Bankruptcy

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7^th Circuit Court of Appeals

Case Name: Gus Paloian v. Jorgovanka Dordevic

Case No.: 22-2500

Officials: Brennan, Scudder, and Kirsch, Circuit Judges.

Focus: Bankruptcy

Jelena Dordevic filed for Chapter 7 bankruptcy. The Trustee then sued her mother, Jorgovanka Dordevic, to recover a stake in a company registered in Jorgovanka’s name, a procedure called a “turnover.” The Trustee successfully argued before the bankruptcy court that Jorgovanka served as Jelena’s nominee—a party who holds title for another’s benefit. So, the court ruled that equitable ownership of the stake in the company belonged to Jelena, and thus that the property was subject to turnover to the bankruptcy estate.

Jorgovanka argues the bankruptcy court incorrectly applied a preponderance of the evidence standard of proof, rather than clear and convincing evidence, when making this decision. But a preponderance standard applies unless particularly important individual interests are involved or the estate’s theory for property turnover imposes a higher standard of proof. Neither situation exists here, so the bankruptcy court applied the correct standard of proof. Under that standard, the bankruptcy court did not clearly err in finding that the Trustee had met his burden of establishing Jelena’s equitable ownership, and the district court correctly affirmed the bankruptcy court’s judgment for the Trustee.

The Seventh Circuit affirms the district court’s affirmance of the bankruptcy court’s judgment for the Trustee, and denies the Trustee’s motion for sanctions.

Affirmed.

Decided 04/27/23

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