A Colorado bankruptcy Court, In Re Arenas (2014 WL 4288991) has recently held that a person who owns a state authorized marijuana shop in Colorado can not stay in an asset Chapter 7 bankruptcy because the sale and administration of the assets would involve both the Chapter 7 trustee and the court in a violation of federal law. Likewise, the Court held that the debtor could not convert to a Chapter 13 bankruptcy because the plan would be funded by unlawful means.
The court appeared to leave open whether a Chapter 7 debtor who operated a marijuana shop could proceed to discharge in a no asset case.
So, until federal law is changed to conform with Colorado law in regards to marijuana possession and sale, the bankruptcy court seems to be off limits for asset 7 or Chapter 13 cases.
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