The New Jersey State House in Trenton is the s...

Robert E. Brennan is reportedly working at an athletic shop after spending nearly a decade in prison for bankruptcy fraud.  But this bankruptcy fraud convict’s troubles with the law are far from over. The bankruptcy court that administered the Brennan case are now considering reopening his bankruptcy case so that they can go after an offshore trust setup in the name of the debtor’s children.

A federal judge in Trenton is expected to decide today whether to reopen his bankruptcy case so regulators can recover money from the trust he set up for his children. The trust was valued at $6.4 million in 1998, according to bankruptcy court records. But the trust set up by Brennan has eluded the grasp of the bankruptcy trustee for ten years and repatriating that money has been impossible.

A. Richard Ross, who served as an attorney for Brennan’s bankruptcy trustee, said offshore trusts can put up “incredible roadblocks” for creditors if they include “flight clauses.” “If there’s any attempt to gain information or freeze the trust to benefit a litigation for creditors, that trustee is obligated to send it on to a new trustee beyond the reach” of creditors or government agencies, he said.

But some are saying that the family trust was specifically setup to protect the assets from creditors seeking reimbursement in the bankruptcy case.  Even if this is the case, it has proven impossible for the bankruptcy court to force the off shore trustees into compliance because the countries in which the trust is held do not recognize U.S. law. The reopening of the bankruptcy case may put pressure on Brennan to release the funds of the family trust to the bankruptcy court.