AMEX Wrongfully Withholding Funds
An excerpt from a recent filing by the US Trustee for the estate of the Ginn companies in Chapter 7:
“Completely disregarding Trustee Dillworth’s repeated requests, AMEX failed and refused to release the Estate Proceeds. Given its receipt of actual notice of the institution of Debtors’ bankruptcy cases, Trustee Dillworth’s appointment and its prior release of the Estate Proceeds, it is indisputable that AMEX is intentionally and willfully violating the automatic stay in exercising control over the Estate Proceeds by imposing its hold on Debtors’ account and failing to turn over the Estate Proceeds to Trustee Dillworth”.
What happened was that Tesoro Club, in particular, uses Amex’s services to process credit card transactions for businesses involving club dues, green fees and food and beverages. Approximately $70,000 of such post-petition credit card revenues were withheld by Amex. There was no known customer disputes concerning these charges. These funds were meant to be used for ongoing business operations, and the Trustee needs all estate proceeds to keep the developers as a going concern.
It was disturbing to read about Amex’s withholding of credit card revenues and its disregard of the US Trustee’s requests. Extrapolate this incident to future potential events – what if you were putting down earnest money deposits using a credit card? What if you were paying for other kinds of dues to the developer using a credit card? Does it disturb you that the money might not reach the developer for the purpose for which you paid the money, and it might cease to be a going concern as a result?
PS. Amex was approved for more than $3 billion of TARP money earlier this year.
