Bankr. L. Rep. P 74,229 in Re Ceferino G. Cheng, Debtor. Ceferino G. Cheng v. David A. Gill, Trustee Kenneth Robert Fraser

We are asked to decide whether the definition of “self-employed retirement plans” under Cal.Civ.Proc.Code § 704.115 includes corporate plans in which one person controls the corporation and the plan. The district court held that it does. We disagree and reverse.

I

Ceferino G. Cheng, M.D., was the sole shareholder, director, and chief executive officer of Ceferino G. Cheng, M.D., Inc. (the “Corporation”). Between 1974 and 1984, Cheng established and maintained two retirement benefit plans (collectively, the “Plan”).

On March 19, 1984, Dr. Cheng filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. As an individual debtor, Dr. Cheng was permitted to exempt certain property from inclusion in his bankruptcy estate. 11 U.S.C. § 522 (1989). Section 522(b) provides two schemes under which an individual debtor may exempt his property. Under the first scheme, the debtor may utilize the exemptions specifically enumerated in section 522(d) unless applicable state or local law “does not so authorize.” 11 U.S.C. § 522 (b). The second option allows the debtor to exempt any property that is exempt under federal law (other than section 522(d)) or the applicable state…