Bankruptcy Judge Harry C. Dees, Jr. resolved the single most important question of bankruptcy law for residents of Indiana: Are season tickets to Notre Dame football games an exempt asset?
We are sad to report that Judge Dees, of South Bend, was forced to hold that football tickets are intangible property and therefore not exempt under Indiana law.
Several weeks before filing a chapter 7 petition, a Notre Dame employee bought season football tickets for $1,100, below the price for which tickets are sold to the public. She claimed the tickets were exempt property under the provision of Indiana law that exempts up to $8,000 in “tangible personal property.”
The trustee objected to the claim of exemption, contending that the tickets were intangible property and therefore not exempt.
Judge Dees said there is no precedent declaring whether tickets of any sort are tangible or intangible in the exemption context. The answer to the question was “not so clear cut,” he said, because the tickets have both tangible and intangible attributes.
On one hand, tickets can be “physically possessed and held.” On the other, the tickets, as pieces of paper, have no value and represent a license to attend an event.
Close to home, there were cases pointing in different directions. A district judge in Indiana held that cash in the form of currency was tangible property falling within the exemption, because state law calls for exemptions to be interpreted liberally in favor of the debtor.
Ruling to the contrary, Circuit Judge Richard A. Posner later wrote an opinion for the Seventh Circuit, interpreting Indiana law and holding that currency is intangible property.
In his opinion on Aug. 17, Judge Dees decided to follow Judge Posner, who retired on Sept. 1. He said that tickets are intangible property, and thus not exempt, because they have “no inherent or intrinsic value in and of themselves.” The value, he said, comes from the ability to exchange the ticket for admission to an event, just like cash, which has value because it can be exchanged for goods.
Judge Dees was also persuaded by the Indiana Constitution, which authorizes the adoption of “wholesome laws” allowing exemptions for “necessary comforts of life.” Football tickets, according to Judge Dees, are not necessary for the debtor “to benefit from her bankruptcy discharge and to enjoy a fresh financial start.”
Bankruptcy Judge Harry C. Dees, Jr. resolved the single most important question of bankruptcy law for residents of Indiana: Are season tickets to Notre Dame football games an exempt asset?