Debtor Sues Self To Manipulate The Bankruptcy Court

In the bankruptcy case of debtor Gerry Griggs, the debtor’s bankruptcy case was dismissed after he dishonestly sues himself and tries to force himself into an involuntary bankruptcy as a ruse to stop a foreclosure on one of his properties.

At 3:00 p.m. on December 9, 2010, Gerry Griggs was to appear in this court at a hearing scheduled in Griggs v. Mortgage Electronic Registration Systems, et al., 4:10-cv-3128. Griggs – the plaintiff in that case – had sued to stop a mortgage servicer from foreclosing on land his former fiancé and he had pledged against a loan to her alone.

Thirty-four minutes before the hearing – the fourth – Griggs, on the behalf of the creditor Harris-Haynes, Inc., petitioned for an involuntary bankruptcy against himself. Griggs is a director, president, and secretary of Harris-Haynes, Inc. The company has forfeited its charter.

Just after the hearing was scheduled to begin, Griggs called this court’s case manager and told her that (a) he had just learned that a bankruptcy petition had been filed against him and (b) he thought it stayed all pending matters against him. When she pressed him about who told him of the bankruptcy, he paused and cagily replied “Harris and Haynes.” The case manager told him he needed to appear at the hearing. He did not.

The court withdrew the reference to the bankruptcy court, lifted the stay, and held hearing.

As we have previously warned, attempting to manipulate the bankruptcy court will not work and it will end in a dismissal. But a dismissal may not be the only negative consequence of attempting to manipulate the bankruptcy court.  Some debtors who have suffered involuntary bankruptcy dismissals find that when they really need to file bankruptcy they are unable to benefit from the automatic stay.  And for those who are habitual abusers of the bankruptcy system, a temporary ban on their ability to file a legitimate bankruptcy case is not unheard of.