In Re Edith Bloom, M.D., Debtor. Edith Bloom, M.D. v. Gilbert Robinson, Chapter 7 Trustee

Edith Bloom appeals from the Bankruptcy Appellate Panel’s decision, 68 B.R. 455 (1986) that her retirement plans are not exempt from being distributed to her creditors. We reverse.

I.

FACTS AND PROCEEDINGS BELOW

Edith Bloom, a physician specializing in obstetrics and gynecology, filed for bankruptcy under Chapter 7 in September 1985. She was a fifty percent owner of “Tobie N. Chroman, M.D. and Edith Bloom, M.D., a Medical Corporation.” In 1977, this corporation created a private retirement plan and a profit-sharing plan with Bloom and Chroman as the sole trustees.

At the time she filed for bankruptcy, Bloom’s stated interest in the plans was approximately $475,000. However, the plans had made a number of loans to Bloom between 1978 and 1982, which totaled nearly $300,000 with accrued interest. Bloom gave the plans only unsecured promissory notes for the loans. Although Bloom made interest payments on the loans, she did not repay any principal. Thus, the assets of the plans to a substantial extent were Bloom’s unsecured notes.

Bloom seeks to keep the plans out of her creditors’ hands by excluding the plans from the administration of her assets in bankruptcy. She relies on…