Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 22, 1992 TAG: 9201220091
SECTION: BUSINESS PAGE: B-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
HIGH COURT TO REVIEW CASE FROM ROANOKE
The Supreme Court on Tuesday agreed to consider a case originating in Roanoke that would make it more difficult for business executives to shield their pension benefits from creditors in bankruptcy proceedings.The justices said they will hear an appeal by John Patterson of Roanoke, a bankruptcy trustee challenging the right of a former furniture company president to a $250,000 pension.
Joseph Shumate of Pulaski, former head of Coleman Furniture Corp., which now is part of Pulaski Furniture Corp., is seeking to shield his pension from creditors.
Shumate controlled 96 percent of the company's voting stock when he was president and chairman of the board until 1983.
The company filed for bankruptcy in 1982, seeking to reorganize and protect its assets from creditors.
Shumate filed for bankruptcy himself in 1984, and Patterson was named by a bankruptcy judge as the trustee to oversee payment of his assets to creditors.
Shumate is a familiar figure around the U.S. District and Bankruptcy courts in Roanoke. He has often argued his own cause in a series of legal controversies throughout the past decade. His tactic of pleading his own case is not popular among lawyers.
The legal actions grew out of the Coleman Furniture and personal bankruptcies. Shumate has been to the high courts before. In 1984, the 4th U.S. Circuit Court of Appeals rejected his claim that Pulaski Furniture acted improperly when it bought Coleman Furniture in 1984. But the Supreme Court refused to hear Shumate's appeal.
A federal judge in Roanoke ruled that Shumate was not entitled to the pension, because as head of the company he had control over the pension plan. But the appeals court overturned the judge's ruling in August, saying Shumate is protected by the Employee Retirement Income Security Act (ERISA), a federal law to safeguard worker pensions.
"Interests in ERISA-qualified pension plans are excluded from a bankrupt's estate," the appeals court said.
The case is Patterson vs. Shumate, 91-913.
Business editor George Kegley contributed to this story.