcy court seems to be off limits for asset 7 or Chapter 13 cases.

photo credit: Alexodus via photopin cc

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