Virginia National Bank v. Phoenix Marine Corp. (In Re Phoenix Marine Corp.)

HAL J. BONNEY, Jr., Bankruptcy Judge.

Prior to the filing of its petition with this Court, the debtor was involved in a suit styled Phoenix Marine Corporation v. Bank of Virginia filed in the Circuit Court for the City of Portsmouth, Virginia [the Bank of Virginia suit]. After the debtor filed its bankruptcy petition, the trustee continued to pursue the claim in State court and eventually the Bank of Virginia suit was settled by the trustee and the defendant for $50,-000.00.

After receiving notice of the settlement, Virginia National Bank and the United States Small Business Administration [the…