Not for Publication

MEMORANDUM DECISION AND ORDER DENYING APPLICATION FOR RELEASE OF UNCLAIMED FUNDS

S. MARTIN TEEL, JR., Bankruptcy Judge.

On May 14, 2018, Redstone Development Corp., through Jeffrey Falbo, owner of Segment Returns LLC, filing by power of attorney on behalf of Redstone Development, filed an application for release of unclaimed funds in the amount of $1,145.92 (Dkt. No. 317). On May 12, 2011, the unclaimed dividend in question was deposited into the court's registry pursuant to 11 U.S.C. § 347(a),1 and the funds remain on deposit pursuant to 28 U.S.C. §§ 2041 and 2042. Absent a showing by Redstone Development that the debt once payable to it has not been previously satisfied, the court will not grant the relief sought.

The burden is on Redstone Development to demonstrate that it is entitled to the funds sought. Hansen v. United States, 340 F.2d 142, 144 (8th Cir. 1965). Although the record before the court demonstrates that Redstone Development was at one time entitled to the funds, Redstone Development, has not demonstrated a present entitlement, as required.2 See 28 U.S.C. § 2042;3 Willametz v. Susi, 489 F.2d 364, 366 (1st Cir. 1973).

The application is not signed by an officer of Redstone Development but instead is signed by Jeffrey Falbo, owner of Segment Returns LLC, who holds a power of attorney on behalf of Redstone Development that was executed by David Rosenstein, president of Redstone Development. Rosenstein did not sign the application. There is no indication of facts establishing that Falbo has any personal knowledge of the facts surrounding the debt and the unclaimed funds, and Falbo's statements in the application, although signed under penalty of perjury, do not constitute admissible evidence.

Falbo indicates that the check was lost and an account record regarding the amounts owed on the debt was not maintained. In the space provided for Redstone Development to explain how it can certify that the debt remains unpaid notwithstanding the lack of account records, Falbo responds by stating "[c]heck was uncashed and reported as unclaimed funds." Putting aside the fact that Falbo has no personal knowledge to recite facts relating to the debt and the unclaimed funds, Redstone Development cannot meet its burden to show a present entitlement to the funds without first showing that the debt remains due. Although the funds were originally distributed by check made payable to Redstone Development pursuant to an allowed claim, the court is not willing to deem this satisfactory evidence, standing alone, of Redstone Development's present entitlement to the funds. See Willametz, 489 F.2d at 366. If, as Falbo recites, Redstone Development did not maintain an account record for the debt, this does not excuse Redstone Development from making this showing.

If Redstone Development's claim that was the basis for the issuance of the distribution was assigned to someone else or has already been satisfied, circumstances have changed such that Redstone Development is no longer entitled to the funds. Id. at 367 (quoting Harris v. Balk, 198 U.S. 215, 226 (1905) ("It ought to be and is the object of courts to prevent the payment of any debt twice over.")). For example, the debt may have been one as to which there was a co-debtor, and that co-debtor may have paid the debt. Or the debt may have been secured by a lien on collateral, and may have been collected via enforcement of that lien. Or, although unlikely, the debtors (who received a discharge) may have voluntarily paid the debt.

Any overpayment that might result from payment of the unclaimed funds to Redstone Development is not simply a matter to be resolved by Redstone Development and the debtors. Instead, § 2042 requires that the court determine Redstone Development's entitlement to the funds. It is thus

ORDERED that Redstone Development's application for release of unclaimed funds (Dkt. No. 317) is DENIED without prejudice to the filing of an amended application demonstrating, based on admissible evidence, a present day entitlement to the funds.