Acambaro case holds potential to pit 2 courts
Posted on Thursday, January 3, 2008
Immigration authorities aren’t the only ones eyeing the assets of Acambaro Mexican restaurants in the aftermath of a raid that rounded up 19 illegal aliens, jailed their employers and froze $ 3 million in property.
Days after the Dec. 10 raid, the Northwest Arkansas restaurant chain filed for bankruptcy protection. Acambaro listed assets of $ 4. 2 million and liabilities of $ 3. 2 million.
The Chapter 11 bankruptcy filing sets up a potential legal tug-of-war: Even as Acambaro continues operating under the shelter of bankruptcy, federal prosecutors have frozen bank accounts and moved to seize key company properties, including most Acambaro locations in Northwest Arkansas.
“It’s unusual,” said John Blair, a Rogers lawyer representing Acambaro in bankruptcy court. The potential conflict between the two courts hasn’t come to a head yet, he said.
“As of this moment, the government has not done anything to attempt to close them down,” he said. “Arguably, that will be a violation of the ‘automatic stay’ which is in effect and which protects the corporation’s assets.”
Would the bankruptcy court’s automatic stay, which keeps creditors at bay, have the same effect on immigration authorities ?
“As a general rule, when you file for bankruptcy, you basically trump every other kind of proceeding that’s out there — people trying to sue you, creditors trying to seize your assets, that kind of stuff,” said Thomas E. Plank, a law professor at the University of Tennessee.
But there are exceptions for criminal cases.
“O. J. Simpson can’t file for bankruptcy and stop from being prosecuted for murder,” Plank said.
Less clear is whether a bankruptcy filing would forestall a civil forfeiture action such as the one the government is using to seize Acambaro’s assets. Plank said he hadn’t researched that, but the answer might lie in the details of the case.
Blair said Acambaro filed for bankruptcy “because of the seizure.” The seizure left the Reyes family, which controls the restaurants, no way to pay its taxes or employees, Blair said.
Acambaro locations were able to reopen with replacement employees and food the company had on hand, Blair said, even though the government froze bank accounts and took away company computers.
The top creditor in the case is Arvest Bank, according to Acambaro’s petition, with $ 3. 2 million in secured claims. Arvest holds the mortgages on several restaurants and houses involved in both the bankruptcy and the immigration case, the petition shows.
Bob Balfe, U. S. attorney for the Western District of Arkansas, declined to discuss specifics of the case.
Asked about the general procedure for forfeiture and its relationship to the bankruptcy proceeding, assistant U. S. attorney Debbie Groom said the government’s position would be that it’s exempt from the automatic stay.
She said the government’s intention in the forfeiture case is to sell the properties, use the money to pay creditors and distribute remaining forfeiture funds to local governments for police operations.
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